SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
KENNEDY-WILSON, INC.
--------------------
(Name of Issuer)
Common Stock, $.01 par value per share
--------------------------------------
(Title of Class of Securities)
489399 20 4
---------------------------------------
(CUSIP Number of Class of Securities)
Mark M. Hedstrom
Colony K-W, LLC
1999 Avenue of the Stars
Suite 1200
Los Angeles, California 90067
(310) 282-8820
---------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
with a copy to:
Jonathan H. Grunzweig, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144
(213) 687-5000
July 16, 1998
------------------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box:
___
/ /
CUSIP No. 489399 20 4 13D
____________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
THOMAS J. BARRACK, JR.
###-##-####
____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
___
(a)/ /
___
(b)/ X/
____________________________________________________________________________
(3) SEC USE ONLY
____________________________________________________________________________
(4) SOURCE OF FUNDS*
BK
____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ___
/ /
____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
____________________________________________________________________________
: (7) SOLE VOTING POWER
:
: -0-**
: _______________________________________
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 572,111**
PERSON WITH : _______________________________________
: (9) SOLE DISPOSITIVE
: -0-**
: _______________________________________
:(10) SHARED DISPOSITIVE
: 572,111**
____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,111
____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) __
EXCLUDES CERTAIN SHARES* / /**
____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.6%**
____________________________________________________________________________
(14) TYPE OF REPORTING PERSON*
IN
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5
CUSIP No. 489399 20 4 13D
____________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
KELVIN L. DAVIS
###-##-####
____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
___
(a)/ /
___
(b)/ X/
____________________________________________________________________________
(3) SEC USE ONLY
____________________________________________________________________________
(4) SOURCE OF FUNDS*
BK
____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ___
/ /
____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
____________________________________________________________________________
: (7) SOLE VOTING POWER
:
: -0-**
: _______________________________________
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 572,111**
PERSON WITH : _______________________________________
: (9) SOLE DISPOSITIVE
: -0-**
: _______________________________________
:(10) SHARED DISPOSITIVE
: 572,111**
____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,111
____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) __
EXCLUDES CERTAIN SHARES* / /**
____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.6%**
____________________________________________________________________________
(14) TYPE OF REPORTING PERSON*
IN
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5
CUSIP No. 489399 20 4 13D
____________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COLONYGP III, INC.
____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
___
(a)/ /
___
(b)/ X/
____________________________________________________________________________
(3) SEC USE ONLY
____________________________________________________________________________
(4) SOURCE OF FUNDS*
BK
____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ___
/ /
____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
____________________________________________________________________________
: (7) SOLE VOTING POWER
:
: -0-**
: _______________________________________
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 572,111**
PERSON WITH : _______________________________________
: (9) SOLE DISPOSITIVE
: -0-**
: _______________________________________
:(10) SHARED DISPOSITIVE
: 572,111**
____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,111
____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) __
EXCLUDES CERTAIN SHARES* / /**
____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.6%**
____________________________________________________________________________
(14) TYPE OF REPORTING PERSON*
CO
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5
CUSIP No. 489399 20 4 13D
____________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COLONY CAPITAL III, L.P.
____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
___
(a)/ /
___
(b)/ X/
____________________________________________________________________________
(3) SEC USE ONLY
____________________________________________________________________________
(4) SOURCE OF FUNDS*
BK
____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ___
/ /
____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
____________________________________________________________________________
: (7) SOLE VOTING POWER
:
: -0-**
: _______________________________________
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 572,111**
PERSON WITH : _______________________________________
: (9) SOLE DISPOSITIVE
: -0-**
: _______________________________________
:(10) SHARED DISPOSITIVE
: 572,111**
____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,111
____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) __
EXCLUDES CERTAIN SHARES* / /**
____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.6%**
____________________________________________________________________________
(14) TYPE OF REPORTING PERSON*
PN
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5
CUSIP No. 489399 20 4 13D
____________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COLONY INVESTORS III, L.P.
____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
___
(a)/ /
___
(b)/ X/
____________________________________________________________________________
(3) SEC USE ONLY
____________________________________________________________________________
(4) SOURCE OF FUNDS*
BK
____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ___
/ /
____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
____________________________________________________________________________
: (7) SOLE VOTING POWER
:
: -0-**
: _______________________________________
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 572,111**
PERSON WITH : _______________________________________
: (9) SOLE DISPOSITIVE
: -0-**
: _______________________________________
:(10) SHARED DISPOSITIVE
: 572,111**
____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,111
____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) __
EXCLUDES CERTAIN SHARES* / /**
____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.6%**
____________________________________________________________________________
(14) TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5
CUSIP No. 489399 20 4 13D
____________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COLONY K-W, LLC
____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
___
(a)/ /
___
(b)/ X/
____________________________________________________________________________
(3) SEC USE ONLY
____________________________________________________________________________
(4) SOURCE OF FUNDS*
BK
____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ___
/ /
____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
____________________________________________________________________________
: (7) SOLE VOTING POWER
:
: -0-**
: _______________________________________
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 572,111**
PERSON WITH : _______________________________________
: (9) SOLE DISPOSITIVE
: -0-**
: _______________________________________
:(10) SHARED DISPOSITIVE
: 572,111**
____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,111
____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) __
EXCLUDES CERTAIN SHARES* / /**
____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.6%**
____________________________________________________________________________
(14) TYPE OF REPORTING PERSON*
OO
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5
ITEM 1. SECURITY AND ISSUER
This Statement on Schedule 13D (the "Schedule 13D") relates to
certain shares (the "Shares") of common stock, $.01 par value per share
(the "Common Stock"), and warrants ("Warrants") to acquire additional
shares of Common Stock (the Shares and Warrants collectively, the
"Securities") of Kennedy-Wilson, Inc., a Delaware corporation (the
"Issuer"). The principal executive offices of the Issuer are located at
530 Wilshire Boulevard, Suite 101, Santa Monica, California 90401.
The information set forth in the Exhibits attached hereto is
hereby expressly incorporated herein by reference and the response to each
item of this statement is qualified in its entirety by the provisions of
such Exhibits.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed on behalf of ColonyGP III, Inc., a
Delaware corporation ("GP"), Colony Capital III, L.P., a Delaware limited
partnership ("Colony Capital"), Colony Investors III, L.P., a Delaware
limited partnership ("Colony Investors"), Colony K-W, LLC, a Delaware
limited liability company ("Colony"), and Thomas J. Barrack, Jr. and Kelvin
L. Davis (collectively, the "Reporting Persons"). The Reporting Persons
are making this joint filing because they may be deemed to constitute a
"group" within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Act"), although neither the fact of this
filing nor anything contained herein shall be deemed to be an admission by
the Reporting Persons that such a group exists.
Colony is the registered owner of the Securities. The sole and
managing member of Colony is Colony Investors. The general partner of
Colony Investors is Colony Capital. The general partner of Colony Capital
is GP. Mr. Barrack and Mr. Davis are the sole stockholders of GP and have
agreed to jointly control GP. Mr. Barrack holds a 60% interest and Mr.
Davis holds a 40% interest in GP. GP, on behalf of Colony Capital, on
behalf of Colony Investors, is the signatory to the agreements referenced
in Items 3 and 4.
Colony's principal business is to be the registered owner of
certain securities purchased by Colony Investors. Colony Investor's
principal business is the acquisition, management and sale of primarily
real estate-related investments. Colony Capital and GP's principal business
is to make and hold investments.
Mr. Barrack is the Chief Executive Officer of GP, Mr. Davis is
the President, Secretary, and Treasurer, Richard A. Ekleberry is a Vice-
President and Mark M. Hedstrom is a Vice-President thereof. GP has no
other executive officers. Mr. Barrack and Mr. Davis are also the sole
directors of GP.
Mr. Barrack is the Chief Executive Officer and President, Mr.
Davis is the Executive Vice President and Secretary, Mark M. Hedstrom is a
Vice President and the Treasurer, John E. Viola is a Vice President and Joy
Mallory is the Assistant Secretary of Colony. Colony has no other officers
and has no directors.
The principal occupation of Mr. Barrack is serving as Chairman
and Chief Executive Officer of each of Colony Capital, Inc. ("Capital") and
Colony Advisors, Inc. ("Advisors".) The principal occupation of Mr. Davis
is serving as President and Chief Operating Officer of each of Capital and
Advisors. The principal occupation of Mr. Ekleberry is serving as a Vice-
President of each of Capital and Advisors. The principal occupation of Mr.
Hedstrom is serving as Chief Financial Officer and Treasurer of each of
Capital and Advisors, as well as a Vice-President of Advisors. The
principal occupation of Mr. Viola is serving as a Vice President of
Capital. The principal occupation of Ms. Mallory is serving as Assistant
Secretary of Advisors. Each of Advisors and Capital is an affiliate of GP.
The principal business address of each of the Reporting Persons,
Mr. Hedstrom, Mr. Viola and Ms. Mallory is 1999 Avenue of the Stars, Suite
1200, Los Angeles, California 90067. The principal business address of
Mr. Ekleberry is 201 Main Street, Suite 2420, Fort Worth, Texas 76102.
None of the Reporting Persons nor any other person disclosed in
response to this Item 2 has, during the last five years, been (i) convicted
in a criminal proceeding (excluding traffic violations or 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 prohibiting or mandating activities subject to,
Federal or State securities laws or finding any violation with respect to
such laws.
Each of Messrs. Barrack, Davis, Ekleberry, Hedstrom and Viola and
Ms. Mallory is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The aggregate amount of funds required to purchase the 440,085
Shares and the Warrants to acquire 132,026 additional shares of Common
Stock is $5,232,610.
Pursuant to the Stock Purchase Agreement, dated July 16, 1998,
and the Warrant Agreement, dated July 16, 1998, copies of which are
attached hereto as Exhibits 1 and 4, the Reporting Persons purchased (a)
440,085 Shares and (b) Warrants to purchase an additional 132,026 shares of
Common Stock for an aggregate purchase price of $5,232,610.
The funds to be used to purchase such Securities were drawn from
a $425 million revolving credit facility entered into by Colony Investors and
the banks therein named, lead by Bankers Trust Company and The Chase Manhattan
Bank.
ITEM 4. PURPOSE OF TRANSACTION.
Colony Investors has entered into an Investor's Agreement, dated
July 16, 1998 (the "Investor's Agreement"), by and between Colony Investors
and the Issuer, a copy of which is attached hereto as Exhibit 2, pursuant
to which Issuer has agreed, during the term of the Investor's Agreement and
subject to the provisions thereof (including the continued ownership of a
specified minimum number of shares of Common Stock, as set forth in the
Investor's Agreement), among other things, to take all action necessary
such that the Board of Directors of the Issuer shall include one director
designated by Colony Investors, and thereafter, to use its best efforts to
cause a person designated by Colony Investors to be included in each slate
of proposed directors put forth by Issuer and its stockholders and
recommended for election in any proxy solicitation materials disseminated
by the Issuer.
With certain exceptions as described in the Investor's Agreement,
the Reporting Persons have a preemptive purchase right to maintain their
beneficial ownership percentage for so long as their investment continues
to represent at least 5% of the Issuer, as discussed in the Investor's
Agreement.
Pursuant to the Investors Agreement, Colony Investors has agreed
that, for a period of three years after the date of such Investors
Agreement, without the prior written consent of the Issuer, it will not
acquire beneficial ownership of any Common Stock or other securities
exercisable for, or convertible or exchangeable into, Common Stock, other
than the Securities, unless, after giving effect to such additional
beneficial ownership, Colony Investors and its Affiliates (as defined) do
not collectively own in excess of 20% of the Common Stock on a fully
diluted basis as described in the Investor's Agreement.
The above discussion is qualified in its entirety by reference to
the Investor's Agreement. A copy of the Investor's Agreement is attached
hereto as Exhibit 2 and is incorporated herein by reference.
In connection with the purchase of the Securities, Colony
Investors entered into a Registration Rights Agreement with Issuer dated
July 16, 1998 (the "Registration Rights Agreement"), by and between Colony
Investors and Issuer, a copy of which is attached hereto as Exhibit 3 and
incorporated herein by reference. Pursuant to the Registration Rights
Agreement, the Securities beneficially owned by the Reporting Persons will
be entitled to customary demand and piggyback registration rights.
Subject to the foregoing, the Reporting Persons have purchased
the Securities to which this Statement on Schedule 13D relates for
investment purposes, and, depending upon its evaluations of the Issuer's
business and prospects, future development, market conditions and other
factors, the Reporting Persons may from time to time purchase additional
shares of Common Stock, or sell or cause to be sold all or a portion of the
Shares over which the Reporting Persons exercise voting and dispositive
power, either in open market or privately negotiated transactions or
otherwise.
Except as disclosed in this Item 4, the Reporting Persons have no
current plans or proposals which relate to or would result in any of the
events described in Items (a) through (j) of the instruction to Item 4 of
Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Reporting Persons may be deemed to be the beneficial
owners of the 440,085 Shares owned by them and the 132,026 shares of Common
Stock that they have a right to acquire through the exercise of immediately
exercisable Warrants at an exercise price of $15.00 per share.
Accordingly, the Reporting Persons may be deemed to be the beneficial
owners of 572,111 shares of Common Stock, or approximately 12.6% of the
shares outstanding. The percentage of shares of Common Stock outstanding
reported as beneficially owned by the Reporting Persons herein, on the date
hereof, is based upon the 3,960,767 shares of Common Stock outstanding as
reported in the Issuer's Form 10-Q for the quarterly period ended March 31,
1998, as filed with the Securities and Exchange Commission.
(b) Mr. Barrack and Mr. Davis, as the sole stockholders of GP,
acting as general partner of and on behalf of Colony Capital, acting as
general partner of and on behalf of Colony Investors, acting as managing
member of and on behalf of Colony, have the shared power to vote, or to
direct the vote, and the shared power to dispose of, or direct the
disposition of, the Securities beneficially owned by the Reporting Persons.
(c) There have been no transactions effected in the Issuer's
Common Stock during the past 60 days by the Reporting Persons or any other
person or entity disclosed in Item 2.
(d) No other person is known by the Reporting Persons to have
the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the Securities or the Common Stock to be
issued upon exercise of the Warrants.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
The responses to Items 3 and 4 are incorporated herein by this
reference.
Pursuant to the Investor's Agreement, the Issuer has taken all
action necessary to include Thomas J. Barrack, Jr., to its Board of
Directors and will use its best efforts to cause Thomas J. Barrack, Jr. to
be included in each slate of proposed directors put forth by the Issuer and
its stockholders and recommended for election in any proxy solicitation
materials disseminated by the Issuer, so long as the Reporting Persons
beneficially own at least 50% of the Securities. The foregoing is
qualified in its entirety by reference to the Investor's Agreement. A copy
of the Investor's Agreement is attached hereto as Exhibit 2 and is
incorporated herein by reference.
Colony has entered into a Bridge Loan Agreement, dated July 16,
1998, with the Issuer and certain of its subsidiaries (the "Bridge Loan
Agreement"). Pursuant to the Bridge Loan Agreement, Colony has agreed to
lend to the Issuer on a subordinated basis $21,000,000 (the "Loan"). The
Loan bears interest at a rate of 14% per annum and matures on January 15,
2000. The Loan is guaranteed by certain subsidiaries of the Issuer on a
subordinated basis and is secured by a pledge of all of the outstanding
shares of one of the subsidiary guarantors. In addition, the terms of the
Loan restrict, among other things, certain borrowings, distributions and
mergers involving the Issuer and the guarantors and is subject to
additional customary restrictive covenants.
Except as set forth above and as described in Items 3 and 4, none
of the Reporting Persons nor any other person disclosed in Item 2 has any
contract, arrangement, understanding, or relationship (legal or otherwise)
with any person with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Stock Purchase Agreement, dated July 16, 1998, by and
between Colony Investors and Issuer.
Exhibit 2 Investor's Agreement, dated July 16, 1998, by and
between Colony Investors and Issuer.
Exhibit 3 Registration Rights Agreement, dated July 16, 1998, by
and between Colony Investors and Issuer.
Exhibit 4 Warrant Agreement, dated July 16, 1998, between Colony
Investors and the Issuer.
Exhibit 5 Joint Filing Agreement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 24, 1998
By: /s/ THOMAS J. BARRACK, JR.
-------------------------------
Thomas J. Barrack, Jr.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 24, 1998
By: /s/ KELVIN L. DAVIS
-------------------------------
Kelvin L. Davis
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 24, 1998
COLONYGP III, Inc.,
a Delaware corporation,
By: /s/ KELVIN L. DAVIS
------------------------------
Kelvin L. Davis
President
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 24, 1998
COLONY CAPITAL III, L.P.,
a Delaware limited partnership,
By: ColonyGP III, Inc.,
a Delaware corporation,
its general partner
By: /s/ KELVIN L. DAVIS
----------------------------
Kelvin L. Davis
President
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 24, 1998
COLONY INVESTORS III, L.P.,
a Delaware limited partnership,
By: Colony Capital III, L.P.,
a Delaware limited partnership,
its general partner
By: ColonyGP III, Inc.,
a Delaware corporation,
its general partner
By: /s/ KELVIN L. DAVIS
----------------------------
Kelvin L. Davis
President
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 24, 1998
COLONY K-W, LLC,
a Delaware limited liability company
By: Colony Investors III, L.P.,
a Delaware limited partnership,
its sole and managing member
By: Colony Capital III, L.P.,
a Delaware limited partnership,
its general partner
By: ColonyGP III, Inc.,
a Delaware corporation,
its general partner
By: /s/ KELVIN L. DAVIS
------------------------------
Kelvin L. Davis
President
EXHIBIT INDEX
Page No.
Exhibit 1 Stock Purchase Agreement, dated July 16, 1998, by
and between Colony Investors and Issuer.
Exhibit 2 Investor's Agreement, dated July 16, 1998, by and
between Colony Investors and Issuer.
Exhibit 3 Registration Rights Agreement, dated July 16, 1998,
by and between Colony Investors and Issuer.
Exhibit 4 Warrant Agreement, dated July 16, 1998, between
Colony Investors and the Issuer.
Exhibit 5 Joint Filing Agreement
EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement"), dated July 16,
1998, is by and between Kennedy-Wilson, Inc., a Delaware corporation (the
"Company"), and Colony Investors III, L.P., a Delaware limited partnership
("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to Purchaser (i)
certain shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), and (ii) warrants to acquire additional shares of Common
Stock for an aggregate purchase price of $5,232,610 (the "Purchase Price");
and
WHEREAS, Purchaser wishes to purchase the such securities on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. THE SECURITIES
Section 1.1 ISSUANCE, SALE AND PURCHASE OF THE SECURITIES. In
reliance upon the representations and warranties made herein and subject to
the satisfaction or waiver of the conditions set forth herein, the Company
agrees to issue and sell to Purchaser, and Purchaser agrees to purchase
from the Company, for the Purchase Price, (i) 440,085 shares (the "Common
Shares") of Common Stock and (ii) warrants (the "Warrants" and,
collectively with the Common Shares, the "Securities"), exercisable for
seven years (as provided in the Warrant Agreement dated the date hereof
between the Company and Purchaser, a form of which is attached hereto as
Exhibit A (the "Warrant Agreement")), to acquire an additional 132,026
shares (the "Warrant Shares") of Common Stock at an initial exercise price
of $15.00 per share, subject to adjustment as provided in the Warrant
Agreement.
Section 1.2 OTHER AGREEMENTS. Concurrently with the Closing
referred to below, the Company will acquire 100% of the outstanding capital
stock of Heitman Properties Ltd. pursuant to that certain Stock Purchase
Agreement between the Company and Heitman Financial Ltd. dated as of the
date hereof (the "Acquisition Agreement"). Concurrently with the execution
of this Agreement, the Company will enter into the Warrant Agreement, an
Investor's Agreement with Purchaser in the form attached as Exhibit B
hereto (the "Investor's Agreement"), a Bridge Loan Agreement (including the
pledges and guaranties thereunder and all exhibits thereto) with Purchaser
in the form attached hereto as Exhibit C and a Registration Rights
Agreement with Purchaser in the form attached as Exhibit D hereto (the
"Registration Rights Agreement" and, collectively with the Warrant
Agreement, the Investor's Agreement, a Bridge Loan Agreement (including the
pledges and guaranties thereunder and all exhibits thereto) and the
Acquisition Agreement, the "Other Documents").
Section 1.3 CLOSING. The closing (the "Closing") shall take place
at the time of execution and delivery hereof at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Los Angeles,
California 90071 or at such other location, date and time as may be agreed
upon between Purchaser and the Company. At the Closing, the Company shall
issue and deliver to Purchaser stock and warrant certificates in definitive
form, registered in the name of Purchaser or its designee, representing the
Securities. As payment in full for the Securities, and against delivery of
the certificates therefor at the Closing, Purchaser shall initiate a wire
transfer in immediately available United States funds in accordance with
the Company's instructions in the amount of the Purchase Price. Each
certificate representing the Securities shall bear the following legend in
addition to any other legend that may be required from time to time under
applicable law or pursuant to any other contractual obligation:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF (A "TRANSFER") EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
AN INVESTOR'S AGREEMENT DATED JULY 16, 1998. SUCH SECURITIES ARE ALSO
SUBJECT TO A REGISTRATION RIGHTS AGREEMENT DATED JULY 16, 1998. ANY
TRANSFEREE OF THESE SECURITIES TAKES SUBJECT TO THE TERMS OF SUCH
AGREEMENTS, A COPY OF EACH OF WHICH IS ON FILE WITH THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR STATE SECURITIES LAWS AND NO SALE OR TRANSFER OF THESE SECURITIES
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, OR (B) PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT
TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY OPINION
OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.
SECTION 2. REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Purchaser as follows:
(a) Each of the Company and its subsidiaries (collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation, trust or partnership, as the case may be, (in the case of
corporate subsidiaries) in good standing under the laws of the jurisdiction
in which it is organized, with full corporate power and authority to own or
lease and occupy its properties and conduct its business, and is duly
qualified to do business, and (in the case of corporate subsidiaries) is in
good standing, in each jurisdiction which requires such qualification,
except where the failure to so qualify would not, individually or in the
aggregate, have or be reasonably likely to result in a material adverse
effect on the business, operations, business prospects, earnings, assets,
liabilities or condition (financial or otherwise) of the Company (a
"Material Adverse Effect"). All of the outstanding shares of capital stock
of each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and, except as disclosed in the Company's
reports, proxy statements, forms, and other documents with the Securities
and Exchange Commission (the "SEC") filed during the 1998 and publicly
available prior to the date hereof (the "1998 SEC Documents"), are owned by
the Company, directly, or indirectly through another Subsidiary, free and
clear of any lien, adverse claim, security interest or other encumbrance.
(b) The Company and each of the Subsidiaries have all
requisite power and authority, and all necessary material authorizations,
approvals, orders, licenses, certificates and permits of and from all
regulatory or governmental officials, bodies and tribunals, to own or lease
their respective properties and to conduct their respective businesses as
now being conducted, except as would not have a Material Adverse Effect on
the Company or such Subsidiary; all such authorizations, approvals,
licenses, certificates and permits are in full force and effect, except
where the failure to be in full force and effect would not have a Material
Adverse Effect on the Company or such Subsidiary; and the Company and each
of the Subsidiaries are in compliance with all applicable laws, the
violation of which could have a Material Adverse Effect on the Company and
the Subsidiaries taken as a whole or on the Issuer and the Guarantors (as
such terms are defined under the Bridge Loan Agreement) taken as a whole,
as the case may be (collectively, a "Company Material Adverse Effect").
(c) Except as disclosed in the 1998 SEC Documents, (i) the
Company and each Subsidiary have good and marketable title to their
properties and assets (or a valid first lien as to mortgaged properties)
owned (or mortgaged) by them, free and clear of all material liens, charges
and encumbrances and equities of record; (ii) no person or entity, other
than tenants under the leases or guarantors thereof pursuant to which the
Company and its Subsidiaries lease all or a portion of their properties,
has an option or right of first refusal or any other right to purchase any
of such properties; (iii) each of the properties of the Company and its
Subsidiaries, at the time such property was acquired or at the time the
loan by the Company with respect to such property was made, had access to
public rights of way, either directly or through insured easements, except
as would not have a Company Material Adverse Effect; (iv) each of such
properties is served by all public utilities necessary for the current
operations on such property in sufficient quantities for such operations,
except as would not have a Company Material Adverse Effect; (v) each of
such properties complies with all applicable codes and zoning and
subdivision laws and regulations, except for such failures to comply which
would not have a Company Material Adverse Effect; (vi) the real property
leases and equipment leases, if any, relating to each of such properties
are in full force and effect, except where the failure to be in full force
and effect would not have a Company Material Adverse Effect; and (vii)
there is no pending or (to the Company's best knowledge) threatened
condemnation, zoning change, or other proceeding or action that will in any
manner affect the size of, use of, improvements on construction on or
access to the properties of the Company and its Subsidiaries, except such
proceedings or actions which would not have a Company Material Adverse
Effect.
(d) The Company and each Subsidiary maintains adequate
insurance for the conduct of their respective business.
(e) The Company, either directly or through the
Subsidiaries, owns or licenses or otherwise has the right to use all
patents, trademarks, trade names and trade secrets material to the
Company's business; other than routine proceedings which if adversely
determined would not result in a Company Material Adverse Effect, no claims
have been asserted by any person with respect to the use of any such
patents, trademarks, trade names or trade secrets or challenging or
questioning the validity or effectiveness of any such patents, trademarks,
trade names or trade secrets; to the best knowledge of the Company, the
use, in connection with the business and operations of the Company and the
Subsidiaries of such patents, trademarks and trade names does not infringe
on the rights of any person.
(f) The Company's authorized and outstanding capitalization
(including all securities exercisable for, or convertible or exchangeable
into, Common Stock) is as set forth in Schedule 1(f) hereto. The
outstanding shares of Common Stock have been duly and validly authorized
and issued in compliance with all Federal and state securities laws, and
are fully paid and nonassessable; the Common Shares have been duly and
validly authorized and, when issued and delivered pursuant to this
Agreement, will be fully paid and nonassessable; and the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Common Shares.
(g) There is no pending or, to the best knowledge of the
Company, threatened, action, suit, proceeding or investigation before any
court, governmental agency, authority or body or arbitrator involving the
Company or any of the Subsidiaries or any of their respective officers (in
their capacities as officers) or any of their respective properties, assets
or rights which, if determined adversely, could have a Company Material
Adverse Effect.
(h) The Company and each of the Subsidiaries party thereto
has full corporate power and authority to enter into and perform its
obligations under this Agreement and the Other Documents and to issue, sell
and deliver the Securities; all of the representations and warranties of
the parties to the Acquisition Agreement made in the Acquisition Agreement
(the "Acquisition Representations") are true and correct in all material
respects as if made on and as of the date hereof; this Agreement and the
Other Documents have been duly authorized, executed and delivered by the
Company and each of the Subsidiaries party thereto and, when so executed,
will each constitute a valid and binding obligation of the Company and each
of the Subsidiaries party thereto, enforceable against the Company and each
of the Subsidiaries party thereto in accordance with its terms, except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether a proceeding is
considered at law or in equity).
(i) No consent, approval, authorization or order of any
court or governmental agency, authority or body is required (and has not
been received) for the execution by the Company and each of the
Subsidiaries party thereto of this Agreement and the Other Documents, the
performance by the Company and each of the Subsidiaries party thereto or
their respective obligations hereunder and thereunder or the consummation
by the Company and each of the Subsidiaries party thereto of the
transactions contemplated herein and therein.
(j) Neither the Company nor any or the Subsidiaries is in
violation of, in conflict with, in breach of or in default under (and the
Company does not know of an event which with the giving of notice or the
lapse of time or both would be reasonably likely to constitute a default
under) its charter or by-laws (and the Company does not know of an event
which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a violation), and neither the Company nor
any Subsidiary is in default in the performance of any obligation,
agreement or condition contained in any loan, note or other evidence of
indebtedness or in any indenture, mortgage, deed of trust or any other
material agreement by which it or its properties are bound, except for such
defaults as would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(k) Neither the Company nor any of the Subsidiaries has
violated any environmental, safety or similar law or regulation applicable
to its business relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants, nor has the Company nor any of the Subsidiaries violated any
Federal, state or local law relating to discrimination in the hiring,
promotion, pay or terms or conditions of employment of employees nor any
applicable wage or hour laws, nor has the Company nor any of the
Subsidiaries engaged in any unfair labor practice, which in each case could
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
(l) Neither the issue and sale of the Securities nor the
consummation by the Company and the Subsidiaries of any of the other
transactions contemplated herein or in the Other Documents nor the
fulfillment of the terms hereof and thereof will conflict with, result in a
breach or violation of; or constitute a default under any law or the
charter or bylaws of the Company or any of the Subsidiaries or the terms of
any indenture or other agreement or instrument to which the Company or any
of the Subsidiaries is a party or is bound or (except as would not have a
Company Material Adverse Effect) any judgment, order or decree applicable
to the Company or any of the Subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over the Company or any of the Subsidiaries.
(m) The Company has fulfilled its obligations, if any,
under the minimum funding standards of Section 302 of the Employee
Retirement Income Security Act or 1974, as amended ("ERISA"), and the
regulations and published interpretations thereunder with respect to each
"pension plan" (as defined in ERISA and such regulations and published
interpretations) in which employees of the Company are eligible to
participate and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and such regulations and
published interpretations (except for such failure to so comply that would
not have, singularly or in the aggregate with all other such failures to
comply, a Company Material Adverse Effect), and has not incurred any unpaid
liability to the Pension Benefit Guaranty Corporation (other than for the
payment of premiums in the ordinary course) or to any such plan under Title
IV of ERISA.
(n) Except as disclosed in the 1998 SEC Documents, other
than the Warrants and grants of options to purchase an aggregate of 815,000
shares of Common Stock pursuant to the 1992 Incentive and Nonstatutory
Stock Option Plan of the Company, as amended, and a warrant to acquire
30,000 shares of Common Stock, there are no outstanding warrants or options
to purchase any shares of capital stock of the Company and there are no
restrictions upon the voting or transfer of, or the declaration or payment
of any dividend or distribution on, any shares of capital stock of the
Company pursuant to the certificate or incorporation or by-laws of the
Company, any agreement or other instrument to which the Company is a party
or by which the Company is bound, or any order, law, rule, regulation or
determination of any court, governmental agency or body (including, without
limitation, any banking or insurance regulatory agency or body), or
arbitrator having jurisdiction over the Company.
(o) There are no registration or other rights entitling any
person to registration by the Company under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the issued capital stock of
the Company (other than pursuant to the Registration Rights Agreement), or
to purchase or subscribe for capital stock of the Company (other than
pursuant to the Investor's Agreement).
(p) The Company files and has filed all required reports,
proxy statements, forms, and other documents with the SEC since January 1,
1995 (the "SEC Documents"). True and complete copies of all 1998 SEC
Documents have been delivered to Purchaser. As of their respective dates,
(i) the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and (ii) none of
the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except to the extent that
information contained in any SEC Document has been revised or superseded by
a later filed SEC Document filed and publicly available prior to the date
of this Agreement, none of the SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply as
to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto as
of their respective dates, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved and fairly present the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments and the absence of footnotes). Except for
liabilities and obligations incurred in the ordinary course of business,
consistent with past practices, since the date of the most recent
consolidated balance sheet included in the 1998 SEC Documents (the "Base
Balance Sheet"), neither the Company nor any of the Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company
and its consolidated Subsidiaries or in the notes thereto.
(q) Except as disclosed in 1998 SEC Documents, since the
date of the Base Balance Sheet, the Company and the Subsidiaries have
conducted their respective businesses only in the ordinary course of
business in accordance with past practices, and there has not been (i) any
material adverse change in the Company, (ii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (iii) any
damage, destruction or loss, whether or not covered by insurance, that has
or reasonably could be expected to have a Company Material Adverse Effect
or (iv) any change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that in all material
respects (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(s) To the Company's knowledge, neither the Company nor any
of its Subsidiaries nor any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or
regulation.
(t) The Company and each of the Subsidiaries have filed all
tax returns required to be filed (except to the extent extensions have been
timely filed related thereto), which returns are complete and correct in
all material respects, and neither the Company nor any Subsidiary is in
default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto.
(u) To the best of the Company's knowledge, no labor
disturbance by the employees of the Company or the Subsidiaries exists or
is imminent that would, individually or in the aggregate, have a Company
Material Adverse Effect. No collective bargaining agreement exists with any
of the Company's employees and, to the best of the Company's knowledge, no
such agreement is imminent.
(v) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will
not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(w) The Company agrees that neither it, nor anyone acting
on its behalf, will offer any of the Securities so as to bring the issuance
and sale of the Securities within the provisions of Section 5 of the
Securities Act, or offer any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, or otherwise approach or
negotiate with respect thereto with, anyone if the sale of any of the
Securities or any such similar securities would be integrated as a single
offering for the purposes of the Securities Act, including, without
limitation, Regulation D thereunder.
(x) Except as set forth in Section 4(c) hereof, the Company
has not retained, directly or indirectly, any broker or finder or incurred
any liability or obligation for any brokerage fees or finder's fees with
respect to this Agreement or the transactions contemplated hereby.
(y) All the Company's representations and warranties herein
(other than the Acquisition Representations, unless and to the extent the
Company knows any such representation is untrue or incorrect) shall survive
until ninety (90) days following the delivery to the Company of its signed,
audited financial statements for the year ending December 31, 1998.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Company that:
(a) Purchaser is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority under such laws to own
or lease and operate its properties and to carry on its business as now
conducted.
(b) Purchaser has the power and authority to execute,
deliver and perform this Agreement and the Other Documents. All action on
the part of Purchaser necessary for the authorization, execution and
delivery of this Agreement and the other Documents and the performance of
all obligations of Purchaser hereunder and thereunder have been taken or
will be taken prior to the Closing. This Agreement and the Other Documents
have been duly authorized, executed and delivered by Purchaser and each
constitutes a valid and legally binding obligation of Purchaser,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether enforcement is sought by
proceedings in equity or at law).
(c) The execution and delivery by Purchaser of this
Agreement and the Other Documents and the performance by Purchaser of its
obligations hereunder and thereunder will not violate any provision of law,
rule or regulation, the organizational documents governing Purchaser or any
order or decree of any court or other agency of government, or conflict
with, result in a breach of or constitute (with notice or lapse of time or
both) a default under any indenture, agreement or other instrument by which
Purchaser or any of its properties or assets is bound, or result in the
creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever known to Purchaser upon any of the
properties or assets of Purchaser.
(d) The Securities will be acquired for investment for
Purchaser's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Purchaser further represents that it does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities.
SECTION 3. CLOSING CONDITIONS
Section 3.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation
of Purchaser to purchase the Securities shall be subject to satisfaction or
waiver by it of the following conditions at or before the Closing:
(a) The representations and warranties of the Company
contained in Section 2.1 hereof that are qualified as to materiality shall
be true and accurate, and those not so qualified shall be true and accurate
in all material respects.
(b) The Company shall have performed and complied in all
material respects with all agreements, covenants and conditions contained
herein that are required to be performed or complied with by it at or
before the Closing and the Acquisition Agreement shall have been
consummated in accordance with its terms.
(c) The Company shall have entered into the Other
Documents, Purchaser shall have been exempted from Section 203 of the
Delaware General Corporation Law by Company Board of Director action so
that Purchaser shall not be an "interested stockholder" thereunder despite
any additional share purchases not in violation of the Investor's
Agreement, and Purchaser's designee shall have been appointed to the board
of director positions pursuant to the Investor's Agreement.
(d) Purchaser shall have received a certificate, dated the
Closing date and signed by the Chief Executive Officer and the Chief
Financial Officer of the Company, certifying that the conditions in
Sections 3.1(a) and (b) are satisfied on and as of such date.
(e) Purchaser and its counsel shall have received copies of
the following documents:
(i) the Certificate of Incorporation,
certified as of a recent date by the Secretary of State of the
State of Delaware, and a certificate of such authority dated as
of a recent date as to the due incorporation and good standing of
the Company and listing all documents of the Company on file with
said authority;
(ii) a certificate of the Secretary or an
Assistant Secretary of the Company dated the Closing date
certifying: (A) that attached thereto is a true and complete copy
of the Bylaws of the Company as in effect on the date of such
certification; (B) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors
authorizing the execution, delivery and performance of this
Agreement and the Other Documents and the issuance, sale and
delivery of the Securities, and that all such resolutions are in
full force and effect and are all the resolutions adopted in
connection with the transactions contemplated by this Agreement;
(C) that the Certificate of Incorporation of the Company has not
been amended since the date of the last amendment referred to in
the certificate delivered pursuant to clause (i) above; (D) that
the Bylaws have not been amended since the date of the last
amendment referred to in such certificate pursuant to subclause
(ii)(A) above; and (E) that each officer of the Company executing
this Agreement and the Other Documents, the certificates
representing the Securities and any agreement, certificate or
instrument furnished pursuant hereto, was, at the respective
times of such execution and delivery of such documents, duly
elected or appointed, qualified and acting as such officer, and
the signatures of such persons appearing on such documents are
their genuine signatures or true facsimiles thereof; and
(iii) such additional supporting
documents as Purchaser may reasonably request.
(f) Purchaser shall have received an opinion (satisfactory
to Purchaser and its counsel), dated the Closing date, from Kulik,
Gottesman & Mouton, LLP in substantially the form of Exhibit E hereto.
Section 3.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
Company's obligation to sell the Securities shall be subject to the
satisfaction or waiver by it of the following conditions at or before the
Closing:
(a) The representations and warranties of Purchaser
contained in Section 2.2 of this Agreement that are qualified as to
materiality shall be true and accurate, and those not so qualified shall be
true and accurate in all material respects.
(b) Purchaser shall have performed and complied in all
material respects with all agreements and conditions contained herein that
are required to be performed or complied with by it at or before the
Closing, including without limitation, payment of the Purchase Price.
(c) Purchaser shall have entered into the Other Documents.
SECTION 4. MISCELLANEOUS
(a) The Company agrees to pay all of the expenses in
connection with the transactions contemplated hereby (including without
limitation the reasonable fees and expenses of counsel for Purchaser),
whether or not such transactions shall be consummated.
(b) Except as otherwise provided herein, covenants,
agreements, representations and warranties made in this Agreement, or any
certificate or instrument delivered pursuant to or in connection therewith
shall survive the execution and delivery of this Agreement.
(c) Each party hereto represents and warrants to the other
that it has had no dealing with any broker or finder in connection with
this Agreement or the transactions contemplated hereby other than a fee to
Prudential Securities Incorporated to be paid by the Company. Each party
hereto will indemnify and hold harmless the other against and in respect of
any claim for brokerage or other commissions relative to this Agreement or
to the transactions contemplated hereby, based in any way on agreements,
arrangements or understandings made or claimed to have been made by such
party with any third party.
(d) All representations, covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not; provided that Purchaser shall
not assign its rights in this Agreement to any unrelated third party
without first obtaining the prior written consent of the Company, and
provided further that, notwithstanding the above provision, Purchaser may
assign its rights in this Agreement to any party under its control.
(e) All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in
person or mailed by certified or registered mail; return receipt requested,
addressed as follows:
If to Purchaser, to: Colony Investors III, L.P.
c/o Colony Capital, Inc.
201 Main Street, Suite 2400
Fort Worth, Texas 76102
Attention: Richard Ekleberry, Esq.
Fax No.: (817) 871-4088
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90067
Telecopier No.: (213) 687-5600
Attention: Jonathan H. Grunzweig, Esq.
If to the Company, to: Kennedy-Wilson, Inc.]
530 Wilshire Blvd., #101
Santa Monica, California 90401
Telecopier No.: (310) 314-8510
Attention: William J. McMorrow
with copies to: Kulik, Gottesman & Mouton, LLP
1880 Century Park East, Suite 1150
Los Angeles, California 90067
Attention: Kent Mouton, Esq.
Fax No.: (310) 557-0224
and
White & Case LLP
633 West Fifth Street
Los Angeles, California 90071-2007
Attention: Richard K. Smith, Jr., Esq.
Fax No.: (213) 687-0758
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been
duly given or served on the date on which personally delivered or on the
date actually received, with receipt acknowledged.
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws provisions thereof.
(g) This Agreement and the Other Documents constitute the
sole and entire agreement of the parties with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous agreements,
discussions, representations, warranties or other communications. All
Schedules and Exhibits hereto are hereby incorporated herein by reference.
(h) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(i) As used in this Agreement, knowledge shall mean, with
respect to any person, actual, conscious knowledge of such person (without
imputing any knowledge to such person), if an individual, or of any
executive officer of such person, if not an individual.
(j) This Agreement may not be amended or modified without
the written consent of the Company and Purchaser, nor shall any waiver be
effective against any party unless in a writing executed on behalf of such
party.
(k) If any provision of this Agreement shall be declared
void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
(l) The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting
any term or provisions of this Agreement.
IN WITNESS WHEREOF, the Company and Purchaser have caused this
Agreement to be executed and delivered by the undersigned duly authorized
officers as of the day and year first above written.
KENNEDY-WILSON, INC.
By: /s/ William J. McMorrow
_________________________
Name: William J. McMorrow
Title: CEO
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By: /s/ Mark M. Hedstrom
______________________________
Name: Mark M. Hedstrom
Title: Vice President
EXHIBIT 2
INVESTOR'S AGREEMENT
This Investor's Agreement (the "Agreement") is made and entered
into on July 16, 1998, by and between Kennedy-Wilson, Inc., a Delaware
corporation (the "Company"), and Colony Investors III, L.P., a Delaware
limited partnership (the "Purchaser").
RECITALS
The Purchaser has, upon the terms and subject to the conditions
of a Stock Purchase Agreement, dated the date hereof (the "Stock Purchase
Agreement"), by and between the Company and the Purchaser, agreed to
acquire 440,085shares of Common Stock, $0.01 par value per share, of the
Company ("Common Stock"), and warrants (the "Warrants") to purchase an
additional 132,026 shares of Common Stock.
The Purchaser and the Company each desire to enter into this
Agreement for the purpose of regulating certain aspects of their
relationship with regard to the Company.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the Purchaser and
the Company agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the terms below shall have the following meanings.
Any such term, unless the context otherwise requires, may be used in the
singular or plural, depending upon reference.
"Affiliate" shall mean, with respect to any Person, (i) any Person or
entity directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, (ii) any spouse or non-adult
child (including by adoption) of any natural person described in clause (i)
above, (iii) any relative other than a spouse or non-adult child (including
by adoption) who has the same principal residence of any natural person
described in clause (i) above, (iv) any trust in which any such Persons
described in clause (i), (ii) or (iii) above has a beneficial interest and
(v) any corporation, partnership, limited liability company or other
organization of which any such Persons described in clause (i), (ii) or
(iii) above collectively own more than fifty percent (50%) of the equity of
such entity. For purposes of this definition, beneficial ownership of more
than ten percent (10%) of the voting common equity of a Person shall be
deemed to be control of such Person.
"Fully Diluted Common Stock" shall mean all of the Common Stock of the
Company, assuming conversion, exercise or exchange of all outstanding
convertible or exchangeable securities, options, rights, warrants and
similar instruments into or for Common Stock (regardless of whether such
convertible securities, options, warrants or similar securities are then
convertible or exercisable), except for compensatory stock options which
shall not be deemed outstanding unless they have vested. As provided in
Section 4.4, all such calculations shall be appropriately adjusted for
stock splits, stock dividends and other similar events as described
therein.
"Person" shall mean an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization
or any other similar entity.
"Restricted Securities" shall mean any securities of the Company issued
and sold to the Purchaser pursuant to the Stock Purchase Agreement.
ARTICLE II
CORPORATE GOVERNANCE
2.1 Board of Directors. Upon the execution of this Agreement, and
until such time as the Purchaser and its Affiliates no longer collectively
beneficially own at least 50% of the Restricted Securities, the Company
hereby agrees (a) to take all action necessary such that from and after the
date hereof until the regularly scheduled 2001 annual meeting of the
Company's stockholders, the Board of Directors of the Company (the "Board")
shall include one Class III director designated by the Purchaser, and (b)
thereafter to use its best efforts to cause a person designated by the
Purchaser to be included in each slate of proposed Class III directors put
forth by the Company to its stockholders and recommended for election in
any proxy solicitation materials disseminated by the Company; provided,
however, that the identity of any nominee so designated by the Purchaser
other than Thomas J. Barrack, Jr. and Kelvin L. Davis shall be reasonably
acceptable to the Company; and provided, further, that if at any time the
nominee so designated by the Purchaser shall not be serving on the Board,
(i) the Purchaser shall have the continuing right to receive copies of all
materials distributed to members of the Board, (ii) the nominee designated
by the Purchaser shall have the right to participate substantially in all
meetings of the Board on a non-voting basis, and (iii) the Company shall
grant the Purchaser such other rights as may be necessary for the
Purchaser's investment in the Restricted Securities to continue to qualify
as a "venture capital investment" within the meaning of 29 C.F.R.
section 2510.3-101(d). The Company further agrees to cause the nominee
designated by the Purchaser in accordance with the foregoing to serve on
the Board of Directors of each subsidiary of the Company as the Purchaser
may from time to time request. Upon the death, resignation or removal of a
nominee designated by the Purchaser, the Company will use its best efforts
to have the vacancy filled by a person designated by the Purchaser. Board
members designated by the Purchaser shall be fully covered by any
directors' and officers' liability insurance maintained from time to time
on the same terms as the other members, shall be entitled to the benefit of
any indemnification arrangements applicable to the other members and shall
have the right to receive all fees paid and options and other awards
granted and expenses reimbursed to non-employee directors generally.
ARTICLE III
CERTAIN PURCHASE RIGHTS AND RESTRICTIONS
3.1 General. If, at any time when the Purchaser and its
Affiliates collectively own in excess of 5% of the Fully Diluted Common
Stock, the Company proposes to issue for cash any of its Common Stock or
other securities exercisable for, or convertible or exchangeable into,
Common Stock (collectively, the "Securities"), other than as provided in
Section 3.2, then the Company shall, no later than 30 days prior to the
consummation of such issuance, give written notice to the Purchaser of such
proposed issuance. Such notice shall describe the proposed issuance, and
contain an offer to sell to the Purchaser, at the same price and for the
same consideration to be paid by the proposed purchasers (but net of any
underwriting or similar fees, discounts or commissions), up to the
Purchaser's pro rata portion (which shall be a percentage equal to the
percentage of the Fully Diluted Common Stock held by the Purchaser and its
Affiliates) of the Securities to be sold. Subject to the foregoing, if
Common Stock is being issued with other Securities as a unit and such
Common Stock may only be purchased in connection therewith as a part of
such unit, the Purchaser must purchase such unit in order for such
acceptance to be valid. If the Purchaser fails to accept such offer by
written notice within 20 days after its receipt of the Company's notice,
the Company may proceed with such proposed issuance, free of any right on
the part of the Purchaser under this Section 3.1 in respect thereof.
3.2 Exceptions. The purchase right granted by Section 3.1 shall
not apply to: (i) compensatory issuances to employees, directors or
consultants or pursuant to related employee benefit or stock option plans
approved by the Board of Directors; (ii) Securities distributed or set
aside to all holders of Common Stock on a per share equivalent basis; (iii)
derivative securities (e.g., warrants) issued as customary "yield
enhancement" in connection with (a) the arrangement of bank credit or (b)
the issuance of debt securities or redeemable, non-convertible preferred
stock; (iv) any issuance of Securities upon the conversion, exercise or
exchange of derivative equity securities contemplated by or issued in
accordance with this Agreement; and (v) any issuance of Common Stock to the
Purchaser on the date hereof and any subsequent issuance of Additional
Warrants (as hereinafter defined).
3.3 Warrant Adjustment. In the event that, prior to January 16,
1999, (a) the Company completes an offering of its Common Stock or (b)
announces (by the filing of any registration statement with the Securities
and Exchange Commission, by press release or otherwise) an offering of its
Common Stock and completes such an offering prior to July 16, 1999 (any
such offering a "Subsequent Equity Offering"), the Company shall, upon each
Subsequent Equity Offering, issue warrants to the Purchaser (the
"Additional Warrants") initially exercisable for the number of shares
necessary to maintain the aggregate amount of Common Stock issuable
pursuant to the Warrants and the Additional Warrants at 3.0% of the Fully
Diluted Common Stock. The Additional Warrants shall have terms
substantially identical to the Warrants and shall have the same
registration rights.
3.4 Standstill Agreement. After acquiring the Restricted
Securities and except as further permitted under Section 3.1 or 3.3, the
Purchaser agrees not to acquire beneficial ownership of any other
Securities prior to July 15, 2001, without the prior written consent of the
Company, unless (after giving effect to such additional beneficial
ownership) Purchaser and its Affiliates do not collectively own in excess
of 20% of the Fully Diluted Common Stock.
ARTICLE IV
MISCELLANEOUS
4.1 Transfer Restrictions. The Purchaser agrees that it will not
transfer, sell or assign (other than transfers, sales or assignments to an
Affiliate of the Purchaser) any of the Restricted Securities prior to July
15, 1999 without the express written consent of the Company. Restricted
Securities sold to the public pursuant to an effective registration
statement or pursuant to Rule 144 promulgated under the Securities Act of
1933 shall no longer be subject to any of the provisions of this Agreement.
4.2 Successors, Assigns and Transferees. This Agreement shall be
binding upon and all rights hereto shall inure to the benefit of the
parties hereto and their respective legal representatives, heirs, legatees,
successors and permitted assigns subject to the terms of this Agreement.
4.3 Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to another party hereto shall be
in writing, shall be deemed to have been duly given or delivered when
delivered personally or telecopied (receipt confirmed, with a copy sent by
reputable overnight courier), or one business day after delivery to a
reputable overnight courier, postage prepaid, to the address of the party
set forth below such person's signature on this Agreement or to such
address as the party to whom notice is to be given may provide in a written
notice to each of the other parties to this Agreement, a copy of which
written notice shall be on file with the Secretary of the Company.
4.4 Recapitalizations, etc. The provisions of this Agreement
(including any calculation of share ownership) shall apply, except to the
extent specifically set forth herein with respect to the Restricted
Securities, to any and all shares of capital stock of the Company or any
capital stock, partnership units or any other security evidencing ownership
interests in any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) that may be issued in respect
of, in exchange for, or in substitution of the Common Stock by reason of
any stock dividend, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
4.5 Inspection and Compliance with Law. Copies of this Agreement
will be available for inspection or copying by any holder of Restricted
Securities at the offices of the Company through the Secretary of the
Company. The Company shall take all reasonable action to insure that the
provisions of Delaware law relating to agreements similar to this Agreement
are promptly complied with.
4.6 Choice of Law. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED
AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF).
4.7 Entire Agreement; Amendments and Waivers. This Agreement and
the Other Documents (as defined in the Stock Purchase Agreement) embody the
entire agreement and understanding of the parties hereto pertaining to the
subject matter hereof. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
4.8 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.
4.9 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms to the fullest extent permitted by law.
4.10 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.11 Cumulative Remedies. All rights and remedies of either party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
4.12 Term. Unless earlier terminated by an instrument in writing
amending this Agreement pursuant to Section 4.7, this Agreement shall
terminate upon the tenth anniversary of the effective date of this
Agreement. Notwithstanding the foregoing, this Agreement shall in any
event terminate with respect to the Purchaser when the Purchaser and its
Affiliates no longer own any shares of Restricted Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Investor's
Agreement to be duly executed as of the date first above written.
KENNEDY-WILSON, INC.
By: /s/ William J. McMorrow
________________________________
Name: William J. McMorrow
Title: CEO
Address: 530 Wilshire Blvd., #101
Santa Monica, California 90401
Telecopy: (310) 315-8510
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By: /s/ Mark M. Hedstrom
________________________________
Name: Mark M. Hedstrom
Title: Vice President
Address: c/o Colony Capital, Inc.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Telecopy: (817) 871-4088
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
Kennedy-Wilson, Inc., a Delaware corporation (the "Company"), hereby
grants to Colony Investors III, L.P. ("Purchaser") and any permitted
assignee of the registration rights provided for herein.
Section 1. DEFINITIONS. As used herein, the following terms shall
have the following meanings:
"Advice" has the meaning set forth in Section 5.
"Additional Warrants" has the meaning set forth in Section 3.3 of the
Investor's Agreement.
"Affiliate" means, with respect to any Person, (a) any Person or
entity directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, (b) any spouse or non-adult
child (including by adoption) of any natural person described in clause (a)
above, (c) any relative other than a spouse or non-adult child (including
by adoption) who has the same principal residence of any natural person
described in clause (a) above, (d) any trust in which any such Persons
described in clause (a), (b) or (c) above has a beneficial interest and (e)
any corporation, partnership, limited liability company or other
organization of which any such Persons described in clause (a), (b) or (c)
above collectively own more than fifty percent (50%) of the equity of such
entity. For purposes of this definition, beneficial ownership of more than
ten percent (10%) of the voting common equity of a Person shall be deemed
to be control of such Person.
"Agreement" means this Registration Rights Agreement, dated as of July
16, 1998.
"Business Day" means any day other than a day on which banks are
authorized or required to be closed in the State of New York.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as filed with the Secretary of State of the State of
Delaware on March 27, 1992, as amended through and including April 30,
1998.
"Commission" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act and/or the Exchange Act from time to time.
"Common Shares" means the shares of Common Stock issued pursuant to
that certain Stock Purchase Agreement, dated July 16, 1998, between the
Company and Purchaser.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" has the meaning set forth in the first paragraph hereof and
shall include the Company's successors by merger, acquisition,
reorganization or otherwise.
"Controlling Persons" has the meaning set forth in Section 8(a).
"Effective Period" has the meaning set forth in Section 4(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and regulations
of the Commission promulgated thereunder.
"Holders" means the registered holders of Registrable Securities.
"Inspectors" has the meaning set forth in Section 4(m).
"Investor's Agreement" means that certain Investor's Agreement between
the Company and Purchaser dated of even date herewith.
"Market Value" means the number of shares of Common Stock to be
registered (or issuable upon the conversion or exchange of other securities
to be registered) pursuant to the demand for registration provided in
Section 2 below multiplied by the then Per Share Price of the Common Stock.
"NASD" has the meaning set forth in Section 4(q).
"Objecting Party" has the meaning set forth in Section 4(a).
"Per Share Price" means the daily closing price of the Common Stock on
the NASDAQ on the trading day before the Company receives the written
demand for registration.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Piggy-Back Registration" has the meaning set forth in Section 3(a).
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms of
the offering of any portion of the Registrable Securities covered by a
Shelf Registration Statement, and by all other amendments and supplements
to the prospectus, including post-effective amendments, and in each case
including all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Records" has the meaning set forth in Section 4(m).
"Registrable Securities" means, collectively, the Common Shares, the
Warrants, any Additional Warrants, the Warrant Shares and any other shares
of Common Stock acquired by Purchaser or its permitted assigns (so long as
not acquired in violation of the Investor's Agreement), unless (in the case
of any such securities) such securities have been (a) effectively
registered under Section 5 of the Securities Act and disposed of pursuant
to an effective Registration Statement, or (b) such securities have been
transferred pursuant to Rule 144 under the Securities Act or any successor
rule such that, after any such transfer referred to in this clause (b),
such securities may be freely transferred without restriction under the
Securities Act.
"Registration Expenses" has the meaning set forth in Section 7.
"Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and supplements to any
such registration statement, including post-effective amendments, in each
case including the Prospectus, all exhibits, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"Rule 144" has the meaning set forth in Section 9(a).
"Rule 144A" has the meaning set forth in Section 9(b).
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute, and the rules and regulations of
the Commission promulgated thereunder.
"Suspension Notice" has the meaning set forth in Section 5(a).
"Suspension Period" means the period from the date on which the
Holders receive a Suspension Notice to the date on which any Holder
receives either the Advice or copies of the supplemented or amended
Prospectus contemplated by Section 4(f).
"Warrants" means the warrants to acquire shares of Common Stock,
issued pursuant to that certain Warrant Agreement, dated of even date
herewith, between the Company and Purchaser.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants and any Additional Warrants.
Section 2. DEMAND REGISTRATION.
(a) Demand for Registration. The Holders may, at their option,
at any time after the date hereof, require the Company to use its best
efforts to effect a registration of Registrable Securities under the
Securities Act (the "Demand Registration"); provided, however, that
(i) the Company shall not be required to effect such Demand
Registration unless the Company is requested to do so with respect to
Registrable Securities having a Market Value of not less than
$2,000,000; (ii) at its option, the Company shall not be required to
effect such registration prior to three (3) months immediately
following the date on which an underwritten public offering of equity
securities (pursuant to an effective registration statement under the
Securities Act) is commenced, if such public offering is commenced
prior to the date of a request for the Demand Registration; provided,
further, that, if in the opinion of an independent investment banking
firm of national reputation such registration, if not deferred,
materially and adversely would affect a proposed business or financial
transaction of substantial importance to the Company's financial
condition, the Company may defer such registration for a single period
(specified in such notice) of not more than 180 days; and (iii) the
Company shall not be required to use its best efforts to effect a
registration of Registrable Securities under this Section 2 more than
three times or more often than nine months following the completion of
a Demand Registration. At the election of Holders requesting a Demand
Registration, such registration statement shall be filed under
Rule 415 promulgated under the Securities Act (a "Resale Registration
Statement"), and the Company shall use its best efforts to keep a
Resale Registration Statement continuously effective until the earlier
of four (4) years and the date on which there are no more Registrable
Securities unsold thereunder. The Company shall promptly cause a
Resale Registration Statement to be amended to remove a Holder's
Registrable Securities upon notice to the Company from such Holder.
The Company shall not be required to file and effect more than one (1)
Resale Registration Statement pursuant to this Section 2(a). If,
after a Demand Registration becomes effective, the offering of
securities thereunder is or becomes subject to any stop order,
injunction or other order or requirement of the Commission that
prevents or limits the sale of securities thereunder for a period of
more than five (5) Business Days, then such Demand Registration shall
be deemed not to have been effected for purposes of this Section 2(a).
(b) Underwritten Offerings. If underwritten, the underwriter in
a Demand Registration must be reasonably acceptable to the Company.
In connection with any Demand Registration in which more than one
Holder participates, in the event that such Demand Registration
involves an underwritten offering and the managing underwriter or
underwriters participating in such offering advise in writing the
Holders of Registrable Shares to be included in such offering that the
total number of Registrable Shares to be included in such offering
exceeds the amount that can be sold in (or during the time of) such
offering without delaying or jeopardizing the success of such offering
(including the price per share of the Registrable Shares to be sold),
then the amount of Registrable Shares to be offered for the account of
such Holders shall be reduced pro rata on the basis of the number of
Registrable Shares to be registered by each such Holder. The Company
shall not include any securities that are not Registrable Securities
in any Registration Statement filed pursuant to this Section 2 without
the prior written consent of the Holders of a majority in number of
the Registrable Securities covered by such Registration Statement.
Section 3. PIGGY-BACK REGISTRATION.
(a) Request for Registration. Each time the Company proposes to
file a registration statement under the Securities Act with respect to
an offering by the Company for its own account or for the account of
any of its securityholders of any class of equity security (except,
(i) a registration statement on Form S-4 or S-8 (or any substitute
form that is adopted by the Commission), (ii) a registration statement
filed in connection with a dividend reinvestment plan, stock option
plan or unit investment trusts, or (iii) a registration statement
filed in connection with an exchange offer or offering of securities
solely to the Company's existing securityholders), and the form of
registration statement to be used permits the registration of
Registrable Securities, then the Company shall give written notice of
such proposed filing to the Holders as soon as reasonably practicable
(but in no event less than 20 days before the anticipated filing date
and no less than 30 days before the anticipated effective date), and
such notice shall offer the Holders the opportunity to register such
Registrable Securities as the Holders may request (which request shall
specify the Registrable Securities intended to be disposed of by the
Holders and the intended method of distribution thereof) up to 20 days
before the anticipated effective date (a "Piggy-Back Registration").
The Company shall cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration to be included
on substantially the same terms and conditions as any similar
securities of the Company or any other securityholder included therein
and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution
thereof. Any Holder shall have the right to withdraw such Holder's
request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 3 by giving written
notice to the Company of such withdrawal no later than two Business
Days prior to the anticipated effective date. The Company may
withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective, provided that the Company shall give prompt notice
of such withdrawal to the other Holders, if any, requested to be
included in such Piggy-Back Registration.
(b) Reduction of Offering. If the managing underwriter or
underwriters of an underwritten offering with respect to which
Piggy-Back Registration has been requested as provided in Section 3(a)
hereof shall have informed the Company, in writing, that in the
opinion of such underwriter or underwriters the total number of shares
which the Company, the Holders and any other Persons participating in
such registration intend to include in such offering is such as to
materially and adversely affect the success of such offering
(including without limitation any material decrease in the proposed
public offering price), then the number of shares to be offered for
the account of all Persons and Holders (other than the Company)
participating in such registration shall be reduced or limited (to
zero if necessary) pro rata in proportion to the respective number of
shares requested to be registered by such Persons to the extent
necessary to reduce the total number of shares requested to be
included in such offering to the number of shares, if any, recommended
by such managing underwriter or underwriters.
(c) Underwriting. In the case of a Piggy-Back Registration, if
the Company has determined to enter into an underwriting agreement in
connection therewith, all Registrable Securities to be included in
such Registration Statement shall be subject to such underwriting
agreement, and no Holder may participate in such Registration unless
such Holder agrees to sell its Registrable Securities on the basis
provided for in such underwriting arrangements approved by the Company
and completes and/or executes all reasonable and customary
questionnaires, powers of attorney, indemnities, underwriting
agreements and other reasonable documents which must be executed under
the terms of such underwriting arrangements.
Section 4. REGISTRATION PROCEDURES. In connection with the
obligations of the Company to effect or cause the registration of any
Registrable Securities pursuant to the terms and conditions of this
Agreement, the Company shall use its best efforts to effect the
registration and sale of such Registrable Securities in accordance with the
terms of this Agreement as quickly as reasonably practicable, and in
connection therewith:
(a) Prior to filing a Registration Statement or Prospectus or
any amendments or supplements thereto, excluding for purposes of this
Section 4(a) documents incorporated by reference after the initial
filing of the Registration Statement, the Company will furnish to the
Holders covered by such Registration Statement (the "Selling Holders")
and the underwriters, if any, draft copies of all such documents
proposed to be filed at least ten Business Days prior thereto (or, in
the case of amendments or supplements, such shorter period as may be
reasonably permitted under the circumstances), which documents will be
subject to the reasonable review of the Holders and the underwriters,
if any, and the Company will not, unless required by law, file any
Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which Selling Holders of at least a majority in
interest of the Registrable Securities (the "Objecting Party") shall
reasonably object pursuant to notice given to the Company prior to the
filing of such amendment or supplement (the "Objection Notice") and no
later than five Business Days after receipt of the documents to which
the Objection Notice relates. The Objection Notice shall set forth
the objections and the specific areas in the draft documents where
such objections arise. The Company shall have five Business Days
after receipt of the Objection Notice to correct such deficiencies to
the reasonable satisfaction of the Objecting Party, and will notify
each Selling Holder of any stop order issued or threatened by the
Commission in connection therewith and take all reasonable actions
required to prevent the entry of such stop order or to remove it if
entered.
(b) The Company promptly shall prepare and file with the
Commission such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration
Statement effective for a period of not more than 60 days or (in the
case of a Resale Registration Statement) up to four (4) years (as
applicable, the "Effective Period"); shall cause the Prospectus to be
supplemented by any required Prospectus supplements, and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities
Act; and shall comply with the provisions of the Securities Act
applicable to it with respect to the disposition of all Registrable
Securities covered by such Registration Statement during the Effective
Period in accordance with the intended methods of disposition by the
Holders set forth in such Registration Statement or supplement to the
Prospectus.
(c) The Company promptly shall furnish to any Holder and the
underwriters, if any, without charge, such reasonable number of
conformed copies of each Registration Statement and any post-effective
amendment thereto and such number of copies of the Prospectus
(including each preliminary Prospectus) and any amendments or
supplements thereto, any documents incorporated by reference therein
and such other documents as such Holder or underwriter reasonably may
request in order to facilitate the public sale or other disposition of
the Registrable Securities being sold by such Holder.
(d) The Company shall, (i) on or prior to the date on which a
Registration Statement is declared effective, use its reasonable best
efforts to register or qualify the Registrable Securities covered by
such Registration Statement under such other securities or "blue sky"
laws of such states of the United States as any Holder or underwriter
requests; (ii) do any and all other acts and things which may be
reasonably necessary to enable such Holder to consummate the
disposition of such Registrable Securities owned by such Holder in
accordance with the intended methods for distribution set forth
therein; and (iii) use its reasonable best efforts to keep each such
registration or qualification (or exemption therefrom) effective
during the Effective Period; provided, however, that the Company shall
not be required (A) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 4(d) or (B) to file any general consent to service of
process.
(e) The Company shall cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be reasonably
necessary by virtue of the business and operations of the Company to
enable the Holders to consummate the disposition of such Registrable
Securities.
(f) The Company promptly shall notify each Holder and any
underwriter in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed and, with
respect to a Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the
Commission or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the issuance
by any state securities commission or other regulatory authority of
any order suspending the qualification or exemption from qualification
of any of the Registrable Securities under state securities or "blue
sky" laws or the initiation of any proceedings for that purpose, and
(v) of the happening of any event which makes any statement made in a
Registration Statement or related Prospectus untrue or which requires
the making of any changes in such Registration Statement or Prospectus
so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) The Company shall make generally available to the Holders an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act no later than 45 days (90 days in the event it relates
to a fiscal year) after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after
the effective date of a Registration Statement, which earnings
statement shall cover said 12-month period, and which requirement will
be deemed to be satisfied if the Company timely files complete and
accurate information on forms 10-Q, 10-K and 8-K under the Exchange
Act and otherwise complies with Rule 158 under the Securities Act.
(h) The Company promptly shall use its reasonable best efforts
to prevent the issuance of any order suspending the effectiveness of a
Registration Statement, and in the event a stop order is issued, use
its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the
earliest possible moment.
(i) If requested by the managing underwriter or underwriters, if
any, or any Holder, the Company promptly shall incorporate in a
Prospectus supplement or post-effective amendment such information as
such managing underwriter or underwriters or such Holder reasonably
requests to be included therein, including, without limitation, with
respect to the Registrable Securities being sold by such Holder to
such underwriter or underwriters, the purchase price being paid
therefor by such underwriter or underwriters and with respect to any
other terms of an underwritten offering of the Registrable Securities
to be sold in such offering, and promptly make all required filings of
such Prospectus supplement or post-effective amendment.
(j) The Company shall deliver a copy of each document
incorporated by reference into a Registration Statement (in the form
in which it was incorporated) to each Holder as promptly as
practicable after filing such documents with the Commission.
(k) The Company shall cooperate with the Holders and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
securities sold under a Registration Statement, and enable such
securities to be in such denominations and registered in such names as
the Holders and the managing underwriter or underwriters, if any,
reasonably may request and keep available and make available to the
Company's transfer agent prior to the effectiveness of such
Registration Statement a supply of such certificates.
(l) The Company shall enter into such customary agreements
(including, if applicable, an underwriting agreement in customary
form) and take such other actions as the Holders, or the underwriters,
if any, retained by the Holders participating in an underwritten
public offering, if any, reasonably may request in order to expedite
or facilitate the disposition of Registrable Securities.
(m) The Company promptly shall make available to each Holder,
any underwriter participating in any disposition pursuant to a
Registration Statement, and any attorney, accountant or other agent or
representative retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection
with such Registration Statement; provided that, unless the disclosure
of such Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement or the release of such Records
is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide
any information under this paragraph if (i) the Company believes,
after consultation with counsel for the Company and counsel for the
Holders, that to do so would cause the Company to forfeit an
attorney-client privilege that was applicable to such information or
(ii) either (A) the Company has requested and been granted from the
Commission confidential treatment of such information contained in any
filing with the Commission or documents provided supplementally or
otherwise or (B) the Company reasonably determines in good faith that
such Records are confidential and so notifies the Inspectors in
writing unless, prior to furnishing any such information with respect
to (A) or (B), such Holder requesting such information agrees to enter
into a confidentiality agreement in customary form and subject to
customary exceptions reasonably acceptable to the Company; and,
provided, further, that each Holder agrees that it will, upon learning
that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its
expense, to undertake appropriate action and to prevent disclosure of
the Records deemed confidential.
(n) In the case of any underwritten offering, the Company shall
furnish to each Holder and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an
opinion or opinions of counsel to the Company, and (ii) a comfort
letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case
may be, as the managing underwriter therefor reasonably requests.
(o) The Company shall cause the Registrable Securities to be
authorized for quotation and/or listing, as applicable, on such
exchange or quotation system as the Common Stock is listed or quoted.
(p) The Company shall provide a CUSIP number for all Registrable
Securities covered by a Registration Statement not later than the
effective date of such Registration Statement.
(q) The Company shall cooperate with each Holder and each
underwriter participating in the disposition of Registrable Securities
and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.
("NASD").
(r) During the period when the Prospectus is required to be
delivered under the Securities Act, the Company promptly shall file
all documents required to be filed with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act.
(s) The Company shall appoint a transfer agent and registrar for
all the shares of Common Stock covered by a Registration Statement not
later than the effective date of such Registration Statement.
(t) In connection with an underwritten offering, the Company
will participate, to the extent reasonably requested by the managing
underwriter for the offering or the Holders, in customary efforts to
sell the securities under the offering, including without limitation,
participating in "road shows."
Each Selling Holder shall provide the Company with such information
about the Selling Holder and its intended manner of distribution of the
Registrable Securities, and otherwise shall cooperate with the Company and
the underwriters, if any, as may be needed or helpful to complete any
obligation of the Company hereunder.
Section 5. LIMITATIONS ON SALES.
(a) Suspension Period. Each Holder, upon receipt of any notice
(a "Suspension Notice") from the Company of the happening of any event
of the kind described in Section 4(f)(v), forthwith shall discontinue
disposition of the Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(f) or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in the Prospectus, and, if
so directed by the Company, such Holder will, or will request the
managing underwriter or underwriters, if any, to deliver to the
Company (at the Company's expense) all copies, other than permanent
file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of
such notice; provided, however, that the Company shall not give a
Suspension Notice until after the Registration Statement has been
declared effective. In the event that the Company shall give any
Suspension Notice, (i) the Company shall use its reasonable best
efforts and take such actions as are reasonably necessary to end the
Suspension Period as promptly as practicable and (ii) immediately
following expiration of the Suspension Period, the Company shall, to
the extent necessary, prepare and file with the Commission and furnish
a supplement or amendment to such Prospectus so that, as thereafter
deliverable to the purchasers of such Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Lock-up. If on any occasion of registration in which the
Company proposes to file a registration statement under the Securities
Act with respect to the proposed sale of Common Stock pursuant to a
fully-underwritten public offering, and the managing underwriter or
underwriters shall request an agreement by each Holder not to sell any
of the Registrable Securities so held by such Holder for a period of
90 days after the date of the underwriting agreement in order to
effect an orderly public distribution thereof, then so long as (i) the
Holder and its Affiliates own five percent (5%) or more of the
Company's outstanding securities or the Holder has a representative on
the Company's Board of Directors and (ii) the Holder is deemed to be
an Affiliate of the Company for purposes of the Securities Act, each
Holder shall enter into and execute such an agreement with such
managing underwriter or underwriters and the Company pertaining to a
restriction on the transfer of any equity securities of the Company
during such period. Each Holder further agrees, upon request of the
managing underwriter or underwriters, to enter into and execute an
agreement with such managing underwriter or underwriters and the
Company pursuant to the terms of which such Holder will agree not to
transfer any securities of the Company during the seven-day period
immediately preceding the effectiveness of such registration statement
to the extent necessary to avoid violation of the Exchange Act.
Section 6. HOLDER INFORMATION. If any Registration Statement refers
to any Holder by name or otherwise as the holder of any securities of the
Company, then such Holder shall have the right, to the extent permitted by
law, to require (a) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the
Company, or (b) in the event that such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar Federal or
state "blue sky" statute and the rules and regulations thereunder then in
force, the deletion of the reference to such Holder.
Section 7. REGISTRATION EXPENSES. Any and all expenses incident to
the Company's performance of or compliance with this Agreement, including
without limitation all Commission and securities exchange, NASDAQ or NASD
registration and filing fees, all fees and reasonable expenses incurred in
connection with compliance with state securities or "blue sky" laws
(including reasonable fees and disbursements of one counsel for all
underwriters in connection with "blue sky" qualifications of the
Registrable Securities), printing expenses, messenger and delivery
expenses, internal expenses of the Company (including, without limitation,
all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), all reasonable expenses for word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, the fees and expenses
incurred in connection with the listing of the Registrable Securities, the
fees and disbursements of counsel for the Company and of the independent
certified public accountants of the Company (including the expenses of any
special audit or comfort letters), Securities Act liability insurance (if
the Company elects to obtain such insurance), the fees and expenses of any
special experts or other Persons retained by the Company in connection with
any registration (all such expenses being herein called "Registration
Expenses"), will be borne by the Company whether or not the Registration
Statement to which such expenses relate becomes effective; provided,
however, that Registration Expenses shall not include underwriting fees,
discounts or commissions attributable to the sale or disposition of
Registrable Securities or the fees and expenses of legal counsel and
accountants retained by the Holders.
Section 8. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law,
each Holder, its partners, officers, directors, trustees,
stockholders, employees, agents and investment advisers, and each
Person who controls such Holder within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, or is
under common control with, or is controlled by, such Holder, together
with the partners, officers, directors, trustees, stockholders,
employees and agents of such controlling Person (collectively, the
"Controlling Persons"), from and against all losses, claims, damages,
liabilities and expenses (including without limitation any reasonable
legal or other fees and expenses actually incurred in connection with
defending or investigating any action or claim in respect thereof,
provided, however, that such legal fees shall be limited to those
incurred by one individual counsel for all indemnified parties under
this paragraph (a), together with any appropriate or necessary local
counsel, if any) (collectively, the "Damages") to which such Holder,
its partners, officers, directors, trustees, stockholders, employees,
agents and investment advisers, and any such Controlling Person may
become subject under the Securities Act, insofar as such Damages (or
proceedings in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of material fact contained in any
Registration Statement or Prospectus (or any amendment thereto)
pursuant to which Registrable Securities were registered under the
Securities Act, including all documents incorporated therein by
reference, or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in
light of the circumstances under which they were made not misleading,
or caused by any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (as amended or supplemented
if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in
light of the circumstances under which they were made not misleading,
except insofar as such Damages arise out of or are based upon any
such untrue statement or omission based upon information relating to
such Holder furnished in writing to the Company by such Holder (or by
a Person authorized to provide such information on behalf of such
Holder) expressly for use therein.
The Company shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals
participating in the distribution, their officers, directors, agents,
employees and each Person who controls such Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) to the same extent as provided with respect to the
indemnification of the Holders.
(b) Indemnification by the Holders. Each Holder agrees,
severally and not jointly, to indemnify and hold harmless, to the
fullest extent permitted by law the Company, its directors, officers,
stockholders, employees, agents, attorneys, and investment advisers
and each Person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, or is under common control with, or is controlled by,
the Company, together with its Controlling Person, from and against
all Damages to which the Company and any Controlling Persons may
become subject under the Securities Act insofar as such Damages (or
proceedings in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which
Registrable Securities were registered under the Securities Act
(including all documents incorporated therein by reference), or caused
by any omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances
under which they were made not misleading, or caused by any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances
under which they were made not misleading, to the extent, but only if
and to the extent that such Damages arise out of or are based upon any
such untrue statement or alleged untrue statement or omission or
alleged omission based upon information relating to such Holder
furnished in writing to the Company by such Holder (or by a Person
authorized to provide such information on behalf of such Holder)
expressly for inclusion therein; provided, however, that (i) such
selling Holder shall not be liable in any such case to the extent that
such Damages result from the failure of the Company to promptly amend
or take action to correct or supplement any such Registration
Statement or Prospectus on the basis of corrected or supplemental
information provided in writing by such selling Holder to the Company
expressly for such purpose and (ii) the total amount for which a
Holder shall be liable hereunder shall not in any event exceed the
aggregate proceeds received by such Holder from the sale of
Registrable Securities in such registration.
(c) Indemnification Procedures. In case any proceeding
(including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought
pursuant to either paragraph (a) or (b) above, such Person (the
"indemnified party") promptly shall notify the Person against whom
such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party shall retain counsel reasonably satisfactory to
the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceedings and
shall pay the reasonable fees and disbursements of such counsel
relating to such proceeding; provided, however, that (i) in the case
of any proceeding in respect of which indemnity may be sought pursuant
to both paragraphs (a) and (b) above, a Holder shall not be required
to assume the defense thereof and the fees and expenses of such
counsel shall be at the expense of the Company and (ii) the Company
shall not be obligated to pay the fees and expenses of more than one
individual counsel (together with any appropriate or necessary local
counsel, if any) for all indemnified parties, including the Company.
In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel, or (ii) the indemnifying
party fails promptly to assume the defense of such proceeding or fails
to employ counsel reasonably satisfactory to such indemnified party or
parties, or (iii) (A) the named parties to any such proceeding
(including any impleaded parties) include both such indemnified party
or parties and any indemnifying party or an Affiliate of such
indemnified party or parties or of any indemnifying party, (B) there
may be one or more legal defenses available to such indemnified party
or parties or such Affiliate of such indemnified party or parties that
are different from or additional to those available to any
indemnifying party or such Affiliate of any indemnifying party and (C)
such indemnified party or parties shall have been advised by such
counsel that there may exist a legal conflict of interest between or
among such indemnified party or parties or such Affiliate of such
indemnified party or parties and any indemnifying party or such
Affiliate of any indemnifying party, in which case, if such
indemnified party or parties notifies the indemnifying party or
parties in writing that it elects to employ separate counsel of its
choice at the reasonable expense of the indemnifying parties, the
indemnifying parties shall not have the right to assume the defense
thereof and such counsel shall be at the reasonable expense of the
indemnifying parties, it being understood, however, that unless there
exists a conflict among indemnified parties, the indemnifying parties
shall not, in connection with any one such proceeding or separate but
substantially similar or related proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of
attorneys at any time for such indemnified party or parties. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent (which will not be
unreasonably withheld) but, if settled with such consent or if there
be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party or parties from and against any
loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent (which
will not be unreasonably withheld) of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of
which such indemnified party is a party, and indemnity could have been
sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) Contribution. To the extent that the indemnification
provided for in paragraph (a) or (b) of this Section 8 is unavailable
to an indemnified party or insufficient in respect of any Damages,
then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of
such Damages in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions that
resulted in such Damages, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and
of the Holders on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
Notwithstanding the provisions of this Section 8(d), no Holder shall
be required to contribute any amount in excess of the amount at which the
net sale proceeds from the Registrable Securities to such Holder exceeds
the amount of any damages which such Holder has otherwise been required to
pay by reason of such untrue statement or omission. Each Holder's
obligation to contribute pursuant to this Section 8(d) is several in the
proportion that the proceeds of the offering received by such Holder bears
to the total proceeds of the offering received by all the Holders and not
joint.
If indemnification is available under paragraph (a) or (b) of this
Section 8, the indemnifying parties shall indemnify each indemnified party
to the full extent provided in such paragraphs without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 8(d).
The Company and each Holder agrees that it would not be just or
equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the Damages referred
to in this Section 8 shall be deemed to include, subject to the limitations
set forth above, any reasonable legal or other expenses incurred (and not
otherwise reimbursed) by such indemnified party in connection with
investigating or defending any such action or claim. 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 remedies provided for
in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law
or in equity.
(e) Survival. The parties' indemnification and contribution
obligations pursuant to this Section 8 shall survive the sale,
transfer, assignment or other disposition of any Registrable
Securities and shall survive any termination of this Agreement.
Section 9. AVAILABLE INFORMATION.
(a) Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the
Exchange Act (or, if the Company is not required to file such reports,
it will, upon the request of any Holder, make publicly available other
information so long as necessary to permit sales under 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
("Rule 144"), and it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by Rule 144. Upon the request of any Holder, the Company
will deliver to such Holder a written statement as to whether it has
complied with such requirements.
(b) Rule 144A. Upon the request of any Holder, the Company
shall deliver to such holder within 20 days following receipt by the
Company of such request, the information required by Section (d)(4) of
Rule 144A 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 ("Rule 144A"), and will take such further action as any
Holder may reasonably request, all to the extent required from time to
time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitations or the
exemptions provided by Rule 144A. All information shall be
"reasonably current" as defined in Rule 144A.
Section 10. MISCELLANEOUS.
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained
the written consent of the Holders of a majority in interest of the
Registrable Securities then outstanding.
(b) Notices. All notices, requests and other communications
provided for herein shall be given or made in writing:
if to the Company: Kennedy-Wilson, Inc.
530 Wilshire Blvd., #101
Santa Monica, California 90401
Attention: William J. McMorrow
Fax No.: (310) 314-8510
with copies to: Kulik, Gottesman & Mouton, LLP
1880 Century Park East, Suite 1150
Los Angeles, California 90067
Attention: Kent Mouton, Esq.
Fax No.: (310) 557-0224
and
White & Case LLP
633 West Fifth Street
Los Angeles, California 90071-2007
Attention: Richard K. Smith, Jr., Esq.
Fax No.: (213) 687-0758
if to Purchaser: Colony Investors III, L.P.
c/o Colony Capital, Inc.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: Richard Ekleberry, Esq.
Fax No.: (817) 871-4088
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Attention: Jonathan H. Grunzweig, Esq.
Fax No.: (213) 687-5600
if to any other person who is a registered Holder, to the address
for such Holder as it appears in the stock or warrant ledger of the
Company; or, in the case of any Holder, at such other address as shall
be designated by such party in a notice to the Company; or, in the
case of the Company, at such other address as the Company may
designate in a notice to the Holders.
All such notices, requests and other communications shall be:
(i) personally delivered, sent by courier guaranteeing overnight
delivery or sent by registered or certified mail, return receipt
requested, postage prepaid, in each case given or addressed as
aforesaid; and (ii) effective upon receipt.
(c) Successors and Assigns. Subject to restrictions on the
transfer of Common Stock set forth in the Company's Certificate of
Incorporation and the Investor's Agreement of even date herewith
between the Company and Purchaser, this Agreement shall inure to the
benefit of and be binding only upon (i) Purchaser, (ii) the general
and limited partners of Purchaser, and (iii) assigns of the Purchaser
(so long as the Registrable Securities are not acquired in violation
of the Investor's Agreement and the Company's Certificate of
Incorporation).
(d) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to principles of conflicts of law.
(f) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held 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 impaired thereby,
it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(g) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement or where any provision hereof
is validly asserted as a defense, the successful party shall, to the
extent permitted by applicable law, be entitled to recover reasonable
attorneys' fees and expenses in addition to any other available
remedy.
(h) Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order
to carry out the provisions and purposes of this Agreement and the
transactions contemplated hereby.
(i) Remedies. In the event of a breach or a threatened breach
by the Company of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive
relief, in addition to being entitled to exercise all rights granted
by law. The parties agree that the provisions of this Agreement shall
be specifically enforceable, it being agreed by the parties that the
remedy at law, including monetary damages, is inadequate and that any
objection in any action for specific performance or injunctive relief
that a remedy at law would be adequate is waived.
KENNEDY-WILSON, INC.
By /s/ William J. McMorrow
___________________________
Name: William J. McMorrow
Title: CEO
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By /s/ Mark M. Hedstrom
_____________________________
Name: Mark M. Hedstrom
Title: Vice President
EXHIBIT 4
WARRANT AGREEMENT
This Warrant Agreement (the "Agreement"), dated as of July 16, 1998,
is by and between Kennedy-Wilson, Inc., a corporation duly organized and
validly existing under the laws of Delaware (the "Company"), and Colony
Investors III, L.P. (the "Holder").
WITNESSETH:
WHEREAS, the Company wishes to issue and sell to the Holder (i)
certain shares of the Company's common stock, $.01 par value per share (the
"Stock"), pursuant to the Stock Purchase Agreement dated as of the date
hereof, between the Company and the Holder, and (ii) warrants to acquire
additional shares of Stock for an aggregate purchase price of $5,232,610,
and may issue certain additional warrants in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND DETERMINATIONS
As used herein:
"Additional Warrants" has the meaning set forth in Section 3.3 of the
Investor's Agreement.
"Board" means the Board of Directors of the Company.
"Bylaws" means the Amended and Restated Bylaws of the Company as
adopted on April 2, 1992.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as filed with the Secretary of State of the State of
Delaware on March 27, 1992, as amended through and including April 30,
1998.
"Commission" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act and/or the Securities Exchange Act of 1934, as amended from
time to time (the "Exchange Act").
"Date of Issuance" shall mean July 16, 1998.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (whether through ownership of securities or other ownership
interests, by contract or otherwise) by any of the foregoing.
"Holder" shall have the meaning set forth at the head of this
Agreement and each other Person who acquires the original Warrant
Certificate or any Warrant Certificate issued upon transfer, division,
combination, partial exercise of Warrants or in replacement or substitution
therefor or who acquires Warrant Shares pursuant to the provisions of this
Agreement.
"Include" and "Including" shall be construed as if followed by the
phrase "without being limited to."
"Investor's Agreement" means that certain Investor's Agreement between
the Company and the initial Holder dated of even date herewith.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or a Governmental Authority.
"Registration Rights Agreement" means the Registration Rights
Agreement of even date herewith between the Company and the Holder relating
to the registration of the Registrable Securities (as defined therein)
under and pursuant to the Securities Act, as said Registration Rights
Agreement shall be modified and supplemented in accordance with its terms
and in effect from time to time.
"Restricted Securities" means the Warrants, any Additional Warrants
and any Warrant Shares or other securities which have been issued or are
issuable upon the exercise of such Warrants until such time as any such
Restricted Securities (a) have been sold pursuant to an effective
registration statement under the Securities Act or (b) are distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act and, if it has so requested, the Company has received an
opinion of counsel (either its own counsel or, if the Company so requests,
counsel to the holders of such Restricted Securities) reasonably acceptable
to the Company that such Restricted Securities may be so transferred
without registration or pursuant to an exemption under the Securities Act,
and in each such instance the Company has delivered new Warrant
Certificates not bearing the legend prescribed by Section 2.03 hereof.
"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act (as such rule may be amended from time to time or any
successor or similar rule then in force).
"Securities Act" means at any time the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Stockholder" means any Person (excluding any Holder) who owns any
shares of common or preferred stock of the Company (or any successor
thereto).
"Transfer" means, unless the context otherwise requires, any
disposition of any Restricted Securities, or of any interest in any
thereof, which would constitute an offer or sale thereof within the meaning
of the Securities Act.
"Warrants" shall have the meaning assigned to such term in
Section 2.01.
"Warrant Certificate" shall have the meaning assigned to such term in
Section 2.01.
"Warrant Shares" means (a) the shares of Stock purchased or
purchasable by the Holder upon the exercise of the originally issued
Warrant or any Additional Warrants, including any Stock into which such
Stock may thereafter be changed or converted, and (b) if required
hereunder, any additional shares of Stock issued or distributed by way of a
dividend, stock split or other distribution in respect of the Stock
referred to in clause (a) above, or acquired by way of any rights offering
or similar offering made in respect of the Stock referred to in clause (a)
above.
Except as otherwise may be expressly provided herein, all accounting
terms used herein shall be interpreted in accordance with generally
accepted accounting principles consistently applied. All calculations made
for the purposes of determining compliance with the terms of this Agreement
and the Warrants shall be made by application of United States generally
accepted accounting principles consistently applied (except as otherwise
may be expressly provided herein).
ARTICLE II
ISSUANCE AND EXECUTION OF WARRANTS
Section 2.01. AUTHORIZATION AND ISSUANCE OF SHARES AND WARRANTS. The
Company has authorized: (a) the issuance of warrant certificates
substantially in the form of Annex 1 to this Agreement (each, a "Warrant
Certificate"), each evidencing warrants to purchase shares of Stock (such
Warrant Certificate issued on the Date of Issuance, other Warrant
Certificates issued in connection with Additional Warrants or upon
transfer, partial exercise, division or combination of, or in substitution
or replacement for any Warrant Certificate or the rights to purchase Stock
evidenced by each of the foregoing, is, as the context requires, sometimes
referred to herein as a "Warrant" or "Warrants"); and (b) the issuance of
such number of shares of Stock as shall permit the compliance by the
Company with its obligations to issue Stock pursuant to the Warrants. In
addition, each Warrant Certificate may have such letters, numbers or other
marks of identification or designation and such legends, summaries, or
endorsements stamped, printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as, in any particular case, may be
required to comply with any law or with any rule or regulation of any
regulatory authority or agency, or to conform to customary usage; provided,
however, that no such change shall be made which affects the duties or
obligations of the Company without the consent of the Company.
Section 2.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATE. Each
Warrant Certificate shall be executed on behalf of the Company by the
Chairman of the Board or the Company's President or any Vice President and
attested to by its Secretary or Assistant Secretary, either manually or by
facsimile signature printed thereon. In case any authorized officer of the
Company who shall have signed any Warrant Certificate shall cease to be
such officer of the Company either before or after delivery thereof by the
Company to the Holder, the signature of such person on such Warrant
Certificate shall be valid nevertheless and such Warrant Certificate may be
issued and delivered to the person entitled to receive the Warrants
represented thereby with the same force and effect as though the person who
signed such Warrant Certificate had not ceased to be such officer of the
Company. The Warrant Certificate originally issued to the Holder shall be
delivered on the Date of Issuance. The Company shall maintain books (the
"Warrant Register") for the registration of Warrants and the registration
of transfers and exchanges of Warrants.
Section 2.03. TRANSFER AND EXCHANGE OF WARRANTS.
(a) Warrant Certificates evidencing Restricted Securities (and
only such Warrant Certificates) will bear a legend in substantially
the following form:
NEITHER THE EXERCISE OF THE WARRANTS EVIDENCED BY THIS CERTIFICATE NOR
THE ISSUANCE OF SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE,
AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH
TRANSFER IS PURSUANT TO (i) A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT AND THE RULES AND
REGULATIONS THEREUNDER OR (ii) AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS AND, IF IT HAS SO REQUESTED, THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL (EITHER ITS OWN COUNSEL OR, IF THE COMPANY SO REQUESTS,
COUNSEL TO THE HOLDERS OF SUCH SECURITIES) REASONABLY ACCEPTABLE TO
THE COMPANY THAT SUCH SECURITIES MAY BE SO TRANSFERRED. FURTHERMORE,
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE COMPANY'S
CERTIFICATE OF INCORPORATION AND IN A REGISTRATION RIGHTS AGREEMENT
AND AN INVESTOR'S AGREEMENT, BOTH DATED JULY 16, 1998.
(b) In connection with the transfer or exchange of a Restricted
Security or Securities (other than pursuant to an effective
registration statement under the Securities Act) the transferor of
such Restricted Security or Securities, upon request of the Company,
shall deliver to the Company an opinion of counsel, in substance
reasonably satisfactory to the Company, to the effect that such
Restricted Security to be issued upon such transfer or exchange may be
so issued without the foregoing legend; provided that such Restricted
Security nonetheless shall contain a legend referencing the
restrictions contained in the Investor's Agreement of even date
herewith.
(c) Subject to paragraphs (a) and (b) above, the Company shall
register the transfer of all or any whole number of Warrants covered
by any outstanding Warrant Certificate in the Warrant Register upon
surrender to the Company of Warrant Certificates accompanied by a
written instrument or instruments of transfer, in form reasonably
satisfactory to the Company, duly executed by the registered Holder or
his attorney duly authorized in writing. Upon any such registration
of transfer a new Warrant Certificate shall be issued to the
transferee and the surrendered Warrant Certificate promptly shall be
canceled by the Company. Warrant Certificates may be exchanged at the
option of the Holder thereof, upon surrender, properly endorsed by the
registered Holders, at the Company, with written instructions, for
other Warrant Certificates evidencing in the aggregate a like number
of Warrants. The Company may require the payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any such exchange or transfer.
Section 2.04. TRANSFER AND EXCHANGE OF WARRANTS. All the
restrictions imposed by this Article II upon the transferability of the
Restricted Securities shall cease and terminate as to any particular
Restricted Security when such Restricted Security shall have been
effectively registered under the Securities Act and applicable state
securities laws and sold by the Holder thereof in accordance with such
registration or sold under and pursuant to Rule 144. Whenever the
restrictions imposed by this Article II shall terminate as to any
Restricted Security as herein above provided, the Holder thereof shall be
entitled to receive from the Company, without expense (other than payment
by the Holder of any tax or governmental charge that may be imposed), a new
certificate evidencing such Restricted Security not bearing the restrictive
legend otherwise required to be borne by a certificate evidencing such
Restricted Security.
ARTICLE III
COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Holder as follows:
Section 3.01. EXISTENCE; QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
Section 3.02. CORPORATE ACTION. The Company has all necessary
corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Warrants and the Registration Rights
Agreement; the execution, delivery and performance by the Company of this
Agreement, the Warrants and the Registration Rights Agreement have been
duly authorized by all necessary corporate action on the part of the
Company; this Agreement has been duly executed and delivered by the Company
and constitutes, and the Registration Rights Agreement when executed and
delivered by the Company will constitute, the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms, except to the extent that enforcement thereof
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, or (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in
equity or at law); the Warrants and any Additional Warrants, when executed,
issued and delivered pursuant to this Agreement, will constitute the legal,
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, or (ii) general
principles of equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law); the Warrant Shares initially covered
by the Warrants and any Additional Warrants will be duly and validly
authorized and reserved for issuance and when paid for, issued and
delivered in accordance with the Warrants, shall be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens; and
none of the Warrant Shares issued pursuant to the terms hereof or the
Warrants or Additional Warrants shall be in violation of any preemptive
rights of any Stockholder.
Section 3.03. APPROVALS. Except as contemplated by the Registration
Rights Agreement, no authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any other
Person which shall not have been obtained on or prior to the Date of
Issuance are necessary for the execution, delivery or performance by the
Company of this Agreement, the Warrants or the Registration Rights
Agreement or for the validity or enforceability thereof.
Section 3.04. CAPITALIZATION. As of the Date of Issuance of the
original Warrant to Holder, the capitalization of the Company consists
solely of Stock and options and warrants to acquire Stock.
ARTICLE IV
HOLDER'S REPRESENTATIONS AND WARRANTIES
The Holder represents and warrants to the Company as follows:
Section 4.01. PURCHASE ENTIRELY FOR OWN ACCOUNT. The Warrant is
being acquired and, if such Warrant is exercised, the Stock issuable upon
such exercise will be acquired, for investment for the Holder's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the federal or state
securities laws.
Section 4.02. INVESTMENT EXPERIENCE. The Holder represents that it
can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Warrant and the
Stock issuable upon exercise thereof. The Holder also represents it has
not been organized solely for the purpose of acquiring the Warrant or the
Stock issuable upon exercise thereof.
Section 4.03. RESTRICTED SECURITIES. The Holder understands that the
Warrant and the Stock issuable upon exercise of such Warrant are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and have not been registered under the
Securities Act nor qualified under applicable state securities laws and
that under such laws and applicable regulations such securities may not be
resold without registration under the Securities Act, except in certain
limited circumstances. In this connection, the Holder represents that it
is familiar with Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
Section 4.04. ACCREDITED INVESTOR. The Holder is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under
the Securities Act.
ARTICLE V
HOLDERS; RIGHTS
Section 5.01. DELIVERY EXPENSES. If any Holder surrenders any
Warrant Certificate or Warrant Shares to the Company or a transfer agent of
the Company for exchange for instruments of other denominations or
registered in another name or names, the Company shall cause such new
instruments to be issued and shall deliver, in each case at the cost of the
Holder, from the office of such Holder or from or to the Company or its
transfer agent, the surrendered instrument and any new instruments issued
in substitution or replacement for the surrendered instrument.
Section 5.02. TAXES. The Company shall pay all transfer taxes which
may be payable in connection with the execution and delivery of this
Agreement or the Registration Rights Agreement or the issuance of the
Warrants and Warrant Shares hereunder or in connection with any
modification of this Agreement, the Registration Rights Agreement or the
Warrants and shall hold each Holder harmless without limitation as to time
against any and all liabilities with respect to all such taxes. The
Company shall not, however, be required to pay: (i) federal, state or local
income tax; (ii) any intangible personal property, franchise or similar
tax; or (iii) any transfer tax which may be payable in respect of any
transfer of a Warrant or any transfer involved in the issue and delivery of
shares of Stock in a name other than that in which a Warrant is registered,
and no such issue or delivery shall be made unless and until the Person
requesting such issue has established, to the satisfaction of the Company,
that such tax has been paid. The obligations of the Company under this
Section 5.02 shall survive any termination of this Agreement or the
Registration Rights Agreement, and any cancellation or termination of the
Warrants.
Section 5.03. REPLACEMENT OF INSTRUMENTS. Upon receipt by the
Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any certificate or instrument
evidencing any Warrants or Warrant Shares, and (a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it, or (b) in
the case of mutilation, upon surrender or cancellation, thereof, the
Company, at the Holder's expense, shall execute, register and deliver, in
lieu thereof, a new certificate or instrument for (or evidencing the right
to purchase) an equal number of Warrants or Warrant Shares.
Section 5.04. CERTAIN RESTRICTIONS. The Company shall not at any
time enter into an agreement or other instrument, and has not entered into
an agreement currently in effect, making performance hereunder or the
issuance of shares of Stock upon the exercise of any Warrant a default
under any such agreement or instrument.
Section 5.05. INDEMNIFICATION. Each party hereto hereby irrevocably
indemnifies the other and saves it harmless against any and all reasonable
out of pocket losses, expenses or liabilities, including judgments, costs
and reasonable counsel fees and expenses arising out of or in connection
with a breach of this Agreement, except as a direct result of the gross
negligence, bad faith or willful misconduct of such other party.
ARTICLE VI
MISCELLANEOUS
Section 6.01. WAIVER. No failure on the part of any Holder to
exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under this Agreement, the Warrants or the
Registration Rights Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege under this
Agreement, the Warrants or the Registration Rights Agreement preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
Section 6.02. NOTICES.
(a) All notices, requests and other communications provided for
herein and in the Warrants (including any waivers or consents under,
this Agreement and the Warrants) shall be given or made in writing:
if to the Company: Kennedy-Wilson, Inc.
503 Wilshire Blvd, #101
Santa Monica, California 90401
Attention: William J. McMorrow
Fax No.: (310) 314-8510
with copies to: Kulik, Gottesman & Mouton, LLP
1880 Century Park East, Suite 1150
Los Angeles, California 90067
Attention: Kent Mouton, Esq.
Fax No.: (310) 557-0224
and
White & Case LLP
633 West Fifth Street
Los Angeles, California 90071-2007
Attention: Richard K. Smith, Jr., Esq.
Fax No.: (213) 687-0758
if to the initial Holder: Colony Investors III, L.P.
c/o Colony Capital, Inc.
201 Main Street, Suite 2400
Fort Worth, Texas 76102
Attention: Richard Ekleberry, Esq.
Fax No.: (817) 871-4088
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Attention: Jonathan H. Grunzweig, Esq.
Fax No.: (213) 687-5600
if to any other person who is the registered Holder of any
Warrants or Warrant Shares, to the address for such Holder as it
appears in the stock or warrant ledger of the Company; or, in the case
of any Holder, at such other address as shall be designated by such
party in a notice to the Company; or, in the case of the Company, at
such other address as the Company may designate in a notice to the
Holders.
(b) All such notices, requests and other communications shall
be: (i) personally delivered, sent by courier guaranteeing overnight
delivery or sent by registered or certified mail, return receipt
requested, postage prepaid, in each case given or addressed as
aforesaid; and (ii) effective upon receipt.
Section 6.03. AMENDMENTS, ETC. Any provision of this Agreement may
be amended or modified only by an instrument in writing signed by (a) the
Company and (b) the Holders of at least a majority of the Warrant Shares
issued or issuable upon exercise of the Warrants; provided, however, that
no such amendment or waiver, without the written consent of all Holders of
such shares and Warrants at the time outstanding, shall amend this
Section 6.03.
Section 6.04. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 6.05. SURVIVAL.
(a) All representations and warranties made by the Company
herein or in any certificate or other instrument delivered by it or on
its behalf under this Agreement or the Registration Rights Agreement
shall be considered to have been relied upon by each Holder and shall
survive the issuance of the Warrants or the Warrant Shares regardless
of any investigation made by or on behalf of any Holder. All
statements in any such certificate or other instrument so delivered
shall constitute representations and warranties by the Company
hereunder.
(b) All representations and warranties made by the Holders
herein shall be considered to have been relied upon by the Company and
shall survive the issuance to the Holders of the Warrants or the
Warrant Shares regardless of any investigation made by the Company or
on its behalf.
Section 6.06. CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
Section 6.07. COUNTERPARTS. This Agreement may be executed on
counterpart signature pages or in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart
signature page or counterpart.
Section 6.08. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be fully performed in such
State.
Section 6.09. SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
Section 6.10. DEFECTS IN NOTICE. Failure to file any certificate or
notice or to mail any notice, or any defect in any certificate or notice
pursuant to this Agreement shall not affect in any way the rights of any
registered Holder of a Warrant Certificate or the legality or validity of
any adjustment made pursuant to the provisions of the Warrant, or any
transaction giving rise to any such adjustment, or the legality or validity
of any action taken or to be taken by the Company.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
KENNEDY-WILSON, INC.
By: /s/ William J. McMorrow
____________________________
Name: William J. McMorrow
Title: CEO
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By: /s/ Mark M. Hedstrom
____________________________
Name: Mark M. Hedstrom
Title: Vice President
[FORM OF WARRANT CERTIFICATE]
DATE OF ISSUANCE: ____ __, 199_ WARRANT CERTIFICATE NO. W-_
NEITHER THE EXERCISE OF THE WARRANTS EVIDENCED BY THIS CERTIFICATE NOR THE
ISSUANCE OF SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT
BE SOLD OR TRANSFERRED UNLESS SUCH TRANSFER IS PURSUANT TO (i) A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE
SECURITIES ACT AND THE RULES AND REGULATIONS THEREUNDER OR (ii) AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND, IF IT HAS SO REQUESTED, THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL (EITHER ITS OWN COUNSEL OR, IF THE
COMPANY SO REQUESTS, COUNSEL TO THE HOLDERS OF SUCH SECURITIES) REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH SECURITIES MAY BE SO TRANSFERRED.
FURTHERMORE, THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE COMPANY'S
CERTIFICATE OF INCORPORATION AND IN A REGISTRATION RIGHTS AGREEMENT AND AN
INVESTOR'S AGREEMENT, BOTH DATED JULY 16, 1998.
WARRANT
TO PURCHASE COMMON STOCK OF
KENNEDY-WILSON, INC.
THIS IS TO CERTIFY THAT, subject to the terms and conditions set forth
below, __________, its successors and permitted assigns (generally, the
"Holder"), is entitled from time to time to subscribe for and purchase from
Kennedy-Wilson, Inc., a Delaware corporation (the "Company"), ____________
(______) shares of the Company's common stock, $.01 par value (the "Common
Stock"). The number, character and exercise price of such shares of Common
Stock are subject to adjustment as provided below. The shares of Common
Stock subject to this Warrant may be referred to herein as the "Warrant
Shares."
This Warrant is subject to the following provisions, terms and
conditions:
ARTICLE I
CERTAIN DEFINITIONS
Each capitalized term used herein without definition shall have the
meaning assigned thereto (or incorporated by reference) in the Warrant
Agreement (as hereinafter defined). As used in this Warrant, unless the
context otherwise requires:
"Affiliate" means, with respect to any Person, (a) any Person or
entity directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, (b) any spouse or non-adult
child (including by adoption) of any natural person described in clause (a)
above, (c) any relative other than a spouse or non-adult child (including
by adoption) who has the same principal residence of any natural person
described in clause (a) above, (d) any trust in which any such Persons
described in clause (a), (b) or (c) above has a beneficial interest and (e)
any corporation, partnership, limited liability company or other
organization of which any such Persons described in clause (a), (b) or (c)
above collectively own more than fifty percent (50%) of the equity of such
entity. For purposes of this definition, beneficial ownership of more than
ten percent (10%) of the voting common equity of a Person shall be deemed
to be control of such Person.
"Business Day" means any day on which commercial banks are not
authorized or required to close in New York City.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as filed with the Secretary of State of the State of
Delaware on March 27, 1992, as amended through and including April 30,
1998.
"Include" and "including" shall be construed as if followed by the
phrase "without being limited to,".
"Investor's Agreement" means the Investor's Agreement dated July16,
1998, between the Company and Colony Investors III, L.P., as such agreement
shall be modified and supplemented in accordance with its terms and in
effect from time to time.
"Market Value" of a share of Common Stock shall be the market price
determined as follows: (i) if the shares of Common Stock are listed or
admitted to trading on any securities exchange or the NASDAQ-National
Market System, the average closing price, regular way, for the ten trading
day period ending on such day, or if no such sale takes place on any such
day, the average of the closing bid and asked prices on such day, (ii) if
the shares of Common Stock are not listed or admitted to trading on any
securities exchange or the NASDAQ-National Market System, the average last
reported sale price for the ten trading day period ending on such day or,
if no sale takes place on any such day, the average of the closing bid and
asked prices on such day, as reported by a reliable quotation source
designated by the Company, or (iii) if the shares of Common Stock are not
listed or admitted to trading on any securities exchange or the NASDAQ-
National Market System and no such last reported sale price or closing bid
and asked prices are available, the average of the reported high bid and
low asked prices for the ten trading day period ending on such day, as
reported by a reliable quotation source designated by the Company, or if
there shall be no bid and asked prices on any such day, the average of the
high bid and low asked prices, as so reported, on the most recent day (not
more than ten (10) days prior to the date in question) for which prices
have been so reported; provided that if there are no bid and asked prices
reported during the ten trading days prior to the date in question, the
Market Value of the shares of Common Stock shall be determined by the
Company acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
"Transfer" means, unless the context otherwise requires, any
disposition of this Warrant or the Warrant Shares, or of any interest in
any thereof, which would constitute an offer or sale thereof within the
meaning of the Securities Act.
"Warrant Agreement" shall mean the Warrant Agreement dated as of July
16, 1998, between the Company and Colony Investors III, L.P., as such
Warrant Agreement shall be modified and supplemented and in effect from
time to time.
"Warrants" shall mean: (a) this Warrant originally issued by the
Company pursuant to the Warrant Agreement on the Date of Issuance,
evidencing rights to purchase all or a portion of the Warrant Shares; and
(b) all Warrants issued upon transfer, division or combination of, or in
substitution or replacement for, any Warrants described in clause (a).
ARTICLE II
EXERCISE AND ISSUANCE
Section 2.01. TERM OF WARRANT. This Warrant shall be immediately
exercisable as to all of the Warrant Shares. The Holder shall have until
5:00 p.m., Los Angeles time, on July 16, 2005, in which to exercise the
rights represented by this Warrant, at which time all of the Holder's
rights hereunder shall terminate.
Section 2.02. EXERCISE PRICE AND ADJUSTMENTS. The exercise price at
which this Warrant may be exercised is Fifteen Dollars ($15.00) per share
of Common Stock, subject to adjustment as set forth below (as adjusted, the
"Exercise Price").
Section 2.03. EXERCISE OF WARRANTS.
(a) The rights represented by this Warrant may be exercised by
the Holder, in whole or in part, by the Holder delivering to the
Company, at its office maintained for such purpose pursuant to Section
11.01, (i) a written notice of the Holder's election to exercise this
Warrant (or any portion thereof), which notice shall specify the
number of Warrant Shares to be purchased pursuant to such exercise,
(ii) a certified or bank check or checks payable to the Company in an
aggregate amount equal to the aggregate Exercise Price for the number
of Warrant Shares specified in clause (i) above, and (iii) this
Warrant Certificate.
(b) Notwithstanding Section 2.03(a), at the election of the
Holder, which election shall be set forth in a written notice to the
Company together with this Warrant Certificate, this Warrant may be
exercised (in whole or in part) by means of a cashless exercise
procedure whereby the number of Warrant Shares issued to the Holder
upon such cashless exercise shall be equal to the quotient obtained by
dividing (A) the product of (x) the Market Value per share of Common
Stock as of the trading day immediately preceding the date such notice
is given to the Company (the "Exercise Date") less the Exercise Price
on such Exercise Date, multiplied by (y) the number of Warrant Shares
as to which the Holder elects to be issued pursuant to this Section
2.03(b) (which election shall reduce the number of Warrant Shares
available for any subsequent exercise), divided by (B) the Market
Value per share of Common Stock as of the trading day immediately
preceding such Exercise Date. The number of Warrant Shares issued
pursuant to this Section 2.03(b) shall be excluded from the
calculation of the amount paid pursuant to Section 2.03(a)(ii) above.
(c) Each notice of exercise shall be in substantially the form
of exercise attached to this Warrant Certificate. Upon receipt
thereof, the Company shall, as promptly as practicable and in any
event within 10 Business Days thereafter, cause to be executed and
delivered to such Holder a stock certificate or certificates
representing the aggregate number of duly and validly issued, fully
paid and nonassessable Warrant Shares issuable upon such exercise,
free and clear of any Liens.
Section 2.04. ISSUANCE. The stock certificate or certificates for
Warrant Shares so delivered shall be in such denominations as may be
specified in such notice and shall be registered in the name of the Holder
or such other name or names as shall be designated in such notice. Such
stock certificate or certificates shall be deemed to have been issued and
the Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares, including to the
extent permitted by law the right to vote such shares or to consent or to
receive notice as a stockholder, as of the time such notice and payment is
received by the Company as aforesaid. Unless this Warrant has expired, if
this Warrant shall have been exercised only in part, at the time of
delivery of said stock certificate or certificates, the Company shall
execute and deliver to the Holder a new Warrant Certificate, dated the Date
of Issuance, representing the number of Warrant Shares with respect to
which this Warrant shall not then have been exercised, which new Warrant
Certificate shall in all other respects be identical with this Warrant
Certificate, or, at the request of the Holder, appropriate notation may be
made on this Warrant Certificate and the same returned to the Holder.
Each certificate evidencing Warrant Shares shall be marked on its
reverse as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE
ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY
NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH LAWS OR PURSUANT TO
WRITTEN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFER
SET FORTH IN THE COMPANY'S CERTIFICATE OF INCORPORATION AND IN A
REGISTRATION RIGHTS AGREEMENT AND AN INVESTOR'S AGREEMENT, BOTH
BETWEEN THE COMPANY AND COLONY INVESTORS III, L.P. DATED JULY 16,
1998.
All shares of Common Stock issuable upon the exercise of this Warrant,
upon payment therefor in accordance herewith, shall be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
The Company shall not be obligated to issue fractional shares of
Common Stock upon any exercise of this Warrant.
Notwithstanding anything herein to the contrary, the Company shall not
be obligated to issue any shares of Common Stock to the extent such
issuance is otherwise prohibited by law, including federal or state
securities law, but the Company shall use all best efforts to effect such
issuance.
ARTICLE III
ADJUSTMENTS
Section 3.01. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company should, at any time or from time to time after the Date of
Issuance, fix a record date for a split, subdivision, or combination of the
outstanding shares of Common Stock, then as of such record date (or the
date of such stock split, subdivision, or combination if no record date is
fixed) the number of shares of Common Stock that this Warrant is
exercisable to purchase as of such time shall be adjusted to be the same
number of shares of Common Stock that the Holder would have if this Warrant
had been exercised immediately prior to such split, subdivision, or
combination. The Exercise Price shall be adjusted to be the then Exercise
Price multiplied by a fraction, the numerator of which is the number of
shares of Common Stock purchasable under this Warrant immediately prior to
such stock split, subdivision, or combination, and the denominator of which
is the number of shares of Common Stock purchasable by this Warrant
immediately after such event.
Section 3.02. ADJUSTMENT FOR DIVIDENDS IN STOCK OR OTHER SECURITIES
OR PROPERTY. If the Company should, at any time or from time to time after
the Date of Issuance, fix a record date for the determination of eligible
stockholders to receive, without payment therefor, other or additional
stock or other securities or property, including any right to receive any
securities or property (including any beneficial interest in an entity
established by the Company or any distribution by an entity whose
beneficial interests are owned by the Company or the Company's shareholders
in substantially the same proportion as their ownership of Common Stock)
not otherwise covered by this Article III (but other than cash in an
amount not in excess of 125% of the regular cash dividend paid with respect
to the preceding calendar quarter) of the Company by way of dividend, then
and in each case, the Holder shall be entitled to receive, in addition to
the number of shares of the Common Stock receivable upon exercise of this
Warrant, and on such record date, and without payment of any additional
consideration therefor upon such exercise, additional consideration (which
may include such other or additional stock or other securities or property)
so that the Holder will continue to have, in the aggregate, the same
economic value as was represented by this Warrant prior to such dividend as
if such Warrant had been exercised immediately prior to such dividend or
distribution.
Section 3.03. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR
SUBSTITUTION. If the Common Stock issuable upon the exercise of this
Warrant shall be changed into the same or different number of shares of any
class or classes of stock, whether by reclassification, exchange,
substitution, or otherwise (other than a stock split, combination or
dividend provided for in Sections 3.01 or 3.02 hereof, or a reorganization,
merger, consolidation, or sale of assets provided for in Section 3.04
hereof), then and in such event the Holder shall have the right thereafter
to receive upon exercise of this Warrant, the kind and amount of shares of
stock and other securities and property receivable upon such
reclassification, exchange, substitution, or other change as a holder of
the number of shares of Common Stock for which this Warrant would have been
exercisable immediately prior to such reclassification, exchange,
substitution, or other change would have had.
Section 3.04. REORGANIZATION, MERGER, CONSOLIDATION OR SALE OF
ASSETS. If at any time or from time to time, there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this
Article III) or a merger or consolidation of the Company with or into
another entity where the Company is not the surviving entity, or the
transfer or sale of all or substantially all of the Company's assets to any
other person, then as a part of such reorganization, merger, consolidation,
transfer or sale, effective provision shall be made so that the Holder
thereafter shall be entitled to receive upon exercise of this Warrant the
number of shares of stock or other securities, instruments or property of
the Company or of the successor entity resulting from such merger,
consolidation, or sale to which a holder of the Common Stock issuable upon
exercise of this Warrant would have been entitled upon such capital
reorganization, merger, consolidation, or sale as if such Warrants had been
exercised immediately prior to such event. In any such case, appropriate
adjustment shall be made in the application of the provisions of this
Section 3.04 with respect to the rights of the Holder after such
reorganization, merger, consolidation, or sale to the end that the
provisions of this Article III (including adjustment of the exercise price
then in effect) shall be applicable after that event as nearly equivalent
as may be practicable. The provisions of this Section 3.04 shall similarly
apply to successive reorganizations, mergers, consolidations or sale of
assets, and to the stock, securities or instruments of any other entity
which are at the time receivable upon the exercise of this Warrant.
Section 3.05. ADJUSTMENT FOR COMMON STOCK ISSUE. If the Company
issues to all holders of Common Stock or to any Affiliate (other than a
wholly owned subsidiary) any shares of Common Stock for a consideration per
share less than the Market Value per share in effect on the date the
Company fixes the offering price of such additional shares, the Exercise
Price shall be adjusted to the price calculated in accordance with the
following formula:
E' equals the product of (a) E and(b) the quotient of (i) the quantity O
plus the quantity P divided by M, divided by (ii) A.
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares.
P = the aggregate consideration received for the issuance of
such additional shares.
M = the Market Value per share of Common Stock on the date of
issuance of such additional shares.
A = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares.
The adjustment under this Section 3.05 shall be made successively
whenever any such issuance is made and shall become effective immediately
after such issuance.
This Section 3.05 does not apply to:
(a) any of the transactions described in any other Section of
this Article III, and
(b) the (i) exercise of the Warrants and Additional Warrants,
(ii) exercise of rights, options or warrants for which an adjustment
has been made hereunder pursuant to any other Section of this
Article III, (iii) conversion or exchange of other securities
convertible or exchangeable for Common Stock for which an adjustment
has been made hereunder pursuant to any other Section of this
Article III and (iv) exercise of rights, options or warrants in
connection with pension plans or employment compensation programs
equating to less than 10% in the aggregate of the Company's
outstanding Common Stock on the date hereof.
Section 3.06. LIMITS ON ADJUSTMENTS. No adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least five cents ($0.05) in such price; provided, however,
that any adjustments which by reason of this sentence are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All such calculations shall be made to the nearest cent.
Notwithstanding anything in this Section 3.06 to the contrary, the Exercise
Price shall not be reduced to less than the then existing par value of the
Common Stock as a result of any adjustment made hereunder.
Section 3.07. NOTICE OF ADJUSTMENT. Whenever an adjustment is to
be made pursuant to this Article III, the Company shall issue and promptly
provide to the Holder a certificate signed by the Company's Secretary
setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated and the Exercise Price and number of shares or amount of
property purchasable hereunder, after giving effect to the adjustment.
ARTICLE IV
TRANSFER, DIVISION AND COMBINATION
This Warrant and all rights hereunder are Transferable, in whole or in
part, on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant Certificate at the office of the Company
maintained for such purpose pursuant to Section 11.01, together with a
written assignment of this Warrant Certificate (in substantially the form
annexed hereto) duly executed by the Holder or its agent or attorney. Upon
such surrender and payment the Company shall execute and deliver one or
more new Warrant Certificates in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and this
Warrant Certificate promptly shall be canceled. This Warrant Certificate,
if properly assigned in compliance with this Article IV, may be exercised
by an assignee for the purchase of shares of Common Stock without having a
new Warrant Certificate issued. Each assignee, by accepting a new Warrant
Certificate issued to such assignee or this Warrant Certificate assigned in
blank, agrees to be bound by the restrictions on the transferability of
this Warrant set forth in the Company's Certificate of Incorporation, in
this Warrant Certificate, in the Warrant Agreement, the Investor's
Agreement and the Registration Rights Agreement.
This Warrant may be divided or combined with other Warrants upon
presentation of this Warrant Certificate at the aforesaid office of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the Holder
or its authorized agent or attorney. Subject to compliance with the next
preceding paragraph, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
The Company shall maintain at its aforesaid office books for the
registration and transfer of the Warrants.
ARTICLE V
CONSOLIDATION, MERGER, ETC.
In case a consolidation or merger of the Company shall be effected
with another Person on or after the Date of Issuance, or the sale, lease or
transfer of all or substantially all its assets to another Person shall be
effected on or after the Date of Issuance, then, as condition of such
consolidation, merger, sale, lease or transfer, lawful and adequate
provision shall be made whereby the registered Holder of this Warrant
Certificate thereafter shall have the right to purchase and receive upon
the basis and upon the terms and conditions specified herein, such shares
of stock, securities, cash or other property to which the Holder would have
been entitled if immediately prior to such consolidation, merger, sale,
lease or transfer the Holder had exercised this Warrant for Common Stock.
In any such case, appropriate and equitable provision also shall be made
with respect to the rights and interests of the registered Holder of this
Warrant Certificate to the end that the provisions hereof, of the Warrant
Agreement and of the Registration Rights Agreement thereafter shall be
applicable, as nearly as may be, in relation of any shares of stock,
securities, cash or other property thereafter deliverable upon the exercise
of this Warrant. The Company shall not effect any such consolidation,
merger, sale, lease or transfer unless prior to or simultaneously with the
consummation thereof the successor Person (if other than the Company)
resulting from such consolidation or merger or the Person purchasing,
leasing or otherwise acquiring such assets shall assume the obligation to
deliver to the Holder such shares of stock, securities, cash or other
property as, in accordance with the foregoing provisions, the Holder may be
entitled to purchase. The above provisions of this Article similarly shall
apply to successive consolidations, mergers, sales, leases or transfers.
ARTICLE VI
NOTICE TO WARRANT HOLDERS
In case the Company proposes to (a) pay any dividend to the holders of
its Common Stock or to make any other distribution to the holders of its
Common Stock, (b) offer to the holders of its Common Stock rights to
subscribe for or to purchase any additional shares of Common Stock or
shares of any other class of stock or any other securities, rights or
options, (c) effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision, or combination, of
outstanding shares of Common Stock), (d) effect any capital reorganization,
(e) effect any consolidation, merger or sale, lease, transfer or other
disposition of all or substantially all of its property, assets or
business, or (f) effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Holder
notice of such proposed action, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution
or rights, or the date on which such reclassification, reorganization,
consolidation, merger, sale, lease, transfer, disposition, liquidation,
dissolution or winding up is to take place, if any such date is to be
fixed, and shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the Common
Stock and the number and kind of any other shares of stock which the Holder
is entitled in accordance herewith, and the purchase price or prices
thereof, after giving effect to any adjustment which will be required as a
result of such action. Such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least 10 Business Days prior
to the record date for determining holders of the Common Stock for purposes
of such action, and in the case of any other such action, at least 10
Business Days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of Common Stock, whichever
shall be the earlier.
ARTICLE VII
RESERVATION AND AUTHORIZATION OF STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company shall at all times reserve and keep available for issue
upon the exercise or conversion of Warrants such number of its authorized
but unissued shares of Common Stock as shall be sufficient to permit the
exercise or conversion in full of all outstanding Warrants. All shares of
Common Stock which shall be so issuable, when issued upon exercise of any
Warrant and payment of the Exercise Price therefor, or upon such
conversion, as the case may be, shall be duly and validly issued, fully
paid and nonassessable and free and clear of any Liens.
Before taking any action which would result in an adjustment in the
number of Warrant Shares issuable upon exercise of this Warrant, the
Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof. If any shares of Common Stock required
to be reserved for issue upon exercise or conversion of this Warrant
require registration with any Governmental Authority under any federal or
state law (otherwise than in connection with a registration under the
Securities Act or applicable state securities laws) before such shares may
be so issued, the Company shall in good faith and as expeditiously as
possible and at its expense endeavor to cause such shares to be duly
registered.
ARTICLE VIII
WARRANT TRANSFER BOOKS
The Company shall not at any time, except upon complete dissolution,
liquidation or winding up, close its stock transfer books or Warrant
transfer books so as to result in preventing or delaying the exercise,
conversion or transfer of this Warrant, unless otherwise required by any
applicable federal, state or local law.
ARTICLE IX
EXPENSES, TRANSFER TAXES AND OTHER CHARGES
The Company shall pay any and all expenses, transfer taxes (other than
income taxes) and other charges in accordance with and to the extent
provided in the Warrant Agreement.
ARTICLE X
NO SHAREHOLDER RIGHTS
Except as expressly provided herein or in the Warrant Agreement, this
Warrant does not entitle the Holder to any voting, dividend or other rights
as a stockholder of the Company.
ARTICLE XI
MISCELLANEOUS
Section 11.01. OFFICE OF THE COMPANY. So long as any this Warrant
remains outstanding, the Company shall maintain an office in the
continental United States of America where this Warrant may be presented
for exercise, transfer, division or combination hereof as herein provided.
Such office shall be at the Company's principal executive office, unless
and until the Company shall designate and maintain some other office for
such purposes and give notice thereof to the Holder.
Section 11.02. NOTICES GENERALLY. Any notices and other
communications pursuant to the provisions hereof shall be sent in
accordance with Section 6.02 of the Warrant Agreement.
Section 11.03. AMENDMENTS. The terms of this Warrant may be amended,
and the observance of any term therein may be waived, but only with the
written consent of the holders of Warrants evidencing a majority of the
total number of Warrant Shares at the time purchasable upon the exercise of
all then outstanding Warrants. For the purposes of determining whether the
holders of outstanding Warrants entitled to purchase a requisite number of
Warrant Shares at any time have taken any action authorized by this
Warrant, any Warrants owned by the Company or any Affiliate of the Company
shall be deemed not to be outstanding.
Section 11.04. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the law of the State of Delaware applicable
to contracts executed in and to be fully performed in such State.
Section 11.05. LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the
Holder, shall give rise to any liability of such Holder for the Exercise
Price or as a stockholder of the Company, whether such liability is
asserted by the Company, any creditor of the Company or any other Person.
Section 11.06. INFORMATION. So long as this Warrant remains
outstanding, the Company will furnish to the registered Holder (at the same
time as made available generally to Stockholders) annual and quarterly
financial reports.
IN WITNESS WHEREOF, The Company has duly executed this Warrant.
Dated: July 16, 1998 KENNEDY-WILSON, INC.
By___________________________
Name:
Title:
By___________________________
Name:
Title:
FORM OF ASSIGNMENT
(To be executed by the registered Holder hereof)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
to the assignee set forth below all of the rights of the undersigned under
the attached Warrant (Certificate No. W-__) with respect to the number of
Warrant Shares set forth below:
Name of Assignee Address Number of Warrant Shares
Dated:
Name:
Title:
FORM OF EXERCISE
(To be executed by the registered Holder hereof)
The undersigned hereby exercises this Warrant to subscribe for and
purchase ____________ Warrant Shares at the Exercise Price and herewith
makes payment therefor in full. Kindly issue certificates and/or other
instruments covering the Warrant Shares in accordance with the instructions
given below. A new Warrant Certificate for the unexercised balance of the
Warrant Shares covered by the attached Warrant (Certificate No. W-__), if
any, will be registered in the name of the undersigned.
In exercising its rights to purchase such Common Stock, the
undersigned hereby confirms that it will not sell or transfer such stock
unless such transfer is pursuant to (a) a registration statement in effect
with respect to such securities under the Securities Act of 1933, as
amended (the "Securities Act") and the rules and regulations thereunder or
(b) an exemption from the registration requirements of the Securities Act
and any applicable state securities laws.
Dated:
Name:
Title:
Instructions for registration of Warrant
Name (please print)
Social Security or Other Identifying Number: ___________________
Address:
EXHIBIT 5
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act
of 1934, as amended, each of the persons named below agrees to the joint
filing on behalf of each of them of a Statement on Schedule 13D (including
amendments thereto) with respect to shares of common stock, par value $.01
per share, of Kennedy-Wilson, Inc., a Delaware corporation, and warrants
exercisable for additional shares, and further agrees that this Joint
Filing Agreement be included as an exhibit to such filings provided that,
as contemplated by Section 13d-1(f)(l)(ii), no person shall be responsible
for the completeness or accuracy of the information concerning the other
persons making the filing, unless such person knows or has reason to
believe that such information is inaccurate. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument.
Dated: July 24, 1998
By: /s/ THOMAS J. BARRACK, JR.
---------------------------------
Thomas J. Barrack, Jr.
By: /s/ KELVIN L. DAVIS
---------------------------------
Kelvin L. Davis
COLONYGP III, Inc.,
a Delaware corporation,
By: /s/ KELVIN L. DAVIS
---------------------------------
Kelvin L. Davis
President
COLONY CAPITAL III, L.P.,
a Delaware limited partnership,
By: ColonyGP III, Inc.,
a Delaware corporation,
its general partner
By: /s/ KELVIN L. DAVIS
----------------------------
Kelvin L. Davis
President
COLONY INVESTORS III, L.P.,
a Delaware limited partnership,
By: Colony Capital III, L.P.,
a Delaware limited partnership,
its general partner
By: ColonyGP III, Inc.,
a Delaware corporation,
its general partner
By: /s/ KELVIN L. DAVIS
-----------------------
Kelvin L. Davis
President
COLONY K-W, LLC,
a Delaware limited liability company,
By: Colony Investors III, L.P.,
a Delaware limited partnership,
its sole and managing member
By: Colony Capital III, L.P.,
a Delaware limited partnership,
its general partner
By: ColonyGP III, Inc.,
a Delaware corporation,
its general partner
By: /s/ KELVIN L. DAVIS
---------------------------
Kelvin L. Davis
President
