UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(A) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A)
(AMENDMENT NO. )*
Aames Financial Corporation
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
00253A 10 1
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(CUSIP Number)
Barry F. Schwartz
35 East 62nd Street
New York, NY 10021
(212) 572-8600
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 19, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition 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
|_|.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746(12-91)
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SCHEDULE 13D
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CUSIP NO. 00253A 10 1 Page 2 of 10 Pages
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1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Thirty-Five East Investments LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
WC OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 2,225,865(1)
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 2,225,865(1)
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,225,865 shares of Common Stock(1)
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[X]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.0%
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14. TYPE OF REPORTING PERSON*
00 (Limited Liability Company)
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
FOOTNOTE: TO FACING SHEET FOR
THIRTY-FIVE EAST INVESTMENTS LLC
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(1) Thirty-Five East Investments LLC disclaims any beneficial interest in any
shares of Common Stock beneficially owned by Turtle Creek Revocable Trust
and Gerald J. Ford.
PAGE 3 OF 10 PAGES
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SCHEDULE 13D
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CUSIP NO. 00253A 10 1 Page 4 of 10 Pages
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1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Turtle Creek Revocable Trust
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
WC OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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7. SOLE VOTING POWER
NUMBER OF 556,466(1)
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 556,466(1)
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
556,466 shares of Common Stock(1)
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[X]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
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14. TYPE OF REPORTING PERSON*
00 (revocable trust)
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
FOOTNOTE: TO FACING SHEET FOR
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TURTLE CREEK REVOCABLE TRUST
(1) Turtle Creek Revocable Trust disclaims any beneficial ownership in any
shares of Common Stock beneficially owned by Thirty-Five East Investments
LLC and Ronald O. Perelman.
PAGE 5 OF 10 PAGES
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $.001 (the
"Common Stock"), of Aames Financial Corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 350 South Grand Avenue, 52nd
Floor, Los Angeles, California 90071.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c) The names of the persons filing this statement are: Thirty-
Five East Investments LLC ("Thirty-Five East") and Turtle Creek Revocable Trust
("Turtle Creek"). Thirty-Five East is a Delaware limited liability company with
its principal business in investments. The principal business address of
Thirty-Five East is located at 35 East 62nd Street, New York, NY 10021. Ronald
O. Perelman is the sole equity holder and the Chairman and Chief Executive
Officer of Thirty-Five East. Turtle Creek, a revocable trust governed by Texas
law, has its principal business address at 200 Crescent Court, Suite 1350,
Dallas, Texas 75201. Gerald J. Ford is the sole trustor and trustee of Turtle
Creek. Mr. Ford's principal business address is 200 Crescent Court, Suite 1350,
Dallas, Texas 75201.
The name, business address, present principal occupation or employment
and citizenship of each director and executive officer of Thirty-Five East are
set forth in Schedule I hereto ("Schedule I") and are incorporated herein by
reference.
(d) - (e) During the last five years, none of the persons filing this
statement or the persons listed on Schedule I or Mr. Ford has been (i) convicted
in a criminal proceeding (excluding traffic violations and similar misdemeanors)
or (ii) 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 mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(f) Mr. Ford is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Thirty-Five East shall make its purchase of the Common Stock and
Warrants (as defined in Item 6) from working capital provided by Mr. Perelman
from personal funds and/or funds borrowed by Thirty-Five East. Turtle Creek
shall make its purchase of the Common Stock and Warrants (as defined in Item 6)
from working capital provided by Mr. Ford from personal and/or borrowed funds.
Page 6 of 10 Pages
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ITEM 4. PURPOSE OF TRANSACTION.
(a) - (d) Thirty-Five East signed a Stock Purchase Agreement, dated
March 19, 1998, between Thirty-Five East and the Issuer (the "TFE Stock Purchase
Agreement") to acquire 2,225,865 newly-issued shares of Common Stock and
2,225,865 Warrants. Turtle Creek signed a Stock Purchase Agreement, dated March
19, 1998, between Turtle Creek and the Issuer (the "Other Stock Purchase
Agreement" and collectively with the TFE Stock Purchase Agreement, the "Stock
Purchase Agreements") to acquire 556,466 newly-issued shares of Common Stock and
566, 466 Warrants. Thirty-Five East and Turtle Creek may also acquire up to
2,225,865 and 556,466 shares of Common Stock, respectively, upon exercise of the
Warrants, subject to customary anti-dilution and price adjustments. Pursuant to
the Stock Purchase Agreements, the Issuer shall cause one person nominated by
Thirty- Five East and one person nominated by Turtle Creek to be elected to the
Issuer's Board of Directors (the "Board of Directors") and shall continue to
recommend that such persons be elected as members of the Board of Directors as
long as Thirty-Five East and Turtle Creek collectively own such number of shares
of Common Stock as equal to 50% of the shares of Common Stock acquired by them
pursuant to the Stock Purchase Agreements.
Thirty-Five East and Turtle Creek each acquired shares of Common Stock
and Warrants for purposes of investment and in order to acquire a significant
equity interest in the Issuer. Each of Thirty-Five East and Turtle Creek expects
to evaluate on an ongoing basis its interest in and intentions with respect to
the Issuer, and may from time to time purchase shares of Common Stock, dispose
of all or a portion of Common Stock held by it, or cease buying or selling
shares of Common Stock. Any such additional purchases may be in open market or
privately-negotiated transactions or otherwise.
(e) - (j) None.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
(a) Thirty-Five East beneficially owns 2,225,865 shares of Common Stock
or 8.0% of the Issuer's outstanding Common Stock and disclaims any beneficial
interest in any shares of Common Stock beneficially owned by Turtle Creek and
Gerald J. Ford. Ronald O. Perelman, as the sole equity holder of Thirty-Five
East, may be deemed to be indirect beneficial owner of such 2, 225, 865 shares
of Common Stock.
Turtle Creek beneficially owns 556,466 shares of Common Stock or 2.0%
of the outstanding Common Stock and disclaims beneficial interest in any shares
of Common Stock beneficially owned by Thirty-Five East and Ronald O. Perelman.
Gerald J. Ford, as trustee of Turtle Creek, may be deemed to be indirect
beneficial owner of such 556,466 shares of Common Stock.
(b) Thirty-Five East has the sole voting and dispositive powers over
the 2,225,865 shares of Common Stock beneficially owned by Thirty-Five East,
Page 7 of 10 Pages
<PAGE>
representing approximately 8.0% of the outstanding Common Stock. Mr. Perelman is
the sole beneficial owner, Chairman and Chief Executive Officer of Thirty-Five
East.
Turtle Creek has the sole voting and dispositive powers over the
556,466 shares of Common Stock beneficially owned by Turtle Creek, representing
approximately 2.0% of the outstanding Common Stock. Such voting and dispositive
powers are exercised by Mr. Ford in his capacity as trustee of Turtle Creek.
(c) The closings of the acquisitions of shares of Common Stock and
Warrants by Thirty-Five East and Turtle Creek pursuant to the Stock Purchase
Agreements are subject to the expiration or termination of all waiting periods
under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, in addition to
other terms and conditions specified in the Stock Purchase Agreements.
(d) and (e) Not Applicable.
ITEM 6. CONTRACTS, AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Each of Thirty-Five East and Turtle Creek signed, in addition to the
Stock Purchase Agreements, a Warrant Agreement and a Registration Rights
Agreement (collectively, the "Warrant Agreements" and the "Registration Rights
Agreements"), each dated March 19, 1998, between Thirty-Five East or Turtle
Creek, as the case may be, and the Issuer setting forth the terms and conditions
for the exercise of the Warrants and certain registration rights as defined
therein. Except for the number of shares of Common Stock and Warrants, the terms
and conditions of each of the Stock Purchase Agreements, Warrant Agreements and
Registration Rights Agreements executed by Thirty-Five East and Turtle Creek are
substantially similar. Such agreements were negotiated and executed by
Thirty-Five East and Turtle Creek concurrently. Thirty-Five East and Turtle
Creek intend to act jointly in any disposition or voting of the Common Stock and
disposition and exercise of the Warrants acquired pursuant to the Stock Purchase
Agreements.
The purchase price of the shares of Common Stock is $13.7625 per share
and in consideration for such purchase, Thirty-Five East and Turtle Creek
received warrants (the "Warrants") to acquire 2,225,865 and 556,466 shares of
Common Stock, respectively, at an exercise price of $17.2031, subject to
customary anti-dilution and price adjustments. Such Warrants are exercisable
only upon the occurrence of a Purchase Event (as defined in the Warrant
Agreements) and prior to April 19, 2001.
Page 8 of 10 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A is a form of the Stock Purchase Agreement. Exhibit B is a
form of the Warrant Agreement. Exhibit C is a form of the Registration Rights
Agreement. Exhibit D is the Filing Agreement.
SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Dated: March 26, 1998
THIRTY-FIVE EAST INVESTMENTS LLC
By: /s/ Glenn P. Dickes
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Glenn P. Dickes
Vice-President
TURTLE CREEK REVOCABLE TRUST
By:/s/ Gerald J. Ford
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Gerald J. Ford
Trustee
Page 9 of 10 Pages
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THIRTY-FIVE EAST INVESTMENTS LLC
The name, business address, present principal occupation or employment and
the name, principal business and address of any corporation or other
organization in which such employment is conducted, of each of the directors and
executive officers of Thirty-Five East Investments LLC is set forth below. The
business of each director and executive officer is Thirty-Five East Investments
LLC, 35 East 62nd Street, New York, New York 10021. All directors and executive
officers listed below are United States citizens.
Principal Occupation, if
other than as an
Executive Officer of
Name and Business Position with Thirty-Five Thirty-Five East
Address East Investments LLC Investments LLC
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Ronald O. Perelman Chairman of the Board MacAndrews & Forbes
and Chief Executive Holdings Inc.
Officer
Howard Gittis Vice Chairman MacAndrews & Forbes
Holdings Inc.
Irwin Engelman Executive Vice President MacAndrews & Forbes
and Chief Financial Holdings Inc.
Officer
Barry F. Schwartz Executive Vice President MacAndrews & Forbes
and General Counsel Holdings Inc.
Page 10 of 10 Pages
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EXHIBIT INDEX
Exhibit No.
99.A Stock Purchase Agreement
99.B Warrant Agreement
99.C Registration Rights Agreement
99.D Filing Agreement
Exhibit A
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STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 19, 1998
By and Between
AAMES FINANCIAL CORPORATION
and
[PURCHASER]
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<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1
Definitions
1.1 Certain Definitions.......................................................1
1.2 Other Definitions.........................................................3
SECTION 2
Purchase and Sale of the Shares and Warrants
2.1 Purchase and Sale.........................................................4
2.2 The Closing...............................................................4
2.3 Delivery..................................................................4
SECTION 3
Representations and Warranties of the Company
3.1 Organization, etc........................................................5
3.2 Qualification to do Business.............................................5
3.3 Capitalization...........................................................5
3.4 Authorization; No Breach.................................................6
3.5 Material Contracts; Defaults.............................................7
3.6 Regulatory Matters.......................................................7
3.7 Compliance with Laws........................................... ......8
3.8 Authorization of Shares and Warrants.....................................9
3.9 Ownership of Shares and Warrants.........................................9
3.10 Financial Reports and Regulatory Documents...............................9
3.11 Litigation..............................................................11
3.12 Tax Matters.............................................................11
3.13 Anti-takeover Provisions................................................11
3.14 Brokers or Finders......................................................11
3.15 Disclosure..............................................................11
3.16 Risk Management Instruments.............................................12
3.17 Books and Records.......................................................12
3.18 Insurance...............................................................12
3.19 Environmental Matters...................................................12
3.20 Employee Benefit Plans..................................................14
3.21 Labor Matters...........................................................15
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SECTION 4
Representations, Warranties and
Acknowledgments of the Purchaser
4.1 Execution, Delivery and Performance......................................16
4.2 Investment...............................................................16
4.3 Organization.............................................................16
4.4 No Breach................................................................16
4.5 Financing................................................................17
SECTION 5
Conditions to the Purchaser's Obligations for the Closing
5.1 Representations and Warranties...........................................17
5.2 Registration Rights Agreement............................................17
5.3 Warrant Agreement........................................................18
5.4 Opinion of the Company's Counsel.........................................18
5.5 HSR Act..................................................................20
5.6 Amendment of the Rights Agreement........................................20
5.7 Proceedings..............................................................20
5.8 Closing Documents........................................................21
5.9 Waiver...................................................................21
SECTION 6
Conditions to the Company's Obligations for the Closing
6.1 Representations and Warranties...........................................21
6.2 Legal Matters............................................................21
6.3 Closing Documents........................................................22
6.4 HSR Act..................................................................22
6.5 Waiver...................................................................22
6.6 Concurrent Purchase Agreement............................................22
SECTION 7
Covenants
7.1 Financial Statements and Other Information...............................22
7.2 Directors................................................................23
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7.3 HSR Act Filing...........................................................23
7.4 Conditions to Closing....................................................23
7.5 Use of Proceeds..........................................................23
7.6 Pledge of Shares.........................................................23
7.7 No-Action Letter.........................................................24
SECTION 8
Miscellaneous
8.1 Expenses................................................................25
8.2 Additional Purchases of Common Stock....................................25
8.3 Amendments and Waivers..................................................25
8.4 Termination.............................................................25
8.5 Survival of Representations and Warranties..............................25
8.6 Successors and Assigns..................................................25
8.7 Severability............................................................26
8.8 Entire Agreement........................................................26
8.9 Descriptive Headings; Language Interpretation...........................26
8.10 Governing Law...........................................................27
8.11 Waiver of Jury Trial....................................................27
8.12 Notices.................................................................27
8.13 Remedies................................................................28
8.14 Counterparts............................................................28
8.15 Publicity...............................................................28
8.16 Legend..................................................................29
8.17 Transfer Opinion........................................................29
INDEX TO EXHIBITS
Exhibit Number
--------------
Registration Rights Agreement A
Warrant Agreement B
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<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 19,
1998, by and between Aames Financial Corporation, a Delaware corporation (the
"Company") and _______________, a __________________ (the "Purchaser").
WHEREAS, the Company desires to sell ________ shares (the "Shares") of
Common Stock and warrants to purchase an additional _________ shares of Common
Stock, on the terms and conditions set forth herein; and
WHEREAS, the Purchaser desires to purchase the Shares and the Warrants
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
SECTION 1
Definitions
1.1 Certain Definitions. The terms specified in this Section 1.1 shall,
for all purposes of this Agreement, have the meanings herein specified, unless
the context expressly otherwise requires.
"Affiliate" means a person that directly, or indirectly through one of
more intermediaries, controls or is controlled by, or is under common control
with, the person specified.
"Closing" shall have the meaning assigned to such term in Section 2.2.
"Common Stock" shall mean the Company's common stock, par value $.001
per share.
"Concurrent Purchase Agreement" shall mean the Stock Purchase
Agreement, dated the date hereof, by and between the Company and the Concurrent
Purchaser.
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"Concurrent Purchaser" shall mean ___________.
"Documents" shall mean, collectively, this Agreement, the Warrant
Agreement and the Registration Rights Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934 or any
federal statute from time to time in effect which has replaced such statute.
"Governmental Authority" means any court, admini strative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
"Material Adverse Effect" means any effect that (i) is material and
adverse to the financial position, results of operations, business or prospects
of the Company and its Subsidiaries taken as a whole, or (ii) would materially
impair the ability of either the Purchaser or the Company to perform its
obligations under any of the Documents or otherwise, provided, however, that in
determining whether a Material Adverse Effect has occurred there shall be
excluded any effect on the referenced party the cause of which is (i) any change
in consumer finance or similar laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental authorities
and (ii) any change in generally accepted accounting principles or regulatory
accounting principles applicable to finance companies generally.
"Officer's Certificate" shall mean a certificate signed by the chief
executive officer and the chief financial officer of the Company, stating that
(i) the person signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy of
the information set forth in such certificate, and (ii) to the best of such
person's knowledge, such certificate does not misstate any material fact or omit
to state any material fact necessary to make the certificate not misleading.
"Registration Rights Agreement" shall have the meaning set forth in
Section 5.2 hereof.
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"Regulatory Documents" shall have the meaning set forth in Section
3.10.
"Rights" shall mean securities or obligations convertible into or
exercisable or exchangeable for, or giving any person any right to subscribe for
or acquire, or any options, calls or commitments relating to, or any stock
appreciation right or other instrument the value of which is determined in whole
or in part by reference to the market price or value of, shares of Common Stock.
"Rights Agreement" shall mean the Rights Agreement dated as of June 21,
1996, between the Company and Wells Fargo Bank.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, or any federal
statute from time to time in effect which has replaced such statute.
"Subsidiary" shall mean any corporation of which shares of stock having
a majority of the general voting power in electing the Board of Directors are,
at the time as of which any determination is being made, owned by the Company
either directly or through its Subsidiaries, any partnership in which the
Company or any Subsidiary is a general partner and any joint venture in which
the Company or any Subsidiary is a joint venturer.
"Warrant Agreement" shall have the meaning set forth in Section 5.3
hereof.
"Warrant Shares" shall mean the shares of Common Stock issuable upon
exercise of the Warrants.
"Warrants" shall mean the warrants to purchase an aggregate of up to
shares of Common Stock at a price of $17.2031 per share upon the
occurrence of a Purchase Event (as defined in the Warrant Agreement), subject to
adjustment as provided herein and in the Warrant Agreement.
1.2 Other Definitions. In addition to the terms defined in Section 1.1
hereof, certain other terms are defined elsewhere in this Agreement, and,
whenever such
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terms are used in this Agreement, they shall have their respective defined
meanings, unless the context expressly otherwise requires.
SECTION 2
Purchase and Sale of the Shares and Warrants
2.1 Purchase and Sale. On the terms and subject to the conditions set
forth herein, the Company will issue to the Purchaser and the Purchaser will
purchase from the Company the Shares at a purchase price of $13.7625 per share,
for an aggregate purchase price of $__________ (the "Purchase Price"). In
addition, on the terms and subject to the conditions set forth herein, in
consideration for the purchase of the Shares, the Company will issue to the
Purchaser the Warrants. If the Company shall adjust, split, combine or
reclassify its shares of Common Stock between the date hereof and the date of
Closing, the purchase price per share, the number of shares of Common Stock
purchased hereby, the number of Warrants issued and the exercise price of such
Warrants shall be adjusted so that the Purchaser's interest shall not be
diluted.
2.2 The Closing. The delivery of and payment for the Shares and
Warrants will take place at the offices of Sullivan & Cromwell, 444 South Flower
Street, Los Angeles, California 90071, no later than five business days after
all waiting periods applicable to the transactions contemplated by this
Agreement and the Concurrent Purchase Agreement under the HSR Act have expired
or been terminated, and on the same day as the closing of the Concurrent
Purchase Agreement or such other time and date or such other place, as the
parties shall mutually agree in writing (the "Closing").
2.3 Delivery. At the Closing, the Company will deliver to the Purchaser
the Shares and the Warrants, registered in the Purchaser's or its nominee's
name, against payment therefor by the Purchaser of the Purchase Price in
immediately available funds by wire transfer to such account as the Company may
designate in writing.
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<PAGE>
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser that:
3.1 Organization, etc. Each of the Company and its Subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation. Each of the Company and its Subsidiaries
has all requisite corporate power and authority to own and operate its
properties, to carry on its businesses as now conducted and to carry out and
perform its obligations under the terms of this Agreement, the Warrant Agreement
and the Registration Rights Agreement.
3.2 Qualification to do Business. The Company is duly licensed or
qualified and is in good standing as a foreign corporation in the State of
California and each other jurisdiction wherein the nature of the business
transacted by the Company or the nature of the property owned or leased by it
requires such licensing or qualification. Each of the Subsidiaries is duly
licensed or otherwise qualified in each state where in the nature of the
business transacted by such Subsidiary or the nature of the property owned or
leased by it requires such licensing or qualification and where failure to be so
licensed or qualified would reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect on the Company.
3.3 Capitalization.
(a) The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock and 1,000,000 shares of preferred stock. At March 17,
1998, there was outstanding 27,823,317 shares of Common Stock and 0 shares of
preferred stock. At February 28, 1998, the Company had outstanding 5,037,121
options to purchase shares of Common Stock, which options were duly granted
pursuant to the 1991 Stock Incentive Plan, 1995 Stock Incentive Plan, 1996 Stock
Incentive Plan, 1997 Non-Qualified Stock Option Plan, 1997 Stock Option Plan and
outside of any such plans. Each such plan has been duly approved by the Board of
Directors and, except for the 1997 Non-Qualified Stock Option Plan, stockholders
of the Company. 5,315,505 shares of Common
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<PAGE>
Stock are reserved for issuance upon exercise of such options, 6,106,617 shares
of Common Stock are reserved for issuance upon conversion of the Company's 5.5%
Subordinated Convertible Debentures due 2006. 500,000 Shares of preferred stock
are reserved for issuance upon exercise of the Rights distributed to holders of
Common Stock pursuant to the Rights Agreement, 1,124,184 shares of Common Stock
are reserved for issuance under the Company's Dividend Reinvestment and Stock
Purchase Plan and 562,500 shares of Common Stock are reserved for issuance under
the Company's Stock Purchase Plan.
(b) Except as described in Section 3.3(a), the Company has no
outstanding Rights, except for Warrants which will be issued pursuant to this
Agreement and the Concurrent Purchase Agreement.
(c) All of the outstanding shares of the capital stock of the Company
are validly issued, fully paid and nonassessable and, upon the issuance and sale
of the Shares, the Shares will be validly issued, fully paid and nonassessable,
and upon the valid exercise (including payment of the exercise price) of the
Warrants, the Warrant Shares will be validly issued, fully paid and
nonassessable.
3.4 Authorization; No Breach. The execution, delivery and performance
of each of the Documents and all other agreements and instruments contemplated
thereby and the consummation of all transactions contemplated thereby have been
duly authorized by all requisite corporate action of the Company. Assuming due
execution by the Purchaser, each of the Documents and all other agreements and
instruments contemplated thereby constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, equitable subordination, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing. The execution and delivery by the Company of each of the Documents and
all other agreements and other instruments contemplated and the consummation of
the transactions contemplated thereby do not and will not (with or without the
giving of notice, the lapse of time or both) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or any Subsidiary's
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capital stock or assets or (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) give any
third party the right to accelerate any obligation under or (iv) result in a
violation of, the Certificate of Incorporation or Bylaws of the Company, or, any
law, statute, rule, regulation, instrument, order, judgment or decree to which
the Company or any of its properties is subject, or any contract to which the
Company is a party or by which it is bound or to which any of its properties is
subject, assuming that all applicable waiting periods under the HSR Act have
expired or been terminated and all applicable filings pursuant to state
securities laws, the HSR Act, the Securities Act, the Exchange Act and the rules
and regulations of the New York Stock Exchange have been made.
3.5 Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its Regulatory Documents or as set forth in
Schedule 3.5, neither the Company nor any of its subsidiaries is a party to,
bound by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract" within
the meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
materially restricts the conduct of business by it or any of its Subsidiaries.
Except as disclosed in the Regulatory Documents, neither the Company nor any of
its Subsidiaries is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its respective assets, business, or
operations may be bound or affected, or under which it or its respective assets,
business, or operations receives benefits, or under any other contract if such
default could reasonably be expected to have a Material Adverse Effect on the
Company, and in either case there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
3.6 Regulatory Matters. (a) No consent, approval, authorization,
registration or qualification of any Governmental Authority or any third party
is required to be obtained by the Company or any of its Subsidiaries in
connection with the execution, delivery or performance by the Company of each of
the Documents, except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities laws, the HSR Act,
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the Securities Act, the Exchange Act and the rules and regulations of the New
York Stock Exchange.
(b) Neither the Company nor any of its Subsidiaries or any of their
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of companies which originate, process, underwrite, sell, securitize
or service loans (collectively, the "Regulatory Authorities").
(c) Neither the Company nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
3.7 Compliance with Laws. The Company and each of its Subsidiaries:
(a) Is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Federal
Truth-in-Lending Act and Regulation Z, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices except where such noncompliance would not, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse Effect
on the Company.
(b) Has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all Governmental
Authorities that are required in order to permit them to own or lease their
properties and to conduct their businesses as presently conducted, except where
the failure to obtain such permits, licenses, authorizations, orders and
approvals or to make such filings, applications and registrations could not
reasonably be expected to, singularly or in the aggregate, to have a Material
Adverse Effect; all such
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permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to Company's knowledge, no suspension or cancellation of
any of them is threatened.
(c) Except as disclosed in Schedule 3.7, has received, since June 30,
1997, no notification or communication from any Governmental Authority (i)
asserting that the Company or any of its Subsidiaries is not in compliance with
any of the statutes, regulations or ordinances which such Governmental Authority
enforces, except where such notification or communication would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on the Company or (ii) threatening to revoke any
material license, franchise, permit or governmental authorization (nor, to the
Company's knowledge, do any grounds for any of the foregoing exist).
3.8 Authorization of Shares and Warrants. The Company has authorized
the issuance and sale to the Purchaser of the Shares and Warrants. Each share of
Common Stock issued and sold to the Purchaser hereunder has the rights set forth
in the Company's Certificate of Incorporation and each Warrant has the terms and
rights set forth in the Warrant Agreement.
3.9 Ownership of Shares and Warrants. Upon delivery of the Shares and
Warrants to the Purchaser and payment therefor pursuant hereto, good and valid
title to such Shares and Warrants, free and clear of all liens, encumbrances,
equities or claims, will pass to the Purchaser. The issuance and sale of the
Shares and Warrants pursuant hereto will not give rise to any preemptive rights
and will not violate any law, statute, rule, regulation, instrument, order,
judgment or decree to which the Company or any of its assets are subject.
3.10 Financial Reports and Regulatory Documents.
(a) The Company's Annual Reports on Form 10-K for the fiscal years
ended June 30, 1995, 1996 and 1997, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1995 under the
Securities Act, under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in
the form filed or to be filed (collectively, "Regulatory Documents") with the
SEC,
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as applicable, as of the date filed, (i) complied or will comply in all material
respects as to form with the applicable requirements under the Securities Act
and the Exchange Act, as the case may be, and (ii) did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
each of the consolidated balance sheets contained in or incorporated by
reference into any such Regulatory Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date, and each
of the consolidated statements of income and changes in stockholders' equity and
cash flows or equivalent statements in such Regulatory Documents (including any
related notes and schedules thereto) fairly presents, or will fairly present,
the consolidated results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of the Company and its Subsidiaries
for the periods to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end audit
adjustments and the lack of complete footnote disclosure in the case of
unaudited statements.
(b) Except as disclosed in Schedule 3.10, since June 30, 1997, the
Company and its Subsidiaries have not incurred any material liability other than
in the ordinary course of business consistent with past practice (other than
liabilities with respect to expenses related to this Agreement and the
transactions contemplated hereby).
(c) Except as disclosed in Schedule 3.10 or disclosed in the Regulatory
Documents filed on or before the date hereof, since June 30, 1997, (i) the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary and usual course consistent with past practice (excluding the
incurrence of expenses related to this Agreement and the transactions
contemplated hereby) and (ii) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and events
(described in any paragraph of Section 3 or otherwise), is reasonably likely to
have a Material Adverse Effect.
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3.11 Litigation. Except as disclosed in Schedule 3.11, no material
litigation, claim or other proceeding before any court or governmental agency is
pending against the Company or any of its Subsidiaries and, to the Company's
knowledge, no such litigation, claim or other proceeding has been threatened.
3.12 Tax Matters. The Company has duly filed or caused to be filed all
material tax returns (Federal, state, local and foreign) required to be filed
and paid all amounts of taxes shown or required to be shown thereon to be due,
including interest and penalties, except to the extent of any taxes being
contested by or on behalf of the Company in good faith and by proper
proceedings, for which adequate reserves have been provided. The Company does
not possess any knowledge of any actual or proposed additional tax assessments
against it which, singly or in the aggregate, could have a Material Adverse
Effect on the Company. No issues raised in connection with the examination of
any of the tax returns referred to above are currently pending which is likely
to result in a Material Adverse Effect on the Company, and no waivers of
statutes of limitation have been given or requested by or with respect to any
taxes of the Company.
3.13 Anti-takeover Provisions. Subject to amendment of the Rights
Agreement prior to Closing, the acquisition of the Shares and the Warrants and
the exercise of the Warrants by the Purchaser will not cause the Purchaser or
any of its Affiliates to become (i) an "Acquiring Person" for purposes of the
Rights Agreement or (ii) subject to the restrictions against business
combinations contained in Section 203 of the Delaware General Corporation Law.
3.14 Brokers or Finders. The Company has not incurred, nor will it
incur, directly or indirectly, as a result of any action taken by the Company,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement and the transactions
contemplated hereby, other than to Donaldson, Lufkin & Jenrette Securities
Corporation.
3.15 Disclosure. Neither this Agreement nor any of the schedules or
other attachments hereto nor any document delivered by the Company to the
Purchaser pursuant hereto or in connection herewith contains any untrue
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statement of a material fact or omits a material fact necessary to make the
statements contained therein not misleading.
3.16 Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for the Company's own account, or
for the account of one or more of the Company's Subsidiaries or their customers,
if any, were entered into in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of the Company or one
of its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect. Neither the Company nor its
Subsidiaries, nor to the Company's knowledge, any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
3.17 Books and Records. The books and records of the Company and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of the Company and its Subsidiaries.
3.18 Insurance. The Company and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management of
the Company reasonably has determined to be prudent in accordance with industry
practices. All the insurance policies, binders, or bonds maintained by the
Company or its Subsidiaries are in full force and effect; the Company and its
Subsidiaries are not in material default thereunder; and all claims thereunder
have been filed in due and timely fashion.
3.19 Environmental Matters. To the best knowledge of the Company,
neither the conduct nor operation of the Company or its Subsidiaries nor any
condition of any property presently or previously owned, leased or operated
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by any of them (including, without limitation, in a fiduciary or agency
capacity), violates or violated Environmental Laws and no condition has existed
or event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws which violation or liability would have or
would reasonably be expected to have a Material Adverse Effect on the Company.
To the knowledge of the Company's executive officers, no property on which the
Company or any of its Subsidiaries holds a Lien, violates or violated
Environmental Laws and no condition has existed or event has occurred with
respect to any such property that, with notice or the passage of time, or both,
is reasonably likely to result in liability under Environmental Laws, which
violation or liability would have or would reasonably be expected to have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has received any notice from any person or entity that the Company
or its Subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from, any such property, which violation or
liability would have or would reasonably be expected to have a Material Adverse
Effect on the Company.
As used herein, the term "Environmental Law" means any federal, state
or local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection or restoration of the
environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, wetlands, indoor air, pollution, contamination or any injury or
threat of injury to persons or property in connection with any Hazardous
Substance and the term "Hazardous Substance" means any substance in any
concentration that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is or
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may be the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
3.20 Employee Benefit Plans.
(a) All employee benefit plans (within the meaning of Section 3(3) of
ERISA), other than "multiemployer plans" within the meaning of Section 3(37) of
ERISA (the "Plans"), covering current employees or former employees of the
Company and its subsidiaries (the "Employees"), to the extent subject to ERISA,
are in material compliance with ERISA. Except as set forth in Schedule 3.20, the
Company is not a party to any "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). There is no material pending or threatened litigation relating to the
Plans. Neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject the Company or any
Subsidiary to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA in an amount which would be material.
(b) No material liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Neither the Company, any of its Subsidiaries nor an
ERISA Affiliate has contributed to a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, at any time on or after September 26, 1980. No notice of
a "reportable event", within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been required to be filed
for any Pension Plan or by any ERISA Affiliate within the 12-month period ending
on the date hereof or will be required to be filed in connection with the
transactions contemplated by this Plan.
(c) All contributions required to be made under the terms of any Plan
have been timely made or have been
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reflected on the consolidated financial statements of the Company included in
the Regulatory Documents. Neither any Pension Plan nor any single-employer plan
of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of ERISA
and no ERISA Affiliate has an outstanding funding waiver. Neither the Company
nor any of its Subsidiaries has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(d) The consummation of the transactions contemplated by this Agreement
will not (x) entitle any employees of the Company or any of its Subsidiaries to
severance pay, (y) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Plans or deferred
compensation, stock option, stock purchase, stock appreciation rights, stock
based, incentive and bonus plans (collectively, the "Benefit Plans") or (z)
result in any breach or violation of, or a default under, any of the Benefit
Plans. Without limiting the foregoing, as a result of the consummation of the
transactions contemplated by this Agreement, none of the Purchaser, the Company
or any of its Subsidiaries will be obligated to make a payment to an individual
that would be a "parachute payment" to a disqualified individual" as those terms
are defined in Section 280G of the Code, without regard to whether such payment
is reasonable compensation for personal services performed or to be performed in
the future.
3.21 Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is the
Company or any of its Subsidiaries the subject of a proceeding asserting that it
or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel the Company or
any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to the Company's knowledge,
threatened, nor is the Company aware of any activity involving its or any of its
Subsidiaries' employees seeking
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to certify a collective bargaining unit or engaging in other
organizational activity.
SECTION 4
Representations, Warranties and
Acknowledgments of the Purchaser
The Purchaser hereby represents and warrants to the Company with
respect to the purchase of the Shares and Warrants hereunder as follows:
4.1 Execution, Delivery and Performance. The Purchaser has full power
and authority to execute and deliver this Agreement and each of the agreements
contemplated hereby to which the Purchaser is a party and to perform the
Purchaser's obligations hereunder and thereunder. This Agreement and each of the
agreements contemplated hereby to which the Purchaser is a party has been duly
authorized, executed and delivered by the Purchaser and is a valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights. No consent, approval, authorization, order,
filing, registration or qualification of or with any court, governmental
authority or third person is required to be obtained by the Purchaser in
connection with the execution and delivery of this Agreement or any of the
agreements contemplated hereby to which the Purchaser is a party or the
performance of the Purchaser's obligations hereunder or thereunder.
4.2 Investment. The Purchaser is acquiring the Shares and Warrants for
its own account and has no intention of distributing such securities or the
Warrant Shares in violation of the Securities Act or applicable state securities
or "blue sky" laws.
4.3 Organization. Purchaser is duly organized, validly existing and in
good standing under the laws of the state of its organization.
4.4 No Breach. The execution and delivery by the Purchaser of each of
the Documents and all other agreements
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and other instruments contemplated and the consummation of the transactions
contemplated thereby do not and will not (with or without the giving of notice,
the lapse of time or both) (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
Purchaser's or any Subsidiary's equity interests or assets, (iv) give any third
party the right to accelerate any obligation under, or (v) result in a violation
of, the Purchaser's certificate of formation and limited liability company
agreement, if the Purchaser is a limited liability company, or trust agreement,
if the Purchaser is a trust, or any law, statute, rule, regulation, instrument,
order, judgment or decree to which the Purchaser or any of its properties is
subject, or any contract to which the Purchaser is a party or by which it is
bound or to which any of its properties is subject, assuming that all applicable
waiting periods have expired under the HSR Act.
4.5 Financing. The Purchaser has or will have at the Closing funds
available to it to consummate the purchase of the Shares pursuant to the terms
of this Agreement.
SECTION 5
Conditions to the Purchaser's Obligations for the Closing
The obligation of the Purchaser to purchase and pay for the Shares and
Warrants to be purchased by the Purchaser at the Closing is subject to the
satisfaction on or before the date of the Closing of the following conditions:
5.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 3 hereof shall be true in all material
respects at and as of the Closing as though then made, except as expressly
contemplated thereby.
5.2 Registration Rights Agreement. A Registration Rights Agreement
substantially in the form of Exhibit A shall have been executed and delivered by
the Company and the Purchaser and shall be in full force and effect as of the
Closing.
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5.3 Warrant Agreement. A Warrant Agreement substantially in the form of
Exhibit B shall have been executed and delivered by the Company and the
Purchaser and shall be in full force and effect as of the Closing.
5.4 Opinion of the Company's Counsel. The Purchaser shall have received
from Barbara S. Polsky, General Counsel for the Company, her opinion, dated the
date of the Closing, in form and substance reasonably satisfactory to the
Purchaser, to the effect that, subject to customary exceptions:
(a) each of the Company and its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
state of its incorporation, and each of the Company and its Subsidiaries
has all requisite corporate power and authority to own and operate its
properties, to carry on its businesses as now conducted and to carry out
and perform its obligations under the terms of this Agreement, the Warrant
Agreement and the Registration Rights Agreement;
(b) the Company is duly licensed or qualified and is in good standing
as a foreign corporation in the State of California and each other
jurisdiction wherein the nature of the business transacted by the Company
or the nature of the property owned or leased by it requires such licensing
or qualification. Each of the Subsidiaries is duly licensed or otherwise
qualified in each state wherein the nature of the business transacted by
such Subsidiary or the nature of the property owned or leased by it
requires such licensing or qualification and where failure to be so
licensed or qualified would reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect on the Company;
(c) the authorized capital stock of the Company consists of 50,000,000
shares of Common Stock and 1,000,000 shares of preferred stock, and all of
the outstanding shares of the capital stock of the Company are validly
issued, fully paid and nonassessable; upon the issuance and sale of the
Shares, the Shares will be validly issued, fully paid and nonassessable;
and upon the valid exercise (including payment of the exercise
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price) of the Warrants, the Warrant Shares will be validly issued, fully
paid and nonassessable;
(d) the execution, delivery and performance of each of the Documents
and all other agreements and instruments contemplated thereby and the
consummation of all transactions contemplated thereby have been duly
authorized by all requisite corporate action of the Company; each of the
Documents and all other agreements and instruments contemplated thereby
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, equitable subordination, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing; and to the
best knowledge of such counsel (except as provided below), the execution
and delivery by the Company of each of the Documents and all other
agreements and other instruments contemplated and the consummation of the
transactions contemplated thereby do not and will not (with or without the
giving of notice, the lapse of time or both) result in the creation of any
lien, security interest, charge or encumbrance upon the Company's or any
Subsidiary's capital stock or assets or (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) give any third party the right to accelerate any obligation
under or (iv) result in a violation of, the Certificate of Incorporation or
Bylaws of the Company (where such opinion shall not be qualified as to such
counsel's best knowledge), or any law, statute, rule, regulation,
instrument, order, judgment or decree to which the Company or any of its
properties is subject, or any contract to which the Company is a party or
by which it is bound or to which any of its properties is subject;
(e) no consent, approval, authorization, registration or qualification
of any Governmental Authority or any third party is required to be obtained
by the Company or any of its Subsidiaries in connection with the execution,
delivery or performance by the Company of each of the Documents, except
such consents, approvals, authorizations, registration or
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qualifications as may be required under the HSR Act, which shall have been
received prior to the Closing, and state securities laws, the Securities
Act, the Exchange Act and the rules and regulations of the New York Stock
Exchange;
(f) the Company has authorized the issuance and sale to the Purchaser
of the Shares and Warrants; each share of Common Stock issued and sold to
the Purchaser hereunder has, and each Warrant Share issued upon the valid
exercise of Warrants will have, the rights set forth in the Company's
Certificate of Incorporation, and each Warrant has the terms and rights set
forth in the Warrant Agreement; and
(g) the acquisition of the Shares and the Warrants and the exercise of
the Warrants by the Purchaser will not cause the Purchaser or any of its
Affiliates to become (i) an "Acquiring Person" for purposes of the Rights
Agreement or (ii) subject to the restrictions against business combinations
contained in Section 203 of the Delaware General Corporation Law.
5.5 HSR Act. Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement or the Concurrent Purchase Agreement
under the HSR Act shall have expired or been terminated, and no action shall
have been instituted by the Department of Justice or the Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall have not been withdrawn or terminated.
5.6 Amendment of the Rights Agreement. The Company shall have caused
the Rights Agreement to be amended to provide that the Purchaser and its
Affiliates, so long as the Purchaser and its Affiliates beneficially owns shares
of Common Stock equal to at least 50% of the number of Shares purchased
hereunder shall be an "Exempt Person" under the Rights Agreement.
5.7 Proceedings. All corporate and other proceedings taken or required
to be taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing shall have been taken and all documents
incident thereto shall be satisfactory in form and substance to the Purchaser.
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5.8 Closing Documents. The Company shall have delivered to the
Purchaser on the date of such Closing:
(a) An Officer's Certificate dated the date of such Closing, stating
that the conditions set forth in Section 5.1 have been satisfied;
(b) Copies of the Certificate of Incorporation and the Bylaws of the
Company, each certified by an officer of the Company;
(c) Copies of the resolutions adopted by the Company's Board of
Directors, authorizing the transactions contemplated hereby; and
(d) Such other documents relating to the transactions contemplated by
this Agreement as the Purchaser or their counsel may reasonably request.
5.9 Waiver. Any condition specified in this Section 5 may be waived in
writing by the Purchaser.
SECTION 6
Conditions to the Company's Obligations for the Closing
The obligation of the Company to the Purchaser to issue and deliver the
Shares and Warrants to the Purchaser at the Closing is subject to the
satisfaction on or before the date of the Closing of the following conditions:
6.1 Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement shall be true and correct in all
material respects on and as of the date of the Closing as if made on and as of
such date; and the Purchaser shall have performed and complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by the Purchaser prior to or at the Closing.
6.2 Legal Matters. The Purchaser's purchase of and payment for the
Shares and Warrants shall not be prohibited by any applicable law, court order
or governmental regulation.
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<PAGE>
6.3 Closing Documents. The Purchaser shall have delivered to the
Company on the date of such Closing:
(a) Copies of the certificate of formation and limited liability
company agreement, if the Purchaser is a limited liability company, or trust
agreement, if the Purchaser is a trust, each certified by an officer, if the
Purchaser is a limited liability company, or the trustee, if the Purchaser is a
trust; and
(b) Such other documents relating to the transactions contemplated by
this Agreement as the Company or its counsel may reasonably request.
6.4 HSR Act. Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement or the Concurrent Purchase Agreement
under the HSR Act shall have expired or been terminated, and no action shall
have been instituted by the Department of Justice or the Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall have not been withdrawn or terminated.
6.5 Waiver. Any condition specified in this Section 6 may be waived in
writing by the Company.
6.6 Concurrent Purchase Agreement. The Concurrent Purchase Agreement
shall be consummated simultaneously with the Closing.
SECTION 7
Covenants
7.1 Financial Statements and Other Information.
(a) Prior to the Closing, the Company shall furnish to the Purchaser
copies of all filings made by the Company with the SEC, promptly following such
filing.
(b) Prior to the Closing, the Company shall furnish to the Purchaser
the same information that it provides its directors, except for discussions,
analyses and other information pertaining to this Agreement and the Documents.
In addition, the Company shall, prior to the
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Closing, furnish to the Purchaser prompt notice of (a) any material change in
its business, operations or prospects, (b) the institution or threat of material
litigation, (c) any material change in the number of outstanding shares of
Common Stock or preferred stock, and (d) any event or condition that constitutes
a breach of this Agreement, or that might be reasonably expected to cause its
representations and warranties set forth herein not to be true and correct in
all material respects as of the Closing.
7.2 Directors. At the Closing, or as soon as practicable thereafter,
the Company shall cause __________ to be elected to the Company's Board of
Directors and shall continue to recommend that such person or any other person
designated by the Purchaser be elected a member of the Board of Directors so
long as the Purchaser, the Concurrent Purchaser and their respective Affiliates
beneficially own in the aggregate shares of Common Stock equal to at least 50%
of the total number of Shares purchased hereunder and under the Concurrent
Purchase Agreement.
7.3 HSR Act Filing. If and when necessary, as promptly as practicable,
the Company and the Purchaser shall make all filings and submissions under the
HSR Act as may be reasonably required to be made in connection with this
Agreement and the transactions contemplated hereby. The Company shall furnish to
the Purchaser, and the Purchaser shall furnish to the Company, such information
and assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions.
7.4 Conditions to Closing. The Company and the Purchaser shall each use
their best efforts to cause the conditions to the Closing, as described herein
in Sections 5 and 6, to be satisfied, and to cause the Closing to occur promptly
after satisfaction of the conditions thereto.
7.5 Use of Proceeds. Any consideration received by the Company for the
sale of the Shares and Warrants to the Purchaser shall be used solely for
working capital purposes, capital expenditures, repayment of indebtedness or the
payment of business expenses.
7.6 Pledge of Shares. If the Purchaser, pursuant to Section 8.6,
pledges any Shares, Warrants or Warrant Shares to secure indebtedness or other
obligations, the
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Company agrees that such pledgee shall be entitled to rely on the Opinion of the
Company's Counsel delivered pursuant to Section 5.4 and each of the closing
documents delivered pursuant to Section 5.8 as if such opinion or certificate
was addressed to such pledgee, and the Company, if reasonably requested by such
pledgee, shall provide opinions of counsel, reliance letters, certificates or
other documents which provide that the representations and warranties contained
in Sections 3.1, 3.3(c), 3.4 (first two sentences only) and 3.8 are correct in
all material respects as if made on such later date and which state that such
pledgee shall be entitled to rely on the documents delivered pursuant to
Sections 5.4, 5.8(a), (b) and (c) and this Section 7.6 (each, a "bring-down
document") none of which will the Company be obligated to reconfirm or in any
way certify as of any date subsequent to the Closing; provided, that the Company
shall be obligated to provide such bring- down documents on no more than two
occasions without charge to the Purchaser, and thereafter, the Purchaser shall
be required to reimburse the Company for all reasonable expenses relating
thereto; provided, further, the Company's obligations under this Section 7.6
shall expire two years after the Closing.
7.7 No-Action Letter. At the request of the Purchaser, the Company
agrees to file with the Commission as soon as practicable after the Closing, but
in no event later than the 120th day after the Closing, a request for a no-
action letter to the effect that the Company may file a shelf registration
statement under the Securities Act to register the offer and sale by the Company
of the Warrant Shares and Other Warrant Shares after the occurrence of a
Purchase Event (as defined in the Warrant Agreement and Other Warrant Agreement,
as the case may be) and such filing would not result in the loss of the
exemption from the registration requirements under the Securities Act which was
relied on by the Company for the offer and sale of any of the Shares, Other
Shares, Warrants or Other Warrants. The Purchaser agrees to reimburse the
Company for reasonable fees, disbursements and expenses of one counsel retained
in connection with such no-action letter.
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SECTION 8
Miscellaneous
8.1 Expenses. Each party hereto shall bear all expenses incurred by it
in connection with this Agreement or the transactions contemplated hereby.
8.2 Additional Purchases of Common Stock. Nothing in this Agreement or
any of the Documents shall restrict the Purchaser from acquiring additional
shares of Common Stock whether through open market purchases or otherwise.
8.3 Amendments and Waivers. Except as otherwise provided herein, any
provision hereof may be amended or waived generally and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, if, but only if, the Company has obtained the written consent
of the Purchaser. No course of dealing between the Company or any of its
Subsidiaries, on the one hand, and the Purchaser on the other hand, or any delay
on the part of the Purchaser in exercising any rights hereunder or under any
agreement contemplated hereby, will operate as a waiver of any rights of any
such holder.
8.4 Termination. If the Closing does not occur by June 30, 1998, this
Agreement shall automatically terminate, and no party to this Agreement shall
have any liability or further obligation to any other party except that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
8.5 Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive for a period of one year from the date of the execution
and delivery of this Agreement, regardless of any investigation made by or on
behalf of any party.
8.6 Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement and all of the provisions hereto shall bind and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns whether so expressed or not, but, except as expressly contemplated
herein, neither this Agreement nor
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<PAGE>
any of the rights, interests or obligations hereunder shall be assigned,
directly or indirectly, by the Purchaser or the Company without the prior
written consent of the other; provided, that in connection with a bona fide
pledge of any Shares, Warrants or shares of common stock issuable upon exercise
of the Warrants to secure indebtedness or other obligations, the Purchaser may
assign its rights, interests and obligations hereunder to the beneficiary of
such pledge without the consent of the Company; and provided, further, that the
Purchaser may assign this Agreement to any Affiliate of the Purchaser or to
Concurrent Purchaser or any of its Affiliates without the consent of the
Company, so long as such assignment to any savings and loan institution, savings
and loan holding company, bank or similar regulated entity or any subsidiary of
the foregoing will not subject the Company or any of its Subsidiaries to
examination or supervision by any federal or state banking supervisory
authority.
8.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision shall be ineffective only to the extent of such invalidity,
illegality or unenforceability in such jurisdiction, without invalidating the
remainder of this Agreement in such jurisdiction or any provision hereof in any
other jurisdiction.
8.8 Entire Agreement. This Agreement, together with the Documents and
that certain Confidentiality Agreement by and between the Company and
__________, dated March 9, 1998, is the entire agreement among the parties and,
when executed by the parties hereto, supersedes all prior agreements and
communications, either verbal or in writing, with respect to the subject matter
contained herein.
8.9 Descriptive Headings; Language Interpreta tion. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement. In the interpretation of this Agreement,
unless the context otherwise requires, (a) words importing the singular shall be
deemed to import the plural and vice versa, (b) words denoting gender shall
include all genders,
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<PAGE>
(c) references to persons shall include corporations or other bodies and vice
versa, and (d) references to parties, sections, schedules, paragraphs and
exhibits shall mean the parties, sections, schedules, paragraphs and exhibits of
and to this Agreement.
8.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PROVISIONS THEREOF.
8.11 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
8.12 Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or three
days after being mailed by certified or registered mail, return receipt
requested and postage prepaid, to the recipient. Such notices, demands and other
communications will be sent to the Company and the Purchaser at the addresses
indicated below:
If to the Company:
Aames Financial Corporation
350 S. Grand Ave., 52nd Floor
Los Angeles, California 90071
Attn: Barbara S. Polsky
With a copy to:
Manatt, Phelps & Phillips LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Attn: William Quicksilver
If to the Purchaser:
------------------------
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<PAGE>
With a copy to:
Sullivan & Cromwell
444 South Flower Street, Suite 1200
Los Angeles, California 90071
Attn: Stanley F. Farrar
8.13 Remedies. The Company acknowledges that it would be impossible to
determine the amount of damages that would result from any breach by it of any
of the provisions of this Agreement and that the remedy at law for any breach,
or threatened breach, of any of such provisions would likely be inadequate and,
accordingly, agrees that the Purchaser shall, in addition to any other rights or
remedies which it may have, including recission of this Agreement, be entitled
to seek such equitable and injunctive relief as may be available from any court
of competent jurisdiction to compel specific performance of, or restrain the
Company from violating any of, such provisions. In connection with any action or
proceeding for injunctive relief, the Company hereby waives the claim or defense
that a remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have each provision of this Agreement specifically enforced
against it, without the necessity of posting bond or other security against it,
and consents to the entry of injunctive relief against it enjoining or
restraining any breach or threatened breach of this Agreement.
8.14 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
8.15 Publicity. Purchaser and the Company shall consult with each other
before issuing any press release with respect to this Agreement and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which shall not be reasonably withheld; provided,
however, that a party may, without the prior consent of the other party (but
after prior consultation, to the extent practicable in the circumstances) issue
such press release or make such public statement as may upon the advice of
counsel be required by
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law or the rules and regulations of the New York Stock Exchange.
8.16 Legend. The certificates evidencing the Shares and the shares of
Common Stock issuable upon exercise of the Warrant shall bear the following
legend until such time as such shares are registered under the Securities Act or
the Purchaser or any transferee thereof delivers an opinion of counsel
reasonably acceptable to the Company to the effect that such legend is no longer
required under the Securities Act:
THESE SECURITIES WERE SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
8.17 Transfer Opinion. Notwithstanding anything to the contrary stated
herein, the Company's transfer agent and registrar shall not be required to
reflect the transfer of the Shares on the Company's stock ledger unless such
Shares have been transferred pursuant to a registration statement which is
effective under Section 5 of the Securities Act or the Company's transfer agent
and registrar has received an opinion of counsel, who is reasonably acceptable
to the Company, that the transfer is exempt from registration under the
Securities Act.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
AAMES FINANCIAL CORPORATION
By:
---------------------------------
Name:
Title:
[PURCHASER]
By:
---------------------------------
Name:
Title:
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Exhibit B
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
Dated as of March 19, 1998
-By and Between-
AAMES FINANCIAL CORPORATION
and
[PURCHASER]
- --------------------------------------------------------------------------------
The securities represented by the Warrants referred to herein have not been
registered under the Securities Act of 1933, as amended. The transferability of
such securities and of any securities which may be issued upon the exercise of
such securities is subject to the provisions of this Warrant Agreement.
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Issuance of Warrants; Exercise Price.............................1
Section 2. Form of Warrant Certificates.....................................2
Section 3. Execution of Warrant Certificates................................2
Section 4. Registration; Transfers and Exchanges............................3
Section 5. Mutilated or Missing Warrant Certificates........................3
Section 6. Duration and Exercise of Warrants................................3
Section 7. Payment of Taxes; Transfer and Exchange Fees.....................7
Section 8. Adjustments; Notices.............................................8
Section 9. Fractional Warrants and Fractional Shares.......................16
Section 10. No Rights as Stockholders.......................................17
Section 11. Representations, Warranties and Covenants of
the Company.....................................................17
Section 12. Inspection of Warrant Agreement.................................20
Section 13. Issuance of New Warrant Certificates............................20
Section 14. Notices.........................................................20
Section 15. Supplements and Amendments......................................21
Section 16. Successors......................................................22
Section 17. Governing Law...................................................22
Section 18. Jurisdiction and Venue..........................................23
Section 19. Benefits of this Agreement......................................23
Section 20. Severability....................................................23
Section 21. Specific Performance............................................24
Section 22. Integration.....................................................24
Section 23. Further Assurances..............................................24
Section 24. Headings and Table of Contents..................................24
Section 25. Counterparts....................................................25
Section 26. Legends.........................................................25
Section 27. Opinion on Transfer of Warrant Shares
After Exercise................................................25
EXHIBIT A. FORM OF WARRANT CERTIFICATE
EXHIBIT B. FORM OF ASSIGNMENT
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WARRANT AGREEMENT (this "Agreement"), dated as of March 19, 1998, by
and among Aames Financial Corporation, a Delaware corporation (the "Company")
and , a (the "Purchaser").
WHEREAS, the Company and the Purchaser have entered into a Stock
Purchase Agreement, dated as of the date hereof (the "Stock Purchase
Agreement"); and
WHEREAS, pursuant to the Stock Purchase Agreement, as consideration for
the purchase of shares of Common Stock ("Common Stock"), par value
$.001 per share, of the Company (the "Purchase Shares"), the Company will issue
to the Purchaser at the Closing (as defined in the Stock Purchase Agreement)
warrants to purchase shares of Common Stock (each a
"Warrant" and collectively, "Warrants"), at an exercise price of $17.2031 per
share, subject to adjustment as provided herein; and
WHEREAS, the Company and the Purchaser have entered into a Registration
Rights Agreement, dated as of the date hereof, providing for certain matters
relating to the registration of the Purchase Shares and the Common Stock
issuable upon exercise of the Warrants under the Securities Act of 1933, as
amended (the "Securities Act");
WHEREAS, the Company and (the "Other Purchaser") have
entered into a stock purchase agreement, dated the date hereof (the "Other Stock
Purchase Agreement"), providing for, among other things, the sale by the Company
and the purchase by the Other Purchaser of an aggregate of shares of
Common Stock and warrants to purchase shares of Common Stock at an
initial exercise price of $17.2031 per share, a warrant agreement, dated the
date hereof, relating to such warrants (the "Other Warrant Agreement");
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Issuance of Warrants; Exercise Price. Pursuant to the Stock
Purchase Agreement, the Company shall issue and deliver to the Purchaser one or
more warrant certificates (each a "Warrant Certificate") representing an
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aggregate of Warrants. Each Warrant shall initially provide the
Purchaser, or such other registered holder of such Warrant to whom transfer is
authorized in accordance with the terms of this Agreement (the Purchaser and
such other registered holder(s) are hereinafter referred to individually as the
"Registered Holder" and collectively as the "Registered Holders"), with the
right to purchase initially one fully paid and nonassessable share of Common
Stock (a "Share" and, collectively, the "Shares") in consideration of the
payment by the Registered Holder of the exercise price (the "Exercise Price") at
the time in effect hereunder. The Exercise Price shall initially be $17.2031 per
Warrant. The Exercise Price and the number of Shares issuable upon exercise of a
Warrant (the "Warrant Exercise Rate") shall be subject to adjustment as provided
in Section 8.
Section 2. Form of Warrant Certificates. The Warrant Certificates
representing the Warrants and the Forms of Exercise and Assignment attached
thereto shall be substantially in the forms set forth in Exhibits A and B
attached hereto. The Warrant Certificates shall be typewritten, printed,
lithographed or engraved and may have such letters, numbers or other marks of
identification and such legends or endorsements as may be required to comply
with any applicable law, rule or regulation or with the rules of any securities
exchange or as may, consistent with the provisions of this Agreement, be
determined by the officers executing any such Warrant Certificate, as evidenced
by their execution of the Warrant Certificate. Each Warrant Certificate shall
contain a legend substantially as set forth in the Form of Warrant Certificate
attached hereto as Exhibit A.
Section 3. Execution of Warrant Certificates. The President or any Vice
President of the Company shall execute the Warrant Certificates on behalf of the
Company, and the official seal of the Company (which may be in facsimile form)
shall be reproduced on the Warrant Certificates and attested by the Secretary or
any Assistant Secretary of the Company. The signatures of the President or any
Vice President and of the Secretary or any Assistant Secretary on any Warrant
Certificate may be manual or facsimile. Warrant Certificates may bear the manual
or facsimile signatures of individuals who were at the time of execution of such
Warrant Certificates the proper officers
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<PAGE>
of the Company notwithstanding that such individuals, or any of them, ceased to
be such officers prior to the delivery of such Warrant Certificate or were not
such officers at the date of this Agreement.
Section 4. Registration; Transfers and Exchanges. The Company shall
maintain at its executive offices a register reflecting the ownership of the
Warrant Certificates and any transfers thereof from time to time (the "Warrant
Register").
The Company may deem and treat the Registered Holder of each Warrant
Certificate as indicated in the Warrant Register as the absolute owner thereof
(notwith standing any notation of ownership or other writing thereon made by
anyone) for the purpose of any exercise thereof, any distribution to the
Registered Holder thereof and for all other purposes, and the Company shall not
be affected in any way by any notice to the contrary.
Upon execution and delivery of a written notice in the form of Exhibit
B to the Company by the Registered Holder and its transferee of a transfer of
any Warrant Certificate, the Company shall reflect such transfer in the Warrant
Register.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate at any time becomes mutilated, lost, stolen or destroyed, the
Company will issue in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and in substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant Certificate and indemnity reasonably satisfactory to the Company.
Section 6. Duration and Exercise of Warrants.
(a) The Warrants shall expire on April 19, 2001 (the "Expiration
Date"), notwithstanding any change in the capitalization of the Company as
a result of any stock split, stock dividend, stock combination or
otherwise. Each Warrant may be exercised by the Registered Holder thereof
only upon the occurrence of a
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<PAGE>
Purchase Event (as defined below) of the Company. Thereafter, Warrants may
be exercised on any business day beginning on the date of the Purchase
Event and prior to the close of business on the Expiration Date. Each
Warrant not exercised at or before the close of business on the Expiration
Date shall become void and of no value, and all rights of the Registered
Holder under the Warrant Certificate and under this Agreement shall cease.
(b) For purposes of this Section 6, the following terms shall have the
meanings ascribed to them:
"Purchase Event" shall mean any of the following events or transactions
occurring after the date hereof:
(i) The Company or any of its subsidiaries shall have entered into
an agreement to engage in an Acquisition Transaction (as defined below)
with any Person (the term "Person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
and regulations thereunder) other than Ronald O. Perelman, Gerald J.
Ford or any of their respective affiliates which is not a Person with
equity securities listed on a national securities exchange or quoted on
the Nasdaq National Market (each, a "Non-Public Purchaser Affiliate")
or the Board of Directors of the Company shall have recommended that
the shareholders of the Company approve or accept any Acquisition
Transaction with any Person other than a Non-Public Purchaser
Affiliate. For purposes of this Section 6, "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving the Company or any of its significant subsidiaries, (y) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Company or any significant subsidiary or (z) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 50% or more of the
voting power of the Company or any of its significant subsidiaries,
provided that the term "Acquisition Transaction" does not
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<PAGE>
include any internal merger, consolidation, or similar transaction
involving solely the Company and one or more of its subsidiaries or a
merger, consolidation or similar transaction as to which the holders of
the Company's common stock immediately prior thereto own in the
aggregate at least 50% of the common stock of the publicly held
surviving or successor corporation or any publicly held ultimate parent
company thereof immediately after giving effect thereto.
(ii) Any Person (other than a Non-Public Purchaser Affiliate or
any subsidiary of the Company acting in a fiduciary capacity in the
ordinary course of business) shall have acquired Beneficial Ownership
of shares of Common Stock (the term "Beneficial Ownership" for purposes
of this Section 6, having the meaning assigned thereto in Section 13(d)
of the Exchange Act, and the rules and regulations thereunder) such
that, upon the consummation of such acquisition, such Person would have
Beneficial Ownership, in the aggregate, of 50% or more of the then
outstanding shares of Common Stock;
(iii) Any Person other than any Non-Public Purchaser Affiliate
shall have made a bona fide proposal to the Company or its
shareholders, by public announcement or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction (including, without limitation, any situation
in which any Person other than a Non-Public Purchaser Affiliate shall
have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securi ties Act, with respect to, a tender offer or exchange offer to
purchase any shares of Common Stock such that, upon consummation of
such offer, such Person would own or control 50% or more of the then
outstanding shares of Common Stock; and
(iv) The first day on which a majority of the members of the Board
of Directors of the Company are not "Continuing Directors" (defined as
members of the Board of Directors of the Company
-5-
<PAGE>
who (A) were members of such Board on the date hereof or (B) were
nominated for election or elected to such Board pursuant to the Stock
Purchase Agreement, the Other Stock Purchase Agreement, or with the
approval of a majority of the Continuing Directors who where members of
such Board at the time of such nomination or election).
"Business day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Los Angeles,
California are authorized or obligated by law or executive order to close.
(c) The Company shall notify the Purchaser promptly in writing of the
occurrence of any Purchase Event (other than by a Non-Public Purchaser
Affiliate).
(d) Subject to the provisions of this Agreement, the Registered Holder
of a Warrant Certificate shall have the right to exercise the Warrant or
Warrants evidenced by such Warrant Certificate by delivering the Warrant
Certificate, along with the Form of Exercise attached thereto duly filled
in and executed by the Registered Holder or his duly authorized agent, and,
upon such exercise, to purchase from the Company at a purchase price equal
to the Exercise Price then in effect multiplied by the number of Warrants
so exercised (such product, the "Aggregate Exercise Price") the number of
Shares at the time purchasable upon exercise of such Warrant or Warrants,
including any shares of any class or series of stock into which such Shares
may hereafter be changed upon surrender to the Company of the Warrant
Certificate evidencing such Warrant or Warrants, upon payment of the
Aggregate Exercise Price in lawful money of the United States of America in
cash, by cashier's check payable to the order of the Company or by wire
transfer to the Company's account of immediately available funds. The
number of Shares, and the amount and type of securities or other property,
purchasable upon exercise of a Warrant shall be subject to adjustment as
provided in Section 8.
(e) Subject to Section 7, (i) upon such surrender of a Warrant
Certificate and payment of the Aggregate
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<PAGE>
Exercise Price with respect to the Warrant or Warrants being exercised on
or prior to the Expiration Date, the Company shall deliver or cause to be
delivered to the Registered Holder surrendering such Warrant Certificate
certificates for the Shares, certificates or other appropriate instruments
for any other securities, and such other property issuable upon the
exercise of such Warrant or Warrants evidenced by such Warrant Certificate
being exercised, in such name or names as the Registered Holder of such
Warrant Certificate shall designate on the Form of Exercise attached
thereto and bearing such restrictive legends concerning transferability as
the Company deems necessary; and (ii) such Shares, securities and other
property shall be deemed to have been issued, and any person so designated
therein shall be deemed to have become the holder of record of such Shares,
securities or property as of the date of the surrender of such Warrant
Certificate and payment of the Aggregate Exercise Price.
(f) All or fewer than all of the Warrants evidenced by a Warrant
Certificate may be exercised on any occasion. In the event that fewer than
all of the Warrants represented by a Warrant Certificate are exercised,
upon such exercise the Company shall execute and deliver to the Registered
Holder thereof or, subject to Section 4 hereof, such person or entity as
shall be designated in the Form of Exercise attached to such Warrant
Certificate a new Warrant Certificate representing the Warrants not so
exercised.
Section 7. Payment of Taxes; Transfer and Exchange Fees. The Company
shall not be required to pay any transfer, documentary, stamp or other taxes
imposed under any federal, state or local laws on Warrant Certificates issued
pursuant to transfers or exchanges or under other circumstances covered in
Sections 4, 5 or 9 hereof.
The Company shall pay any tax or taxes or government charges of any
kind that may be payable in respect of any issuance of any stock certificates
for the Shares, any certificates or other instruments for any other securities,
or any other property purchased upon exercise of a Warrant.
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Section 8. Adjustments; Notices. The Exercise Price and the number of
Shares purchasable upon the exercise of each Warrant are subject to adjustment
from time to time as provided in this Section.
(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock,
the Exercise Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying
such Exercise Price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination and the denominator shall be the sum
of such number of shares plus the total number of shares constituting such
dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination; and in the event that such dividend or other
distribution is not so made, or is made in part, the Exercise Price shall
again be adjusted to the Exercise Price which would then be in effect (i)
if such record date has not been fixed or (ii) based on the actual number
of shares actually issued, as the case may be.
(b) In case the Company shall issue shares of Common Stock at a price,
or securities convertible into, exchangeable for or exercisable for shares
of Common Stock ("Convertible Securities") having a Conversion Price (as
defined below), per share less than the current fair market value per share
(determined as provided in paragraph (f) of this Section 8) of the Common
Stock on the date such shares or Convertible Securities are issued, the
Exercise Price in effect at the opening of business on the day following
the date on which such shares or Convertible Securities are issued shall be
reduced by multiplying such Exercise Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date on which such shares or Convertible
Securities are issued plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of
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shares of Common Stock so issued, or the number of shares of Common Stock
which the aggregate of the Conversion Price of such Convertible Securities
so issued, would purchase at such current fair market value and the
denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date on which such shares or Convertible
Securities are issued plus the number of shares of Common Stock so issued
or the number of shares of Common Stock issuable upon conversion, exchange
or exercise of such Convertible Securities so issued, such reduction to
become effective immediately after the opening of business on the day
following the date on which such shares are issued.
For purposes of this Section 8(b), the total offering price of any
securities is the offering price to the public before deduction of
underwriting discounts and commissions, and "Conversion Price" of any
Convertible Securities is the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible
Securities (before deduction of underwriting discounts and commissions)
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion, exchange or exercise thereof.
Notwithstanding the foregoing, no adjustment to the Exercise Price
shall be made (i) on the account of the issuance of any Purchase Shares or
shares of Common Stock pursuant to the Other Stock Purchase Agreement, (ii)
on the account of the grant or issuance of any option or securities either
prior to or after the date hereof pursuant to any employee benefit plans of
the Company, (iii) on the account of the grant of any Warrants or issuance
of any Shares or other securities pursuant to this Agreement, the Stock
Purchase Agreement, the Other Stock Purchase Agreement or the Other Warrant
Agreement; or (iv) on the account of the issuance of any securities upon
the conversion of the Company's outstanding 5.5% Convertible Subordinated
Debentures Due 2006.
In case part or all of the subscription or purchase price for the
Common Stock shall be in a form other than cash, the value of such
consideration shall
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be as determined in good faith by the vote of a majority of the Board of
Directors of the Company other than any director who is a Registered
Holder, the nominee of a Registered Holder or any affiliate, director,
officer, trustee, beneficiary or employee of a Registered Holder (the
"Non-Interested Directors").
(c) In case the Company shall (i) subdivide its outstanding shares of
Common Stock into a greater number of shares, (ii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iii) issue by
reclassification of its shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation) any shares of capital stock (any
such subdivision, combination or reclassification a "Change of Shares"),
the Exercise Price in effect at the effective date of such Change of Shares
shall be proportionally adjusted so that the holder of any Warrants
exercised after such time shall be entitled to receive the aggregate number
and kind of shares which, if such Warrants had been converted immediately
prior to such time, paying the same aggregate consideration, he would have
owned upon such exercise and been entitled to receive upon such Change of
Shares. Such adjustment shall become effective immediately after the
effective date of such Change of Shares.
(d) In case the Company shall fix a record date for the making of a
distribution, by dividend or otherwise, to all holders of its Common Stock
evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in paragraph (b) of this
Section, any dividend or distribution paid in cash out of the retained
earnings of the Company and any dividend or distribution referred to in
paragraph (a) of this Section), the Exercise Price in effect after the
record date shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to
the close of business on the record date by a fraction of which the
numerator shall be the current fair market value per share (determined as
provided in paragraph (f) of this Section) of the Common Stock on the date
fixed for such determination
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less the then fair market value (as determined by the vote of a majority of
the Non-Interested Directors of the Company, whose determination shall be
conclusive and described in a resolution of the Board of Directors of the
Company) of the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock and the denominator
shall be such current fair market value per share of the Common Stock, such
adjustment to become effective immediately prior to the opening of business
on the day following the record date. In the event that such distribution
is not so made, the Exercise Price shall again be adjusted to the Exercise
Price which would then be in effect if such record date has not been fixed.
(e) Upon each adjustment of the Exercise Price pursuant to this
Section, each Warrant outstanding immediately prior to such adjustment
shall thereafter constitute the right to purchase, at the adjusted Exercise
Price per share, an adjusted number of Shares determined (to the nearest
one-hundredth of a Share) by multiplying the number of Shares purchasable
upon exercise of a Warrant immediately prior to such adjustment 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.
(f) For the purpose of any computation under paragraphs (b) and (d) of
this Section, the current fair market value per share of Common Stock on
any date shall be (a) the arithmetic average of the daily last sale prices
of the Common Stock for the 15 consecutive trading days commencing 25
trading days prior to such time, as officially reported on the principal
national securities exchange on which the Common Stock is then listed (or
the NASDAQ if the Common Stock is not listed on a national securities
exchange but is designated as a national market system security by the
NASD) or (b) if the Common Stock is not then listed or quoted on the
over-the-counter market, the fair market value of the Common Stock as
determined by the Company's Board of Directors.
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(g) The Company may make such reductions in the Exercise Price, in
addition to those otherwise required by this Section, as it considers to be
advisable in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to the
recipients.
(h) No adjustment under this Section in the Exercise Price (and,
therefore, no adjustment in the number of Shares purchasable upon the
exercise of Warrants) shall be required unless such adjustment would
require an increase or decrease of at least $0.25 in such price; provided,
however, that any adjustments which by reason of this paragraph are not
required to be made shall be carried forward and taken into account in
determining any subsequent adjustment. All calculations under this Section
shall be made to the nearest one-hundredth of a cent or to the nearest
one-hundredth of a Share, as the case may be.
(i) Whenever the Exercise Price and the number of Shares purchasable
upon the exercise of a Warrant are adjusted as herein provided, the Company
shall as soon as practicable, but in no event later than 30 calendar days
thereafter:
(i) compute the adjusted Exercise Price in accordance with this
Section and shall prepare a certificate signed by the principal
accounting officer of the Company or any other appropriate officer or
official of the Company setting forth the adjusted Exercise Price and
the adjusted number of Shares purchasable upon the exercise of Warrants
and showing in reasonable detail the facts upon which such adjustments
are based; and
(ii) cause to be given notice to each of the Registered Holders at
such Registered Holder's address appearing in the Warrant Register.
Such notice shall set forth the adjusted Exercise Price and the
adjusted number of such Shares. Where appropriate, any such notice may
be given in advance and included as part of any other notice required
to be mailed under the other provisions of this Section.
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The failure to give the notice required in this paragraph or any
defect therein shall not affect the legality or validity of the event
causing the adjustment of the Exercise Price and the number of Shares
purchasable upon the exercise of the Warrant or the vote thereon or any
other action taken in connection therewith.
(j) In case:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of
its retained earnings; or
(ii) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class (or securities convertible into
shares of capital stock of any class) or of any other rights or shall
issue shares of Common Stock; or
(iii) any of the following transactions occur -- any
reclassification of the capital stock of the Company (other than a
subdivision or combination of its outstanding shares of Common Stock),
any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or any
sale or transfer of all or substantially all of the assets of the
Company; or
(iv) the Company shall be (voluntarily or involuntarily)
dissolved, liquidated or wound up;
then the Company, if notice of such event is being mailed to the holders of
the Common Stock, shall cause to be mailed to the Registered Holders, at or
prior to the time notice of such event is mailed to the holders of the
Common Stock, a copy of the notice being mailed to the holders of the
Common Stock. The failure to give the notice required in this paragraph or
any defect therein shall not affect the legality or validity of any
dividend, distribution, right, warrant, consolidation, merger, sale,
transfer, dissolution,
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liquidation or winding up or the vote thereon or any other action taken in
connection therewith.
(k) In any case in which this Section 8 shall require that any
adjustment in the Exercise Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
the event issuing to the Registered Holder of any Warrants exercised after
that record date the Shares or other capital stock of the Company, if any,
issuable upon exercise over and above the Shares or other capital stock of
the Company, if any, issuable upon the exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to the holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(l) In case the Company shall have issued Convertible Securities and
the Exercise Price was adjusted pursuant to Section 8(b), upon the
expiration of such Convertible Securities or upon the expiration of such
securities' conversion privilege, the number of Shares purchasable upon
exercise of a Warrant and the Exercise Price, to the extent such Warrant
has not then been exercised, shall, upon such expiration, 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) on the basis of (A) the fact that the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold
upon the exercise of such Convertible Securities, and (B) the fact that
such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for the issuance,
sale or grant of all such Convertible Securities whether or not exercised;
provided, however, that no such readjustment shall have the effect of
increasing the Exercise Price by an amount in excess of the amount of the
adjustment initially made in respect to the issuance, sale or grant of such
Convertible Securities.
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<PAGE>
(m) In case of any consolidation of the Company with or merger of the
Company into any other person, any merger of another person into the
Company (other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock
of the Company) or any sale or transfer of all or substantially all of the
assets of the Company, each Warrant then outstanding shall thereafter, at
the then Exercise Price and upon the other terms and conditions specified
in this Agreement, be exercisable for the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company
issuable upon exercise of such Warrant immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common
Stock of the Company is not a person with which the Company consolidated or
into which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be (a "Constituent
Person"), or a person directly or indirectly controlling, controlled by, or
under common control with a Constituent Person (an "Affiliate"), and failed
to exercise its rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer is not the same for each share of Common Stock of
the Company held immediately prior to such consolidation, merger, sale or
transfer by others than a Constituent Person or Affiliate thereof or in
respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon each such
consolidation, merger, sale or transfer by each Non-Electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of
the Non-Electing Shares). Prior to or simultaneously with effecting any
such consolidation, merger, sale or transfer, the person formed by such
consolidation or the successor resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to each
Registered Holder
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a supplemental warrant agreement containing provisions to the effect set
forth in the previous sentence and providing for adjustments which, for
events subsequent to the effective date of such supplemental warrant
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section and containing an agreement to be
bound by the provisions of this Agreement.
(n) Upon the occurrence of any event requiring an adjustment of the
Exercise Price as described above, if the foregoing adjustments do not
result in the kind and number of shares of Common Stock to be issued upon
exercise of the Warrants having substantially equal value after such event
as the kind and number of shares of Common Stock issuable upon exercise of
the Warrants immediately prior to such event, the Company shall make such
other or additional adjustments to the Exercise Price and the Warrant
Exercise Rate as may be required to carry out the intention of the parties
that no such event shall result in any increase or decrease in the value of
such Warrants.
(o) The above adjustments shall be made, to the extent applicable,
successively whenever any event described above shall occur.
(p) Irrespective of any adjustments in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the
same Exercise Price per Share and number and kind of Shares as are stated
on the Warrant Certificates initially issuable pursuant to this Agreement.
Section 9. Fractional Warrants and Fractional Shares. The Company shall
not be required to exchange or transfer Warrants for fractions of Warrants. The
Company will not be required to issue any fractional Warrants representing
fractional shares of Common Stock or other distributed securities upon exercise
of the Warrants or distribute stock certificates or other instruments that
evidence fractional shares of Common Stock or other distributed securities and
the Company will not pay any cash adjustment in respect of any fractional shares
of Common
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Stock or other distributed securities otherwise issuable upon the exercise of
any Warrant.
Section 10. No Rights as Stockholders. Nothing contained in this
Agreement or in any of the Warrant Certificates shall be construed as conferring
upon the Registered Holder thereof the right to vote, receive dividends or to be
deemed for any purpose the holder of Common Stock or of any other securities of
the Company that may at any time be issuable on the exercise of the Warrant
Certificates, nor shall anything contained herein or in the Warrant Certificates
be construed to confer upon the Registered Holders thereof, as such, any of the
rights of a stockholder of the Company or any right to vote on matters submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or, without limitation, otherwise) or to receive notice of meetings,
or to receive subscription rights or otherwise, until the Warrants evidenced by
the Warrant Certificates shall have been exercised as provided herein.
Section 11. Representations, Warranties and Covenants of the Company.
The Company represents, warrants and agrees with each Registered Holder that:
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. The Company has
all requisite corporate power and authority to carry out and perform its
obligations under this Agreement.
(b) The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock and 1,000,000 shares of preferred stock. At March 17,
1998, there was outstanding 27,823,317 shares of Common Stock and 0 shares of
preferred stock. At February 28, 1998, the Company had outstanding 5,037,121
options to purchase shares of Common Stock, which options were duly granted
pursuant to the 1991 Stock Incentive Plan, 1995 Stock Incentive Plan, 1996 Stock
Incentive Plan, 1997 Non-Qualified Stock Option Plan, 1997 Stock Option Plan and
outside of any such plans. Each such plan has been duly approved by the Board of
Directors and, except for the 1997 Non-Qualified Stock Option Plan, stockholders
of the Company. 5,315,505 shares of Common
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Stock are reserved for issuance upon exercise of such options, 6,106,617 shares
of Common Stock are reserved for issuance upon conversion of the Company's 5.5%
Subordinated Convertible Debentures due 2006. 500,000 Shares of preferred stock
are reserved for issuance upon exercise of the Rights distributed to holders of
Common Stock pursuant to the Rights Agreement, 1,124,184 shares of Common Stock
are reserved for issuance under the Company's Dividend Reinvestment and Stock
Purchase Plan and 562,500 shares of Common Stock are reserved for issuance under
the Company's Stock Purchase Plan.
(c) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms except as such enforceability may be
subject to any applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, equitable subordination or other laws relating to or affecting
creditor's rights and general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing; and neither the issuance of the Warrants nor the issuance of the shares
of Common Stock issuable upon exercise of the Warrants will result in a breach
or violation of any terms or provisions of, or constitute a default under, any
contract, indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company is currently a party or by which the Company
is currently bound, the Certificate of Incorporation or Bylaws of the Company,
or any law, order, rule, regulation or decree of any government, governmental
agency or court, domestic or foreign, currently applicable to the Company, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company, except for such breaches, violations or
defaults as, individually and in the aggregate, do not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole, assuming that all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") have expired or been terminated and all applicable
filings pursuant to state securities laws, the HSR Act, the Securities Act, the
Exchange Act and the rules and regulations of the New York Stock Exchange have
been made.
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(d) No consent, approval, authorization or order of any court or
governmental agency or body or any third party is required to be obtained by the
Company for the sale and issuance of the Warrants or the issuance of the shares
of Common Stock issuable upon exercise of the Warrants except such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities laws, the HSR Act, the Securities Act, the Exchange Act
and the rules and regulations of the New York Stock Exchange. Upon the valid
exercise of the Warrants by a Registered Holder thereof, the shares of Common
Stock with respect to which the Warrants are exercised shall be fully paid and
nonassessable.
(e) The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Agreement or of the Warrants.
(f) The Company shall not consolidate with or merge into any other
corporation or sell, transfer or lease its properties and assets as an entirety
or substantially as an entirety to any entity, unless the entity formed by such
consolidation or into which the Company is merged or the entity which acquires
by sale or transfer, or which leases, the properties and assets of the Company
as an entirety or substantially as an entirety shall be a corporation, company,
partnership or trust, shall be organized and validly existing under the laws of
the United States of America, any State thereof or the District of Columbia and
shall expressly assume, by supplemental agreement, the due and punctual
performance and observance of each and every obligation, covenant and condition
of this Agreement to be performed or observed by the Company. Upon any such
consolidation, merger, sale, transfer or lease in accordance with the preceding
sentence, such entity shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Agreement with the same effect
as if such successor entity had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor entity shall be
relieved of all obligations and covenants under this Agreement and the Warrants.
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(g) The Company covenants to at all times keep reserved and available,
for the purpose of effecting the exercise of the Warrants, free from preemptive
rights, out of its authorized but unissued Common Stock the full number of
shares of Common Stock sufficient to provide for the exercise of all rights of
purchase represented by all outstanding Warrants.
Section 12. Inspection of Warrant Agreement. The Company shall keep
copies of this Agreement and any notices given or received hereunder available
for inspection by Registered Holders during normal business hours at its
executive offices.
Section 13. Issuance of New Warrant Certificates. Notwithstanding any
of the provisions of this Agreement or of the Warrants to the contrary, the
Company may, at its option, issue new Warrant Certificates evidencing Warrants
in such form as may be approved by its Board of Directors which reflect any
adjustment or change in the number or kind or class of shares of stock or other
securities or property purchasable under the Warrant Certificates made in
accordance with the provisions of this Agreement. The Company may, at its
option, require Registered Holders of Warrants to surrender their old Warrant
Certificates for any such new Warrant Certificates. The Company shall make no
service or other charge in connection with any such exchange or Warrant
Certificates, except for any taxes payable in connection therewith.
Section 14. Notices. All instructions, notices and other communications
to be given to any party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid and return
receipt requested, and shall be deemed to be given for purposes of this
Agreement on the day when delivered to the intended party at its address
specified below:
(a) If to the Company:
Aames Financial Corporation
350 South Grand Avenue, 52nd Floor
Los Angeles, California 90071
Attention: Barbara S. Polsky
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With copy to:
Manatt, Phelps & Phillips LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: William Quicksilver
or such other address as the Company may designate from time to time by written
notice to the Registered Holder.
(b) If to the Registered Holder, then at the address as set forth in
the Warrant Register or such other address as the Registered Holder may
designate from time to time by written notice to the Company.
Section 15. Supplements and Amendments. The Company and the Registered
Holders of a majority of the then outstanding Warrants may from time to time
supplement or amend this Agreement, without the approval of any other Registered
Holders, in order to cure any ambiguity or to correct or supplement any
provision contained herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder that the Company and such Registered Holders may
deem necessary or desirable and that shall not adversely affect the interests of
the Registered Holders. This Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a written instrument
duly executed by the Company and the Registered Holders of a majority of the
then-outstanding Warrants; provided, however, that no such amendment or waiver
shall, without the consent of the Registered Holder of each outstanding Warrant
affected thereby, (a) alter the provisions of this Agreement so as to affect
adversely the Exercise Price, the number of shares of Common Stock purchasable
upon exercise of a Warrant, or the adjustment provisions of Section 8, or (b)
reduce the number of Warrants outstanding the consent of whose Registered
Holders is required for any such amendment or waiver. Each Registered Holder
shall be bound by any amendment or waiver effected pursuant to this Section 15,
whether or not any notice, writing or marking indicating such amendment or
waiver appears on the certificates for the Warrants held by such Registered
Holder or is delivered to such Registered Holder.
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Section 16. Successors. This Agreement shall be binding upon and inure
to the benefit of the respective successors and permitted assigns hereunder of
the Company or any Registered Holder. In the event that any transferee of a
Registered Holder shall acquire Warrants, in any manner, whether by gift,
bequest, purchase, operation of law or otherwise, such transferee shall, upon
the execution and delivery to the Company of an assignment in the form of
Exhibit B hereto, be deemed a party hereto for all purposes and such Warrants
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Warrants, such transferee shall be entitled to receive the benefits
of and be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement. In addition, in connection with a
bona fide pledge of any Warrants to secure indebtedness or other obligations, a
Registered Holder may assign its rights, interests and obligations hereunder to
the beneficiary of such pledge; provided that if the beneficiary of such pledge
becomes, or through the exercise of remedies under such pledge causes another
person to become, a Registered Holder of Warrants, such Registered Holder agrees
to be bound by the terms of this Agreement by execution and delivery to the
Company of written notice in the form of Exhibit B pursuant to Section 4 or
otherwise; and provided further that unless and until the immediately preceding
proviso is applicable, the pledgor shall remain bound by the terms of this
Agreement. The Company shall not have either the right or the power to assign or
delegate any right or obligation hereunder (except by merger or other operation
of law) without the written consent of Registered Holders holding a majority of
the then outstanding Warrants.
SECTION 17. GOVERNING LAW. THIS AGREEMENT, EACH WARRANT CERTIFICATE AND
EACH WARRANT ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO CONFLICT OF
LAWS PROVISIONS THEREOF.
Section 18. Jurisdiction and Venue. Each of the parties hereto hereby
irrevocably submits in any legal action or proceeding relating to or arising out
of this Agreement or any other document relating hereto or delivered in
connection with the transactions contemplated hereby, or for recognition and
enforcement of any judgment in respect thereof, to the exclusive jurisdiction of
the United States
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District Court for the District of Delaware (or if such court does not have
jurisdiction, the courts of the State of Delaware, Newcastle County, and
appellate courts thereof. Each of the parties hereto further (a) consents that
any such action or proceeding may be brought in such court and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; (b) agrees that
service of process in any such action or proceeding may be effected by personal
delivery thereof to such party's registered office in the jurisdiction in which
it is incorporated, with a copy to such party at its address as provided in
Section 14; and (c) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law.
Section 19. Benefits of this Agreement. Except as otherwise provided
for in Section 16, nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Registered Holders of the
Warrant Certificates any legal or equitable right, remedy or claim under this
Agreement, and this Agreement shall be for the sole and exclusive benefit of the
Company and the Registered Holders of the Warrant Certificates.
Section 20. Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held or
rendered invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
affected or impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.
Section 21. Specific Performance. The Company acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach by it of any of the provisions of this Agreement and that the remedy
at law for any breach, or threatened breach, of any of such provisions would
likely be inadequate and, accordingly, agrees that each Holder shall, in
addition to any other rights or remedies which it may have, be entitled to seek
-23-
<PAGE>
such equitable and injunctive relief as may be available from any court of
competent jurisdiction to compel specific performance of, or restrain the
Company from violating any of, such provisions. In connection with any action or
proceeding for injunctive relief, the Company hereby waives the claim or defense
that a remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have each provision of this Agreement specifically enforced
against it, without the necessity of posting bond or other security against it,
and consents to the entry of injunctive relief against it enjoining or
restraining any breach or threatened breach of this Agreement.
Section 22. Integration. This Agreement and the documents referred to
herein or delivered pursuant hereto, including the exhibits hereto, contain the
entire understanding of the parties with respect to the subject matter hereof
and thereof. There are no agreements, representations, warranties, covenants or
undertakings with respect to the subject matter hereof and thereof other than
those expressly set forth herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to this
subject matter.
Section 23. Further Assurances. Each of the parties hereto shall
execute and deliver such further instruments and documents and take such further
actions as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
Section 24. Headings and Table of Contents. The section and subsection
headings herein and the table of contents are for convenience only and shall not
affect the construction hereof.
Section 25. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and
the same instrument.
Section 26. Legends. The certificates evidencing the Warrants and the
shares of Common Stock issuable upon exercise of the Warrants shall bear a
legend to the effect that such security may not be sold or transferred unless
-24-
<PAGE>
registered under the Securities Act or if an exemption thereunder is available.
Such legend shall be removed upon registration under the Securities Act or if
the Purchaser or any transferee delivers an opinion of counsel reasonably
acceptable to the Company to the effect that such legend is no longer required
under the Securities Act. In addition, certificates evidencing the Warrants
shall bear a legend which states that such Warrants are subject to the terms of
this Agreement.
Section 27. Opinion on Transfer of Warrant Shares After Exercise.
Notwithstanding anything to the contrary stated herein, neither the Company nor
the Company's transfer agent and registrar shall be required to reflect the
transfer of the Shares or other securities issued upon exercise of the Warrants
unless such Shares or other securities have been transferred pursuant to a
registration statement which is effective under the Securities Act of the
Company or the Company's transfer agent and registrar has received an opinion of
counsel, who is reasonably acceptable to the Company, that the transfer is
exempt from registration under the Securities Act.
-25-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AAMES FINANCIAL CORPORATION
By:
--------------------------------
Name:
Title:
[PURCHASER]
By:
---------------------------------
Name:
Title:
-26-
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
---------------------------
---------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ANY SECURITIES WHICH
MAY BE ISSUED UPON EXERCISE OF THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND ARE SUBJECT TO THE TERMS OF THE
WARRANT AGREEMENT, DATED AS OF MARCH 19, 1998 BY AND BETWEEN AAMES FINANCIAL
CORPORATION AND _____________ (THE "WARRANT AGREEMENT"). THESE SECURITIES AND
ANY SECURITIES WHICH MAY BE ISSUED UPON EXERCISE OF THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION
THEREFROM UNDER SAID ACT OR OTHERWISE THAN IN ACCORDANCE WITH THE WARRANT
AGREEMENT. A COPY OF THE WARRANT AGREEMENT MAY BE OBTAINED FROM AAMES FINANCIAL
CORPORATION.
---------------------------
This Warrant Certificate certifies that ,
or any registered and permitted assigns, is the Registered Holder (as
hereinafter defined) of warrants (the "Warrants"). Each Warrant
entitles the Registered Holder hereof to purchase, upon the terms and conditions
set forth herein, one fully paid and nonassessable share (the "Share") of Common
Stock, par value $.001 per share (the "Common Stock"), of Aames Financial
Corporation, a Delaware corporation (the "Company"), in consideration of the
payment by the Registered Holder of the exercise price (the "Exercise Price") at
the time in effect under the Warrant Agreement (as hereinafter defined). The
Exercise Price shall initially be $17.2031 per Warrant. The Exercise Price and
the number of shares purchasable upon exercise of a Warrant shall be subject to
adjustment as provided in Section 8 of the Warrant Agreement. Any or all of the
Warrants shall expire on April 19, 2001 (the "Expiration Date"). After the
Expiration Date, unexercised Warrants will be wholly void and of no value. The
Warrants represented hereby may be exercised by the Registered Holder on any
business day, as defined in the Warrant Agreement, beginning on the date of a
<PAGE>
Purchase Event (as defined in the Warrant Agreement) and on or prior to the
close of business on the Expiration Date upon payment of the Exercise Price
multiplied by the number of such Warrants being exercised (the "Aggregate
Exercise Price") in cash, by cashier's check payable to the order of the Company
or by wire transfer to the Company's account of immediately available funds, and
upon proper execution of the Form of Exercise attached hereto and surrender of
this Warrant Certificate at the corporate executive offices of the Company at
350 South Grand Avenue, 52nd Floor, Los Angeles, California 90071. The Exercise
Price and the number of shares of Common Stock and the type and amount of other
securities or other property purchasable upon exercise of each Warrant may as of
the date of this Warrant Certificate have been, or may after such date be,
adjusted as a result of the occurrence of certain events, as more fully provided
in the Warrant Agreement.
The Warrant or Warrants evidenced by this Warrant Certificate are part
of a duly authorized issue of Warrants issued pursuant to the Stock
Purchase Agreement, dated March 19, 1998, by and among the Company and the
Purchaser and whose terms and provisions are governed by the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for the description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the Purchaser or such other registered holder of the Warrants to
whom transfer is authorized in accordance with the terms of the Warrant
Agreement (the Purchaser and such other registered holder are referred to herein
individually as the "Registered Holder" and, collectively, as the "Registered
Holders") to all of which the Registered Holder of the Warrants represented by
this Warrant Certificate, by acceptance hereof, consents. Copies of the Warrant
Agreement are on file and available for inspection and can be obtained from or
at the corporate executive offices of the Company.
Subject to the provisions of the Warrant Agree ment, (i) upon such
surrender of this Warrant Certificate and payment of the Aggregate Exercise
Price with respect to the Warrant or Warrants being exercised on or prior to the
close of business on the Expiration Date, the Company shall deliver or cause to
be delivered to the Registered Holder
A-2
<PAGE>
surrendering this Warrant Certificate certificates for the shares of
Common Stock, certificates or other appropriate instruments for any other
securities, and such other property issuable upon the exercise of the Warrant or
Warrants evidenced by this Warrant Certificate, in such name or names as the
Registered Holder of this Warrant Certificate that are being exercised shall
designate on the Form of Exercise attached hereto; and (ii) such shares of
Common Stock, securities and other property shall be deemed to have been issued,
and any person so designated therein shall be deemed to have become, the holder
of record of such shares of Common Stock, securities or property as of the date
of the surrender of this Warrant Certificate and payment of the Aggregate
Exercise Price.
All or fewer than all of the Warrants evidenced by this Warrant
Certificate may be exercised on any occasion. In the event that fewer than all
of the Warrants represented by this Warrant Certificate are exercised, upon such
exercise the Company shall execute and deliver to the Registered Holder thereof
or, subject to Section 4 of the Warrant Agreement, such person or entity as
shall be designated in the Form of Exercise attached hereto a new Warrant
Certificate representing the Warrants not so exercised.
Transfers of the Warrant shall only be made in accordance with the
Warrant Agreement.
The Company may deem and treat the Registered Holder hereof as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for the purpose of any
exercise hereof, any distribution to the Registered Holder hereof and for all
other purposes, and the Company shall not be affected in any way by any notice
to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.
Signatures on exercises and assignments of the Warrant represented by
this Warrant Certificate must, unless waived by the Company, be guaranteed by a
bank or trust company having an office or correspondent in the United States or
by a broker or dealer that is a member of a
A-3
<PAGE>
registered national securities exchange or the National Association of
Securities Dealers, Inc.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its official seal by its President or any Vice President
and attested to by its Secretary or any Assistant Secretary.
Dated: ____________, 1998
AAMES FINANCIAL CORPORATION
By:
-------------------------------
Attest:
- -------------------------------
[SEAL]
A-4
<PAGE>
FORM OF EXERCISE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate, entitling the undersigned to purchase
shares of Common Stock, par value $.001 per share (the "Common Stock"),
of Aames Financial Corporation, a Delaware corporation (the "Company"), and such
other securities or property issuable upon exercise of such Warrants in
accordance with the terms of the Warrant Agreement, dated as of March 19, 1998,
between the Company and , and herewith tenders payment for such
Warrants in the amount of $ payable in cash, by cashier's check payable
to the order of the Company or by wire transfer to the Company's account of
immediately available funds.
The undersigned requests that certificates for shares of Common Stock
and certificates or other instruments for other securities, and other property
issuable upon exercise of the Warrant be registered in the name of
whose address is
and that such certificates and other instruments and property be delivered to
whose address is
. If said number of Warrants is less than
all of the Warrants represented by this Warrant Certificate, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
the Warrants be registered in the name of whose address
is and that such Warrant Certificate be
delivered to whose address is
.
<PAGE>
[The undersigned hereby certifies that it is acquiring the shares of
Common Stock issuable upon the exercise of the Warrants for its own account and
is an "accredited investor" as defined in Rule 501 to the Securities Act of
1933, as amended (the "Securities Act"), and has no intention of distributing
the shares of Common Stock issuable upon the exercise of the Warrants in
violation of the Securities Act or applicable state securities or "blue sky"
laws.]*.
Dated:
Signature:
------------------------------
(Signature must conform in all
respects to the name of the
Registered Holder as specified on
the face of the Warrant
Certificate.)
- -------------------------------
(Social Security or Other
Taxpayer Identification
Number of Registered Holder)
- ----------
* Required if the shares of Common Stock issuable upon exercise of the Warrants
are not registered under the Securities Act for issuance and sale by the
Company.
<PAGE>
EXHIBIT B
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
--------------------------------
--------------------------------
--------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ,
attorney to transfer this Warrant Certificate on the books of
, with full power of substitution.
[The undersigned hereby certifies that the acquisition by the
transferee of the Warrants evidenced by this Warrant Certificate was effected in
a transaction exempt from the registration provisions in Section 5 of the
Securities Act of 1933 (as amended (the "Securities Act") and was effected in a
transaction that was not a distribution, without the use of general advertising
or general solicitation, to a person or entity that the undersigned, in his best
a person or entity that the undersigned, in his best knowledge, believes to be
an "accredited investor" (as defined in Rule 501 to the Securities Act and not
an underwriter (as defined in Section 2(II) of the Securities Act.]*
Dated:
Signature:
--------------------------
(Signature must conform in all
respects to the name of the
Registered Holder as specified
on the face of the Warrant
Certificate.)
<PAGE>
- ------------------------------
(Insert Social Security or
Other Identifying Number of
Assignee)
[The aforesaid assignee hereby certifies that such assignee is an
"accredited investor" as defined in Rule 501 to the Securities Act, is acquiring
the Warrants for its own account and has no intention of distributing the
Warrants or shares of Common Stock issuable upon the exercise of the Warrants in
violation of the Securities Act or applicable state securities or "blue sky"
laws.]*
By accepting this assignment, the aforesaid assignee shall be entitled to
the benefits of and hereby agrees to be bound by all of the terms and conditions
of the Warrant Agreement.
Agreed and Accepted as of :
- ------------------------------
* Required if the Warrants are not registered under the Securities Act for
resale by registered holders.
Exhibit C
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of March 19, 1998
By and Between
AAMES FINANCIAL CORPORATION
and
[PURCHAER]
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions................................................1
Section 2. Registration Under the Securities Act..............................5
Section 3. Registration Procedures............................................8
Section 4. Registration Expenses.............................................18
Section 5. Representations and Warranties....................................19
Section 6. Indemnification...................................................22
Section 7. Underwritten Offerings............................................27
Section 8. Rule 144..........................................................27
Section 9. Miscellaneous.....................................................28
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March 19,
1998, by and among Aames Financial Corporation, a Delaware corporation (the
"Company"), and ____________, a _____________ (the "Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser have entered into a Stock
Purchase Agreement, dated the date hereof (the "Stock Purchase Agreement"),
providing for, among other things, the sale by the Company and the purchase by
the Purchaser of an aggregate of shares (the "Shares") of Common
Stock of the Company, par value $.001 per share (the "Common Stock") and
warrants (each a "Warrant" and collectively, the "Warrants") to purchase
shares of Common Stock at an initial exercise price of $17.2031 per
share (the "Warrant Shares");
WHEREAS, the Company and (the "Other Purchaser") have
entered into a Stock Purchase Agreement, dated the date hereof (the "Other Stock
Purchase Agreement"), providing for, among other things, the sale by the Company
and the purchase by the Other Purchaser of an aggregate of shares
(the "Other Shares") of Common Stock and warrants (the "Other Warrants") to
purchase shares of Common Stock at an initial exercise price of
$17.2031 per share (the "Other Warrant Shares");
WHEREAS, the Company and the Purchaser have entered into a Warrant
Agreement, dated as of the date hereof (the "Warrant Agreement"), providing for,
among other things, the terms and conditions of the Warrants; and
NOW, THEREFORE, in consideration of the mutual covenants and conditions
as hereinafter set forth, the parties hereto agree as follows:
Section 1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
<PAGE>
"Affiliate" means a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the person specified.
"Closing Date" shall be the same date as the closing of the Stock
Purchase Agreement and the Other Stock Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
"Common Stock" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"Holder" shall mean the Purchaser, the Other Purchaser and each of
their successive successors and assigns who acquire Registrable Securities,
directly or indirectly, from either such persons or from any successive
successor or assign of either such persons.
"Other Purchaser" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Other Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated the date hereof, between the Company and the Other
Purchaser, with terms and provisions substantially similar to this Agreement.
"Other Shares" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Other Stock Purchase Agreement" shall have the meaning assigned to
such term in the preamble to this Agreement.
"Other Warrants" shall have the meaning assigned to such term in the
preamble to this Agreement.
-2-
<PAGE>
"Other Warrant Shares" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Registrable Securities" shall mean the Shares, Other Shares, Warrant
Shares and Other Warrant Shares, and any securities of the Company issued
successively in exchange for or in respect of any of the foregoing, whether as a
result of any successive stock split or reclassifica tion of, or stock dividend
on, any of the foregoing or otherwise; provided, however, that such shares of
Common Stock or securities shall cease to be Registrable Securities when (i) a
registration statement registering such shares of Common Stock or securities, as
the case may be, under the Securities Act has been declared effective and such
shares of Common Stock or securities, as the case may be, have been sold or
otherwise transferred by the Holder thereof pursuant to such effective
registration statement, (ii) such shares of Common Stock or securities, as the
case may be, are sold pursuant to Rule 144 (or any successor provision) promul
gated under the Securities Act under circumstances in which any legend borne by
such shares of Common Stock or securities relating to restrictions on
transferability thereof, under the Securities Act or otherwise, is removed by
the Company or (iii) such shares of Common Stock or securities shall have been
transferred, new securities evidencing such shares of Common Stock or securities
without legends restricting further transfer shall have been delivered by the
Company and subsequent public distribution of such shares of Common Stock or
securities shall not require registration under the Securities Act.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 of this Agreement.
"Rights" shall mean any options, warrants, securities, rights or other
instruments convertible into or exchangeable or exercisable for, or otherwise
giving the holder thereof the right to acquire, directly or indirectly, any
Common Stock or any other such options, warrants, securities, rights or
instruments, including without limitation, the Warrants, Other Warrants and any
instrument the value of which is measured by reference to the value of the
Common Stock.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
-3-
<PAGE>
"Shares" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Share Shelf Registration Statement" shall mean any registration
statement of the Company that covers the resale of any of the Shares and the
Other Shares pursuant to the provisions of this Agreement and the Other
Registration Rights Agreement, including any prospectus, amendments and
supplements to such registration statement or prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement.
"Shelf Registration Statements" shall mean the Share Shelf Registration
Statement and the Warrant Shelf Registration Statement.
"Subsidiary" shall mean any corporation of which shares of stock having
a majority of the general voting power in electing the Board of Directors are,
at the time as of which any determination is being made, owned by the Company
either directly or through its Subsidiaries, any partnership in which the
Company or any Subsidiary is a general partner and any joint venture in which
the Company or any Subsidiary is a joint venturer.
"Warrants" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Warrant Shelf Registration Statement" shall mean any registration
statement of the Company that covers the resale of any of the Warrant Shares and
the Other Warrant Shares, including any prospectus, amendments and supplements
to such registration statement or prospectus, including pre-and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
"Warrant Shares" shall have the meaning assigned to such term in the
preamble to this Agreement.
-4-
<PAGE>
Section 2. Registration Under the Securities Act.
(a) The Company agrees to file with the Commission as soon as
practicable after the Closing Date, but in no event later than the 120th day
after the Closing Date, the Share Shelf Registration Statement. The Share Shelf
Registration Statement shall be on Form S-3 under the Securities Act or another
appropriate form permitting registration of the Shares and the Other Shares for
resale by the Holders from time to time in open market transactions (with or
without the use of one or more brokers) or through an underwritten offering. The
Company shall not permit any securities other than the Shares and the Other
Shares to be included in the Share Shelf Registration Statement. The Company
shall use its reasonable best efforts to cause the Share Shelf Registration
Statement to be declared effective pursuant to the Securities Act as promptly as
practicable following the filing thereof, but in no event later than 60 days
following such filing date, and to keep the Share Shelf Registration Statement
continuously effective under the Securities Act thereafter for a period ending
the earlier of (i) three years from the Closing Date (subject to extension
pursuant to Section 2(e) below), or (ii) when there ceases to be any outstanding
Shares or Other Shares which are Registrable Securities (the "Purchase Shelf
Effectiveness Period").
(b) After the occurrence of a Purchase Event (as defined in the Warrant
Agreement or the Other Warrant Agreement, as the case may be), the Company
agrees to file with the Commission at the request of any registered holder of
Warrants, Warrant Shares, Other Warrants or other Warrant Shares, but in no
event later than the 90th day after any such registered holder makes such
request, the Warrant Shelf Registration Statement. The right of the Purchaser to
request registration of the Warrant Shares shall expire on the Expiration Date
of the Warrants (as defined in the Warrant Agreement). The Warrant Shelf
Registration Statement shall be on Form S-3 under the Securities Act or another
appropriate form permitting registration of such Warrant Shares and Other
Warrant Shares for resale by the Holders from time to time in open market
transactions (with or without the use of one or more brokers) or through an
underwritten offering. The Company shall not permit any securities other than
the Warrant Shares and the Other Warrant Shares to be included in the Warrant
Shelf Registration Statement. The Company shall use its
-5-
<PAGE>
reasonable best efforts to cause the Warrant Shelf Registration Statement to be
declared effective pursuant to the Securities Act as promptly as practicable
following the filing thereof, but in no event later than 60 days following such
filing date, and to keep such Warrant Shelf Registration Statement continuously
effective under the Securities Act thereafter for a period ending on the earlier
of (i) twelve months from the date the Warrant Shelf Registration Statement
becomes effective (subject to extension pursuant to Section 2(e) below), or (ii)
when there ceases to be any outstanding Warrant Shares and Other Warrant Shares
which are Registrable Securities (the "Warrant Shelf Effectiveness Period," and
each of the Purchase Shelf Effectiveness Period and Warrant Shelf Effectiveness
Period, an "Effectiveness Period").
(c) In the event that either (i) the no action relief contemplated by
Section 7.7 of the Stock Purchase Agreement and Other Stock Purchase Agreement
is obtained or (ii) the Company determines in its sole and absolute discretion
that there has been a change in law or change in administrative interpretation
by the Commission that would permit the Company to file a shelf registration
statement (the "Exercise Shelf Registration Statement") under the Securities Act
to register the offer and sale by the Company of the Common Stock issuable upon
exercise of the Warrants and Other Warrants after the occurrence of a Purchase
Event (as defined in the Warrant Agreement and Other Warrant Agreement, as the
case may be) and such filing will not result in the loss of the exemption from
the registration requirements under the Securities Act which was relied on by
the Company for the offer and sale of any of the Shares, Other Shares, Warrants
or Other Warrants, at the request of any registered holder of Warrants, Warrant
Shares, Other Warrants or Other Warrant Shares, the Company shall file with the
Commission the Exercise Shelf Registration Statement. The Company shall use its
reasonable best efforts to cause such Exercise Shelf Registration Statement to
be declared effective as promptly as practicable after the filing thereof and to
keep such Exercise Shelf Registration Statement continuously effective under the
Securities Act thereafter for a period ending on the earlier of (i) three years
from the Closing Date (subject to extension pursuant to Section 2(e) below) or
(ii) when there ceases to be any outstanding Warrants and Other Warrants which
have not expired or been exercised. As soon as practicable after (a) the
Exercise Shelf Registration
-6-
<PAGE>
Statement is declared effective under the Securities Act and (b) the Warrant
Agreement, Other Warrant Agreement, Warrants and Other Warrants shall have been
amended by the Company and each of the registered holders of Warrants and Other
Warrants in a manner acceptable to the Company to provide for a suspension of
the right of any registered holder of Warrants or Other Warrants to exercise
such Warrants or Other Warrants in the event the Exercise Shelf Registration
Statement shall not continue to remain effective with the Commission, the
Company will amend this Agreement in a manner consistent with the other terms
hereof to provide for the filing of a shelf registration statement under the
Securities Act covering the resale of the Warrants and Other Warrants.
(d) If, for any reason, any of the Shelf Registration Statements loses
its effectiveness during its applicable Effectiveness Period, the Company shall
file with the Commission as soon as practicable, but in no event later than 60
days after the date such shelf registration statement loses its effectiveness,
another registration statement covering all of the Registrable Securities which
were covered by the Shelf Registration Statement which so lost its
effectiveness; provided, that if the Company has notice that any Shelf
Registration Statement will lose its effectiveness, the Company shall use its
reasonable best efforts to file another registration statement covering the
Registrable Securities which are covered by such Shelf Registration Statement
for the applicable Effectiveness Period as soon as practicable after the Company
receives such notice.
(e) The Company shall use its reasonable best efforts to keep the shelf
registration statements continuously effective by supplementing and amending
them as required by the rules, regulations or instructions applicable to the
registration form used for such shelf registration statement if required by the
Securities Act or reasonably requested by the Holders of a majority in aggregate
principal amount of the Registrable Securities covered by such shelf
registration statement; provided that the applicable Effectiveness Period shall
be extended to the extent necessary to permit dealers to comply with the
applicable prospectus delivery requirements of Rule 174 and as otherwise
provided herein.
-7-
<PAGE>
Section 3. Registration Procedures.
(a) In connection with the Company's obligations with respect to any
registration of Registrable Securities pursuant to Section 2 hereof, the Company
shall use its reasonable best efforts to effect or cause such registration to
permit the sale of the Registrable Securities by the Holders thereof in open
market transactions or in one underwritten offering pursuant to Section 7
hereof. In connection therewith, the Company shall, as soon as reasonably
possible:
(i) comply with the provisions of the Securities Act applicable to
issuers with respect to the disposition of all of the Registrable
Securities covered by such registration statement in accordance with the
intended methods of disposition by the Holders thereof set forth in such
registration statement;
(ii) provide (A) each Holder of the Shares and the Other Shares,
in the case of the Share Shelf Registration Statement, and the Warrant
Shares and the Other Warrant Shares, in the case of the Warrant Shelf
Registration Statement, and counsel for such Holders the opportunity to
participate in the preparation of such Shelf Registration Statement and (B)
(1) each such Holder and counsel, (2) the underwriters (which term, for
purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act), if
any, in connection with the one underwritten offering pursuant to Section 7
hereof and (3) counsel for such underwriters, if any, the opportunity to
participate in the preparation of each prospectus included in the
applicable Shelf Registration Statement or filed with the Commission, and
each amendment or supplement thereto (and, in the case of the parties
referred to in Sections 3(a)(ii)(B)(2) and 3(a)(ii)(B)(3), only with
respect to each prospectus, amendment or supplement relating to the one
underwritten offering pursuant to Section 7 hereof);
(iii) throughout the Effectiveness Period and after receiving
notice under Section 3(c) hereof until such offer and sale is completed,
make available for inspection during normal business hours by the parties
referred to in Section 3(a)(ii) above (and, in
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the case of the party referred to in Sections 3(a)(ii)(B)(2) and
3(a)(ii)(B)(3), only with respect to an offer and sale pursuant to Section
7 hereof) such financial and other information and books and records of the
Company, and cause the officers, directors, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act if the
recipient thereof has executed a confidentiality agreement in a form
reasonably acceptable to the Company protecting against the
misappropriation or disclosure of the Company's confidential information;
(iv) promptly notify the Holders of the Shares and the Other
Shares, in the case of the Share Shelf Registration Statement, and the
Holders of the Warrant Shares and the Other Warrant Shares, in the case of
the Warrant Shelf Registration Statement and confirm such advice in
writing, (A) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such registration statement
or any post-effective amendment, when the same has become effective, (B) of
any comments by the Commission and by the Blue Sky or securities
commissioner or regulator of any state with respect thereto or any request
by the Commission for amendments or supplements to such registration
statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time during the applicable Effectiveness
Period the representations and warranties of the Company contemplated by
Section 3(a)(xiii) or Section 5 hereof cease to be true and correct in all
material respects, (E) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, or (F) in addition to such Holders, the
managing underwriter or underwriters, if any, in connection with the one
underwritten offering pursuant
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to Section 7 hereof, at any time a prospectus (in the case of such
underwriter or underwriters, only when a prospectus relating to such
underwritten offering) is required to be delivered under the Securities
Act, that such registration statement, prospectus, prospectus amendment or
supplement or post-effective amendment, or any document incorporated by
reference in any of the foregoing, may contain an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;
(v) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of either of the Shelf Registration
Statements or any post-effective amendment thereto at the earliest
practicable date;
(vi) if requested by any managing underwriter or underwriters in
connection with the one underwritten offering pursuant to Section 7 hereof,
or any Holder, promptly incorporate in a prospectus supplement or
post-effective amendment such information as is required by the applicable
rules and regulations of the Commission and as such managing underwriter,
underwriters or Holder specifies should be included therein relating to the
terms of the sale of such Registrable Securities, including, without
limitation, information with respect to the number of Registrable
Securities being sold by the Holders or to any underwriters, the name and
description of the Holders and underwriter, the offering price of such
Registrable Securities and any discount, commission or other compensation
payable in respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by the Holders or to such underwriters;
and make all required filings of such prospectus supplement or
post-effective amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(vii) furnish (A) to each Holder of the Shares and the Other
Shares, in the case of the Share Shelf Registration Statement, and the
Warrant Shares and the
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Other Warrant Shares, in the case of the Warrant Shelf Registration
Statement, an executed copy of such registration statement, each such
amendment and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein), and (B) to any
Holder of Registrable Securities such number of copies of such registration
statement (excluding exhibits thereto and documents incorporated by
reference therein unless specifically so requested by any Holder or
underwriter, if any, in connection with the one underwritten offering
pursuant to Section 7 hereof) and of the prospectus included in such
registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities
Act, and such other documents, as any such Holder and underwriter, if any,
may reasonably request in order to facilitate the offering and disposition
of the Registrable Securities owned by any such Holder or underwritten by
such underwriter and to permit each Holder and underwriter to satisfy the
prospectus delivery requirements of the Securities Act; and the Company
hereby consents to the use of such prospectus (including such preliminary
and summary prospectus) and any amendment or supplement thereto by each
Holder and by any such underwriter, in each case in the form most recently
provided to such party by the Company, in connection with the offering and
sale of the Registrable Securities covered by the prospectus (including
such preliminary and summary prospectus) or any supplement or amendment
thereto;
(viii) use its reasonable best efforts to (A) register or qualify
the Registrable Securities to be included in the applicable Shelf
Registration Statement under such securities laws or Blue Sky laws of such
jurisdictions in the United States as any Holder and underwriter, if any,
in connection with the one underwritten offering pursuant to Section 7
hereof, thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions for
so long as may be necessary to enable the Holders or underwriters to
complete its distribution of Registrable Securities pursuant to such
offering and (C) take any and all other actions as may be reasonably
necessary or advisable to enable the
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Holders and underwriters, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that the
Company shall not be required for any such purpose to (I) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(a)(viii) or
(II) consent to general service of process in any such jurisdiction;
(ix) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to effect such registration or the offering
or sale in connection therewith or to enable the Holders to offer, or to
consummate the disposition of, the Registrable Securities;
(x) cooperate with the Holders and the managing underwriters, if
any, in connection with the one underwritten offering pursuant to Section 7
hereof to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall be
printed, lithographed or engraved, or produced by any combination of such
methods, on steel engraved borders if required or appropriate and which
shall not bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such denominations
and registered in such names as the managing underwriters may request at
least two business days prior to any sale of the Registrable Securities;
(xi) (reserved);
(xii) in the event of the one underwritten offering pursuant to
Section 7 hereof, enter into one or more underwriting agreements,
engagement letters, agency agreements, "best efforts" underwriting
agreements or similar agreements, as appropriate, and take such other
actions in connection therewith as the Holders shall reasonably request in
order to expedite or facilitate the disposition of the Registrable
Securities registered;
(xiii) in the event of the one underwritten offering pursuant to
Section 7 hereof, (A) make such representations and warranties to the
Holders and the
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underwriters, in form, substance and scope as are customarily made in
connection with an offering of common stock or other equity securities
pursuant to any appropriate agreement and/or to a registration statement
filed on the form applicable to such registration; (B) to use reasonable
best efforts to obtain an opinion of counsel to the Company in customary
form and covering such matters, of the type customarily covered by such an
opinion, as the managing underwriters, and as the Holders may reasonably
request, addressed to the Holders and the underwriters, dated the date of
the closing under the underwriting agreement relating thereto, it being
agreed that the matters to be covered by such opinion shall include,
without limitation, subject to such customary assumptions, qualifications
and limitations as such counsel reasonably deems appropriate, the due
incorporation and good standing of the Company and its significant
Subsidiaries (as defined in Regulation S-X under the Exchange Act); the
qualification of the Company and its significant Subsidiaries to transact
business as foreign corporations; the due authorization, execution and
delivery of this Agreement and of any agreement of the type referred to in
Section (3)(a)(xii) hereof; the due authorization and valid issuance of,
full payment for, and nonassessability of, the Registrable Securities and
all other outstanding Common Stock; the absence of material legal or
governmental proceedings involving the Company; the absence of a breach by
the Company or its significant Subsidiaries of, or a default under,
material agreements binding the Company or any Subsidiary as a result of
(I) the execution and delivery by the Company of any agreement of the type
referred to in Section 3(a)(xii) hereof, (II) the consummation of the
transactions contemplated by any such agreement or (III) the performance by
the Company of its obligations hereunder with respect to such Registrable
Securities; the absence of governmental approvals required to be obtained
in connection with such registration, the offering and sale of the
Registrable Securities, this Agreement or any agreement of the type
referred to in Section (3)(a)(xii) hereof; the compliance as to form of
such registration statement and any documents incorporated by reference
therein with the requirements of the Securities Act; the effectiveness of
such registration statement under
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the Securities Act; and, as of the date of the opinion, the lack of
knowledge of such counsel of the inclusion in such registration statement
or the prospectus included therein, as then amended or supplemented, or
from the documents incorporated by reference therein of an untrue statement
of a material fact or the omission to state therein a material fact
necessary to make the statements therein not misleading (in the case of
such documents, in the light of the circumstances existing at the time that
such documents were filed with the Commission under the Exchange Act); (C)
to use its reasonable best efforts to obtain a "cold comfort" letter or
letters from the independent certified public accountants of the Company
addressed to the Holders and the underwriters, if any, thereof, dated (I)
the effective date of any prospectus supplement, if any, to the prospectus
included in such registration statement or post-effective amendment to such
registration statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the latest
such statements included in such prospectus and (II) dated the date of the
closing under the underwriting agreement relating thereto, such letter or
letters to be in customary form and covering such matters of the type
customarily covered by letters of such type; (D) deliver such documents and
certificates, including officers' certificates, as may be reasonably
requested by the Holders and the managing underwriters, if any, thereof to
evidence the accuracy of the representations and warranties made pursuant
to clause (A) above or those contained in Section 5(a) hereof and the
compliance with or satisfaction of any agreements or conditions contained
in the underwriting agreement or other agreement entered into by the
Company; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in Section
6 hereof;
(xiv) in the event of one underwritten offering pursuant to
Section 7 hereof, that (i) any broker-dealer registered under the Exchange
Act shall underwrite any Registrable Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules and the By-Laws of
the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of Registrable Securities
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or as an underwriter, or a broker or dealer in respect thereof, or
otherwise, or (ii) more than 10% of the net offering proceeds, not
including underwriting compensation, of such distribution is intended to be
paid to any such broker-dealer or "associated or affiliated persons" of
such broker-dealer or "members of the immediate family of such persons"
(each within the meaning of such Rules), the Company shall take reasonable
steps to assist such broker-dealer in complying with the requirements of
such Rules and By-Laws, including, without limitation, by (A) if such Rules
or By-Laws, including Rule 2720 thereto, shall so require, engaging a
"qualified independent underwriter" (as defined in such Schedule) to
participate in the preparation of the registration statement relating to
such Registrable Securities, to exercise usual standards of due diligence
in respect thereto and, if any portion of the offering contemplated by such
registration statement is an underwritten offering, to recommend the price
of such Registrable Securities, (B) indemnifying any such qualified
independent underwriter to the extent of the indemnification of
underwriters provided in Section 6 hereof, and (C) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Conduct Rules of the
NASD;
(xv) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders, as soon as
practicable after the date of filing of the last report of the Company
incorporated by reference into the prospectus next preceding the relevant
sale, an earning statement of the Company and its Subsidiaries complying
with Section 11(a) of the Securities Act (including, at the option of the
Company, Rule 158 thereunder); and
(xvi) use its reasonable best efforts to list prior to the
effective date of the Share Shelf Registration Statement, subject to notice
of issuance, the Shares and the Other Shares and prior to the effective
date of the Warrant Shelf Registration Statement, subject to the notice of
issuance, the Warrant Shares and the Other Warrant Shares covered by such
registration statement on any securities exchange on which the Common Stock
is then listed.
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(b) In the event that the Company would be required, pursuant to
Section 3(a)(iv)(F) above, to notify the Holders and the managing underwriters,
if any, thereof in connection with the one underwritten offering pursuant to
Section 7 hereof, the Company shall without delay prepare and furnish to the
Holders, and to each underwriter, if any, a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to an
offeree of Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. The Holders agree that upon receipt of
any notice from the Company pursuant to Section 3(a)(iv)(F) hereof, they shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until they
shall have received copies of such amended or supplemented prospectus, and if so
directed by the Company, the Holders shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in their
possession of the prospectus covering such Registrable Securities at the time of
receipt of such notice.
(c) If any Holder proposes to sell any of its Registrable Securities
pursuant to the applicable Shelf Registration Statement, such Holder shall
notify the Company of its intent to do so (including the proposed manner and
timing of such sales) at least two (2) but no more than five (5) full trading
days prior to such sale, and the provision of such notice to the Company shall
conclusively be deemed to reestablish and reconfirm an agreement by such Holder
to comply with the registration provisions in this Agreement. Unless otherwise
specified in such notice, such notice shall be deemed to constitute a
representation that any information previously supplied by such Holder expressly
for inclusion in the Share Shelf Registration Statement or the Warrant Shelf
Registration Statement, as appropriate (as the same may have been superseded by
subsequent information), is accurate as of the date of such notice. At any time
within such two (2) to five (5) trading day period, the Company may refuse to
permit any Holder to resell any Registrable Securities pursuant to the
appropriate Shelf Registration Statement, provided, that in order to exercise
this right, the Company or its counsel must deliver a certificate in writing to
the Holder to the effect that a delay in such
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sale is necessary because a sale pursuant to the Shelf Registration Statement in
its then-current form without the addition of material, nonpublic information
about the Company could constitute a violation of the federal securities laws.
In addition, in connection with any sale of the Registrable Securities, the
Company may require the Holders to: (i) furnish to the Company such information
regarding the distribution of such Registrable Securities as is required by law
to be disclosed in the registration statement and (ii) provide to the Company a
signed writing accepting and acknowledging its rights and obligations hereunder.
(d) The registration rights of Holders pursuant to this Agreement and
the ability to offer and sell Registrable Securities pursuant to any Shelf
Registration Statement are subject to the conditions and limitations contained
in Sections 3(b) and 3(c), and Holders will be deemed to have agreed with the
Company that if the Board of Directors of the Company determines in its good
faith judgment that the use of any prospectus would require the disclosure of
material information that the Company has a bona fide business purpose for
preserving as confidential, and that the Company is not otherwise required by
applicable securities laws or regulations to disclose, or that the offer and
sale of the Registrable Securities would interfere with any financing,
acquisition or other material transaction contemplated by the Company, upon
written notice of such determination by the Company, the rights of the Holders
to offer, sell or distribute any Registrable Securities pursuant to a Shelf
Registration Statement or to require the Company to take action with respect to
the registration or sale of any Registrable Securities pursuant to a Shelf
Registration Statement shall be suspended until the date upon which the Company
notifies the Holders in writing (the "Suspension Termination Notice") that
suspension of such rights for the grounds set forth in this paragraph is no
longer necessary, and the Company agrees to give such notice as promptly as
practicable following the date that such suspension of rights is no longer
necessary. Further, if during the applicable Effectiveness Period, the Holder,
or a person who is a nominee, Affiliate, director, officer, trustee, beneficiary
or employee of such Holder, is an officer, director or employee of the Company,
the rights of the Holder to offer, sell or otherwise effect any distribution of
Registrable Securities pursuant to the Shelf Registration Statement or to
require the Company to take
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action with respect to the registration or sale of any Registrable Securities
pursuant to the applicable Shelf Registration Statement shall be suspended
during any period in which directors, officers or employees of the Company are
not permitted to offer or sell securities in accordance with the Company's
policies.
(e) From the time that the Company receives any notice pursuant to
Section 3(c) from a Holder or Holders in connection with a sale of an aggregate
of $10.0 million of more of Registrable Securities in connection with the one
underwritten offering pursuant to Section 7, and the Company does not give
notice to Holders pursuant to Sections 3(b), 3(c) or 3(d) to suspend sales of
Registrable Securities, until the date 90 days after the sale relating thereto
or such shorter period as may be required by the managing underwriter or
underwriters of such offering, if any, or the selling Holders, the Company will
not offer, issue, sell, agree or commit to issue or sell, file with the
Commission a registration statement relating to any offering of or solicit any
offer to buy any Common Stock or any Rights, other than (A) in connection with
the Registrable Securities, (B) pursuant to a bona fide employee stock option,
bonus or other benefit plan as then in existence, (C) in connection with the
5.5% Convertible Subordinated Debentures due 2006 and (D) any other Rights which
may be issued by the Company, the terms of such issue requires a filing by the
Company of a shelf registration statement covering such Rights.
Section 4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly upon
request being made therefor all customary expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
(a) all Commission and any NASD registration and filing fees and expenses, (b)
all fees and expenses in connection with the qualification of the Registrable
Securities for offering and sale under the State securities and Blue Sky laws,
including reasonable fees and disbursements of one counsel for the underwriters
in connection with such qualifications, (c) all expenses relating to the
preparation, printing, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or
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supplement to the foregoing, the certificates representing the Common Stock or
other equity securities to be sold and all other documents relating hereto, (d)
messenger and delivery expenses, (e) fees and expenses of any escrow agent or
custodian, (f) internal expenses of the Company (including, without limitation,
all salaries and expenses of the Company's officers and employees performing
legal or accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or "cold comfort" letters required by or incident to such
performance and compliance), (h) fees, disbursements and expenses (including
fees and expenses of one counsel) of any "qualified independent underwriter"
engaged pursuant to Section 3(a)(xiv) hereof but excluding underwriting
commissions and discounts, (i) reasonable fees, disbursements and expenses of
one counsel for all of the Holders retained in connection with one underwritten
offering pursuant to Section 7 hereof, and fees, expenses and disbursements of
any other persons, including special experts, retained by the Company in
connection with such registration, and (j) all fees and expenses (including,
without limitation, listing fees) in connection with the listing or quotation of
trading of the Registrable Securities as required by Section 3(a)(xvi) hereof
(collectively, the "Registration Expenses"). Under no circumstances will the
Company be obligated to bear and pay underwriting discounts, commissions and
brokerage fees. To the extent that any Registration Expenses are incurred,
assumed or paid by the Holder or any underwriter thereof in connection with the
one underwritten offering pursuant to Section 7 hereof, the Company shall
reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor.
Section 5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Holder
from time to time of Registrable Securities that:
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. The Company has
all requisite corporate power and authority to carry out and perform its
obligations under this Agreement.
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(b) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms except as such enforceability may be
subject to any applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, equitable subordination or other laws relating to or affecting
creditor's rights and general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing; and the registration of the Registrable Securities will not result in a
breach or violation of any terms or provisions of, or constitute a default
under, any contract, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is currently a party or by which
the Company is currently bound, the Certificate of Incorporation or Bylaws of
the Company, or any law, order, rule, regulation or decree of any government,
governmental agency or court, domestic or foreign, currently applicable to the
Company, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, except for such
breaches, violations or defaults as, individually and in the aggregate, do not
have a material adverse effect on the Company.
(c) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(a)(vii) hereof and any further
amendments or supplements to any such registration statement or prospectus, when
it becomes effective or is filed with the Commission, as the case may be, and,
in the case of an underwritten offering of Registrable Securities, at the time
of the closing under the underwriting agreement relating thereto will conform in
all material respects to the requirements of the Securities Act and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and at all times subsequent to the effective date of registration
statement when a prospectus would be required to be delivered under the
Securities Act, other than from (i) such time as a notice has been given to
Holders of Registrable Securities pursuant to Section 3(a)(iv)(F) hereof until
(ii) such time as the Company furnishes an amended or supplemented prospectus
pursuant to Section 3(b) hereof, each such registration statement, and each
prospectus (including any
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summary prospectus) contained therein or furnished pursuant to Section 3(a)(vii)
hereof, as then amended or supplemented, will conform in all material respects
to the requirements of the Securities Act and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by a Holder of Registrable Securities or any of the parties referred to
in Section 3(a)(ii) expressly for use therein.
(d) Any documents incorporated by reference in any prospectus referred
to in Section 5(c) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, as then amended or supplemented,
will conform or conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such documents
will contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by a Holder of Registrable Securities or any of the parties referred to
in Section 3(a)(ii) expressly for use therein.
(e) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
significant Subsidiary is or hereafter becomes a party or by which the Company
or any significant Subsidiary is or hereafter becomes bound or to which any of
the property or assets of the Company or any significant Subsidiary is or
hereafter becomes subject, except for such conflicts, breaches and defaults as,
individually and in the aggregate, do not have a material adverse effect on the
financial condition, results of
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operations, business or prospects of the Company and its significant
Subsidiaries, taken as a whole, and do not materially hinder or delay the rights
of the Holders hereunder, nor will such action result in any violation of the
provisions of the Restated Certificate of Incorporation, as amended, or the
By-Laws of the Company or any statute or any order specifically applicable to
the Company, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any significant Subsidiary or any of
their properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated by
this Agreement, except the registration under the Securities Act of the
Registrable Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities or
Blue Sky laws in connection with the offering and distribution of the
Registrable Securities.
Section 6. Indemnification.
(a) Indemnification by the Company. Upon the registration of any
Registrable Securities pursuant to Section 2 hereof, and in consideration of the
agreements of the Holders contained herein and of the Purchaser, in the Stock
Purchase Agreement, and as an inducement to the Purchaser, to enter into such
Agreement, the Company shall, and it hereby agrees to, indemnify and hold
harmless each Holder, and each person who participates as an underwriter in any
offering or sale of such Registrable Securities, against any losses, claims,
damages or liabilities, joint or several, to which any such Holder or
underwriter may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to any such Holder or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company shall, and it hereby
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agrees to, reimburse any such Holder and underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim; provided, however, that the Company shall
not be liable to any such Holder or underwriter in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
(i) an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, or preliminary, final or summary
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Holder or underwriter
expressly for use therein or (ii) any untrue statement or alleged untrue
statement of material fact contained in, or any omission or alleged omission of
a material fact from, a prospectus if (x) a later prospectus corrects the untrue
statement or alleged untrue statement, or omission or alleged omission, which is
the basis for the claim, action, demand, loss, damage, liability, cost or
expense for which indemnification is sought, (y) a copy of the later prospectus
has been made available to the Holders in a timely fashion in accordance with
the Securities Act and had not been sent or given to such purchaser at or prior
to confirmation of sale to such purchaser and the Holder seeking indemnification
was under an obligation to deliver such later prospectus to the purchaser and
(z) there would have been no such liability but for such failure to deliver such
later prospectus by such Holder.
(b) Indemnification by the Holder and any Underwriters. The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 2 hereof and to entering into
any underwriting agreement with respect thereto in connection with the one
underwritten offering pursuant to Section 7 hereof, that the Company shall have
received an undertaking from the Holder thereof and from each underwriter named
in any such underwriting agreement, severally and not jointly, to (i) indemnify
and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in such registration statement, or any
preliminary, final or summary prospectus contained therein or furnished to the
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Company by the Holders or underwriter, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Holder or underwriter expressly for
use therein, and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim; provided, however, that no Holder shall be required to
undertake liability under this Section 6(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder from the sale of its
Registrable Securities pursuant to such registration, as reduced by any damages
or other amounts that such Holder was otherwise required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who may be counsel to
the indemnifying party unless representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interest between
them) provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that
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there may be legal defenses available to it and/or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel (in which case the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties). After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, such indemnifying party shall not be liable to
such indemnified party for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of investigation
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence, (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party shall be liable for
settlement of any proceeding effected without its written consent, which consent
shall not be unreasonably withheld.
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 6(a) or Section 6(b) hereof
are unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and
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the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The parties hereto agree that
it would not be just and equitable if contribution pursuant to this Section 6(d)
were determined by pro rata allocation (even if the Holders or underwriters or
all of them were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in this Section 6(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Holder shall be required to contribute any
amount in excess of the amount of the proceeds received by such Holder from the
sale of any Registrable Securities, and no underwriter shall be required to
contribute any amount in excess of the amount of compensation received. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders' and any
underwriter's obligations in this Section 6(d) to contribute shall be several in
proportion to the number or amount of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of any
Holder or underwriter and each person, if any, who controls any Holder or
underwriter within the meaning of the Securities Act; and the obligations of the
Holders and any underwriters contemplated by this Section 6 shall be in addition
to any liability which the Holders or underwriter may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company (including any person who, with his consent, is named in any
registration statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
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Section 7. Underwritten Offerings.
(a) In addition to selling Registrable Securities from time to time in
open market transactions under the Shelf Registration Statements, Holders of
Registrable Securities shall be permitted to sell such Registrable Securities in
one underwritten offering, provided that the aggregate market value of all
Registrable Securities to be sold in such underwritten offering exceeds $10
million, and provided further that, if an underwritten offering is elected
pursuant to the Other Registration Rights Agreement, then such right to elect an
underwritten offering pursuant to this Agreement shall terminate.
(b) Upon a receipt of a notice under Section 3(c) which includes a
request to sell Registrable Securities pursuant to an underwritten offering, the
Company shall provide all Holders of Registrable Securities then covered by the
appropriate Shelf Registration Statement a written notice of and opportunity to
participate in the offering. The managing underwriter or underwriters thereof
shall be designated by the Holders of a majority of the Registrable Securities
so to be offered, provided that such designated managing underwriter or
underwriters is or are reasonably acceptable to the Company.
(c) Each Holder hereby agrees that it may not participate in any
underwritten offering hereunder unless it (i) agrees to sell its Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
Section 8. Rule 144.
The Company covenants to and with each Holder of Registrable Securities
that to the extent it shall be required to do so under the Exchange Act, the
Company shall timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including, but not limited to, the reports
under Section 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder,
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and shall take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable the Holders to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemption provided by Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements.
Section 9. Miscellaneous.
(a) Purchaser Lock-Up. If, at any time, the Company undertakes to
register any of its Common Stock or Rights or any other equity securities under
the Securities Act on a registration statement on Form S-1, Form S-2 or Form S-3
(or an equivalent general registration form then in effect), from the time that
the Company files such registration statement or, in the case of a Form S-3, a
prospectus or prospectus supplement thereunder relating to an offering pursuant
thereto with the Commission until the earlier of (i) the date 90 days after the
effectiveness of the registration statement or, in the case of a Form S-3, the
filing of a prospectus or prospectus supplement thereunder relating to an
offering pursuant thereto or such shorter period as may be required by the
managing underwriter or underwriters of such offering and (ii) the date an
election is made to withdraw such registration statement with the Commission, no
Holder will offer, sell, agree or commit or sell, grant any option for the
purchase of or solicit any offer to buy any Common Stock or any Rights. If
requested by the Company or the managing underwriter or underwriters, if any,
the Holders will execute and deliver all such documents as are necessary and
appropriate to reflect the foregoing.
(b) No Inconsistent Agreements. The Company covenants and agrees that
it shall not grant registration rights with respect to any class of Common Stock
or any other securities which would adversely affect the rights of the Holders
as set forth in this Agreement; provided, the Holders acknowledge that the
Company has heretofore granted registration rights in connection with its 5.5%
Subordinated Convertible Debentures due 2006.
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(c) Specific Performance. The Company acknowledges that it would be
impossible to determine the amount of damages that would result from any breach
by it of any of the provisions of this Agreement and that the remedy at law for
any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each Holder shall, in addition to any
other rights or remedies which it may have, be entitled to seek such equitable
and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain the Company from
violating any of, such provisions. In connection with any action or proceeding
for injunctive relief, the Company hereby waives the claim or defense that a
remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against it,
without the necessity of posting bond or other security against it, and consents
to the entry of injunctive relief against it enjoining or restraining any breach
or threatened breach of this Agreement.
(d) Illegality. If any term or provision of this Agreement or any
application thereof shall be declared or held invalid, illegal or unenforceable,
in whole or in part, whether generally or in any particular jurisdiction, such
provision shall be deemed amended to the extent, but only to the extent,
necessary to cure such invalidity, illegality or unenforceability, and the
validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
(e) Recovery of Litigation Costs. Except as otherwise expressly
provided herein to the contrary, in the event any dispute between the parties to
this Agreement shall result in litigation, arbitration or other proceeding, the
prevailing party shall be entitled to recover from the losing party all
reasonable costs and expenses, including without limitation reasonable
attorneys' fees and disbursements, incurred by the prevailing party in
connection with such litigation or other proceeding and any appeal thereof. Such
costs, expenses, fees and disbursements shall be included in and made a part of
the judgment recovered by the prevailing party, if any.
(f) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be
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in writing and shall be deemed to have been duly given when delivered by hand,
when delivered personally or by courier, three days after being deposited in the
mail (registered or certified mail, postage prepaid, return receipt requested),
or when received by facsimile transmission if promptly confirmed by one of the
foregoing means, as follows: If to the Company, to it at 350 South Grand Avenue,
52nd Floor, Los Angeles, California 90071, Attention: Barbara S. Polsky,
facsimile transmission no. (213) 640-5000, and if to a Holder, to the address or
facsimile transmission number of such Holder set forth in the security register
or other records of the Company, or to such other address or facsimile
transmission number as any party may have furnished to the others in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
(g) Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by
the parties hereto and their respective successors and assigns, but, except as
set forth in this Section 9(g), no such term or provision is for the benefit of,
or intended to create any obligations to, any other persons. In the event that
any transferee of a Purchaser or other Holder shall acquire Registrable
Securities, in any manner, whether by gift, bequest, purchase, operation of law
or otherwise, such transferee shall, by the execution and delivery of an
agreement to be bound to the terms of this Agreement, be deemed a party hereto
for all purposes and such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by delivering such agreement, such transferee
shall be entitled to receive all the benefits of and be bound by all of the
terms and provisions of this Agreement. Until the execution and delivery of such
agreement, the transferee shall have no rights under this Agreement. In
addition, in connection with a bona fide pledge of any Registrable Securities to
secure indebtedness or other obligations, a Purchaser or other Holder may assign
its rights, interests and obligations hereunder to the beneficiary of such
pledge; provided that neither the beneficiary of such pledge, nor any other
person who through the exercise of remedies under such pledge becomes a Holder
of Registrable Securities, shall be entitled to exercise any rights under this
Agreement unless and until the person who wishes to exercise such rights agrees
in writing to be bound by the terms of this Agreement. The Company shall not
have
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<PAGE>
either the right or the power to assign or delegate any right or obligation
hereunder (except by merger or other operation of law) without the written
consent of Holders who own a majority of the aggregate of the then outstanding
Registrable Securities and Warrants.
(h) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any Holder, any
director, officer, partner or employee of any Holder, any underwriter or any
director, officer, partner or employee thereof, or any controlling person of any
of the foregoing, and shall survive delivery of and payment for the Warrants
pursuant to the Warrant Agreement and the transfer and registration of
Registrable Securities by any Holder.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
CONFLICT OF LAW PROVISIONS THEREOF.
(j) Jurisdiction and Venue. Each of the parties hereto hereby
irrevocably submits in any legal action or proceeding relating to or arising out
of this Agreement or any other document relating hereto or delivered in
connection with the transactions contemplated hereby, or for recognition and
enforcement of any judgment in respect thereof, to the exclusive jurisdiction of
the United States District Court for the District of Delaware (or if such court
does not have jurisdiction, the courts of the State of Delaware, Newcastle
County), and appellate courts thereof. Each of the parties hereto further (a)
consents that any such action or proceeding may be brought in such court and
waives any objection that it may now or hereafter have to the venue of any such
action or proceeding in such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the same; (b) agrees
that service of process in any such action or proceeding may be effected by
personal delivery thereof to such party's registered office in the jurisdiction
in which it is incorporated, with a copy to such party at its address as
provided in Section 9(f); and (c) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law.
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(k) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(l) Entire Agreement; Amendments. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument duly executed by the Company and the Holders of at least a majority
of the Warrants and of the Registrable Securities at the time outstanding. Each
Holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any amendment or waiver effected pursuant to this Section 9(l),
whether or not any notice, writing or marking indicating such amendment or
waiver appears on such Registrable Securities or is delivered to such Holder.
(m) Inspection. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the Holders of
Registrable Securities and Warrants shall be made available for inspection and
copying on any business day by any Holder of Registrable Securities at the
offices of the Company at the address thereof set forth in Section 9(f) above.
(n) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
AAMES FINANCIAL CORPORATION
By:
-------------------------------
Name:
Title:
[PURCHAER]
By:
-------------------------------
Name:
Title:
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Exhibit D
FILING AGREEMENT
FILING AGREEMENT (this "Agreement"), dated as of March 26, 1998, among
Thirty-Five East Investments LLC, a Delaware limited liability company
("Thirty-Five East") and Turtle Creek Revocable Trust ("Turtle Creek"), a Texas
Revocable trust.
WHEREAS, in accordance with Rule 13d-1(f) issued pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"), only one Schedule 13D
needs to be filed whenever two or more persons are required to file such
schedule and any amendments thereto pursuant to Rule 13d-2 of the Exchange Act
with respect to the same securities, provided such persons meet certain
conditions set forth in such Rules, including an agreement in writing that such
filing and any amendments thereto is filed on their behalf; and
WHEREAS, the parties intend to file a Schedule 13D (the "Aames Schedule
13D") relating to the parties' beneficial ownership of common stock, par value
$.001, of Aames Financial Corporation (the "Common Stock").
NOW, THEREFORE, the parties hereto agree that the Aames Schedule 13D
and any amendments thereto shall be filed on behalf of each of the parties
hereto.
IN WITNESS THEREOF, the undersigned have executed this Agreement as of
the date first above written.
THIRTY-FIVE EAST INVESTMENTS LLC
By: /s/ Glenn P. Dickes
------------------------------
Glenn P. Dickes
Vice President
TURTLE CREEK REVOCABLE TRUST
By: /s/ Gerald J. Ford
------------------------------
Gerald J. Ford
Trustee
