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Exhibit 4.1
WARRANT AGREEMENT
Dated as of October 17, 1996
by and between
Homestead Village Incorporated
and
The First National Bank of Boston
as Warrant Agent
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WARRANT AGREEMENT
TABLE OF CONTENTS/1/
PAGE
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SECTION 1. Appointment of Warrant Agent............................... 1
SECTION 2. Issuance of Warrants....................................... 1
SECTION 3. Warrant Certificates....................................... 1
SECTION 4. Execution of Warrant Certificates.......................... 2
SECTION 5. Registration and Countersignature.......................... 2
SECTION 6. Registration of Transfers and Exchanges.................... 3
SECTION 7. Terms of Warrants; Exercise of Warrants.................... 3
SECTION 8. Reports.................................................... 6
SECTION 9. Payment of Taxes........................................... 7
SECTION 10. Mutilated or Missing Warrant Certificates.................. 7
SECTION 11. Reservation of Warrant Shares.............................. 7
SECTION 12. Registration and Listing of Common Stock................... 8
SECTION 13. Adjustment of Exercise Rate................................ 8
SECTION 14. Fractional Interests....................................... 16
SECTION 15. Notices to Warrant Holders................................. 16
SECTION 16. Merger, Consolidation or Change of Name of Warrant Agent 17
SECTION 17. Warrant Agent.............................................. 18
SECTION 18. Change of Warrant Agent.................................... 20
SECTION 19. Notices to the Company and Warrant Agent................... 21
SECTION 20. Supplements and Amendments................................. 21
SECTION 21. Successors................................................. 22
SECTION 22. Termination................................................ 22
SECTION 23. Governing Law; Jurisdiction................................ 22
SECTION 24. Benefits of This Agreement................................. 22
SECTION 25. Counterparts............................................... 22
SECTION 26. Further Assurances......................................... 22
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/1/ This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
i
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement"), dated as of October 17, 1996, between
Homestead Village Incorporated, a Maryland corporation (the "Company"), and
The First National Bank of Boston, a national banking association, as
Warrant Agent (the "Warrant Agent").
WHEREAS, the Company, Security Capital Group Incorporated, a Maryland
corporation ("SCG"), Security Capital Pacific Trust, a Maryland real estate
investment trust ("PTR"), and Security Capital Atlantic Incorporated, a
Maryland corporation ("Atlantic"), have entered into a Warrant Purchase
Agreement (the "Purchase Agreement"), dated May 21, 1996, pursuant to
which, among other things, Homestead has agreed to issue, on the terms and
conditions set forth in the Purchase Agreement, to each of SCG, PTR and
Atlantic, Warrants, as hereinafter described (collectively, the "Warrants"
and the certificates evidencing the Warrants hereinafter referred to as the
"Warrant Certificates"), to purchase up to an aggregate of 10,000,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), of
the Company (the Common Stock issuable on exercise of the Warrants being
referred to herein as the "Warrant Shares" and, where appropriate, such
term shall also mean the other securities or property purchasable and
deliverable upon exercise of a Warrant as provided in Section 13 hereof);
each Warrant entitles the holder of the Warrant upon exercise to receive
from the Company, as adjusted as provided herein, one (1) fully paid,
registered and nonassessable Warrant Share at the Exercise Price (as
defined herein);
WHEREAS, the Warrants are being issued by the Company as part of a
public distribution registered under the Securities Act of 1933, as
amended; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates and other matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Issuance of Warrants. The Warrants shall be originally
issued by the Company at the time and in the manner specified in the
Purchase Agreement.
SECTION 3. Warrant Certificates. The Warrant Certificates to be
delivered pursuant to this Agreement shall be in registered form only and
shall be substantially in the form set forth in Exhibit A attached hereto.
SECTION 4. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board (or
any Co-Chairman of the Board), Chief Executive Officer, President, any
Managing Director or any Senior Vice President and by its Secretary or an
Assistant Secretary. Each such signature upon the Warrant Certificates may
be in the form of a facsimile signature of the present or any future
Chairman of the Board, Chief Executive Officer, President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been
Chairman of the Board (or any Co-Chairman of the Board), Chief Executive
Officer, President, Managing Director, Senior Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be countersigned and delivered or disposed of such
officer shall have ceased to hold such office. The seal of the Company may
be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent
pursuant to Section 5 hereof, or disposed of by the Company, such Warrant
Certificates nevertheless may be countersigned and delivered or disposed of
as though such person had not ceased to be such officer of the Company; and
any Warrant Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent pursuant to Section 5 hereof.
SECTION 5. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates
in a register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board
(or any Co-Chairman of the Board), Chief Executive Officer, President, any
Managing Director, any Senior Vice President, the Chief Financial Officer
or the Secretary of the Company, initially countersign and deliver Warrants
entitling the holders thereof to purchase not more than the number of
Warrant Shares referred to above in the first recital hereof and shall
countersign and deliver Warrants as otherwise provided in this Agreement.
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The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes.
SECTION 6. Registration of Transfers and Exchanges. The Warrant
Agent shall from time to time register the transfer of any outstanding
Warrant Certificates upon the records to be maintained by it for that
purpose, upon surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, duly
executed by the registered holder or holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee(s) and the surrendered Warrant Certificate shall
be cancelled by the Warrant Agent. Cancelled Warrant Certificates shall
thereafter be disposed of by the Warrant Agent in a manner satisfactory to
the Company.
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Warrant Agent at its corporate trust
office in the Borough of Manhattan, The City of New York or at such other
location as it may notify the holders of Warrants that it maintains as its
principal office for trust administration (the "Warrant Agent Office") for
another Warrant Certificate or other Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrants. Warrant
Certificates surrendered for exchange shall be cancelled by the Warrant
Agent. Such cancelled Warrant Certificates shall then be disposed of by the
Warrant Agent in a manner satisfactory to the Company.
No service charge shall be made for any exercise, exchange or
registration of transfer of Warrant Certificates or any issuance of Warrant
Certificates, but the Company may require payment of a sum sufficient to
cover any stamp or other governmental charge or tax that may be imposed in
connection with any such transfer or exchange.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 6, the new Warrant Certificates
required pursuant to the provisions of this Section 6.
SECTION 7. Terms of Warrants; Exercise of Warrants. (a) Subject to
the terms of this Agreement, the Warrants shall expire at 5:00 p.m., New
York, New York time on _________, 1997 (the "Expiration Date"). Each
Warrant may be exercised on any Business Day (as defined below) on or after
the date of this Warrant Agreement (the "Exercisability Date") and on or
prior to the Expiration Date. Each Warrant not exercised prior to 5:00
p.m., New York, New York time, on the Expiration Date shall become void and
all rights thereunder and all rights in respect thereof under this
Agreement shall cease as of such time.
(b) Subject to the provisions of this Agreement, the holder of each
Warrant shall have the right to purchase from the Company on or after the
Exercisability Date and on or prior to the Expiration Date, one (1) fully
paid, registered and nonassessable Warrant Share, subject to
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adjustment in accordance with Section 13 hereof, at the purchase price of ten
dollars ($10.00) for each Warrant exercised (the "Exercise Price"). The number
or amount of Warrant Shares for which a Warrant may be exercised, as adjusted
pursuant hereto, is referred to herein as the "Exercise Rate."
For purposes of this Section 7 and elsewhere in this Agreement, the
following terms shall have the meanings provided hereafter:
"Affiliate" means, with respect to another Person, any Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such other Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday or a Sunday or
a day on which commercial banking institutions in The City of New York are
authorized by law to be closed.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock.
"Equity Interests" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any publicly traded debt security
that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government or any agency
or political subdivision thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any specified Person means (i) a corporation a
majority of whose outstanding Voting Stock is at the time, directly or
indirectly, owned by such Person or by such Person and a Subsidiary or
Subsidiaries of such Person or by a Subsidiary or Subsidiaries of such Person or
(ii) any other Person (other than a corporation) in which such Person or such
Person and a Subsidiary or Subsidiaries of such Person or a Subsidiary or
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest.
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"Voting Stock" of any Person means Capital Stock of such Person with
voting power, under ordinary circumstances, to elect directors of such Person.
(c) Warrants may be exercised on and after the Exercisability Date
and on or prior to the Expiration Date by (i) surrendering at any office or
agency maintained by the Company for that purpose, which will initially be the
Warrant Agent Office (each a "Warrant Exercise Office"), the Warrant Certificate
evidencing such Warrants with the form of election to purchase Warrant Shares
set forth on the reverse side of the Warrant Certificate (the "Election to
Exercise") duly completed and signed by the registered holder or holders thereof
or by the duly appointed legal representative thereof or by a duly authorized
attorney, and in the case of a transfer, such signature shall be guaranteed by
an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (each an "Eligible Guarantor Institution"), and (ii) paying in full
the Exercise Price for each such Warrant exercised and any other amounts
required to be paid pursuant to this Agreement. Each Warrant may be exercised
only in whole.
(d) Simultaneously with the exercise of each Warrant, payment in full
of the Exercise Price shall be made in cash, certified or official bank check or
wire transfer to be delivered to the office or agency where the Warrant
Certificate is being surrendered. No adjustment shall be made hereunder on
account of any Warrant Shares issued upon exercise of a Warrant under this
Agreement after the exercise of such Warrant. Except for certain adjustments as
set forth in Section 13, no payment shall be made on Warrant Shares on account
of any dividend or distribution declared on Common Stock to holders of such
Common Stock of record as of a date prior to the Exercise Date.
(e) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office, such Warrant
Certificate and payment shall be promptly delivered to the Warrant Agent. The
"Exercise Date" for a Warrant shall be the date when all of the items referred
to in the first sentence of each of paragraphs (c) and (d) of this Section 7 are
received by the Warrant Agent at or prior to 2:00 p.m., New York, New York time,
on a Business Day and the exercise of the Warrants will be effective as of such
Exercise Date. If any items referred to in the first sentence of paragraphs (c)
and (d) are received after 2:00 p.m., New York, New York time, on a Business
Day, the exercise of the Warrants to which such item relates will be effective
on the next succeeding Business Day. Notwithstanding the foregoing, in the case
of an exercise of Warrants on the Expiration Date, if all of the items referred
to in the first sentence of each of paragraphs (c) and (d) of this Section are
received by the Warrant Agent at or prior to 5:00 p.m. New York, New York time,
on such Expiration Date, the exercise of the Warrants to which such items relate
will be effective on the Expiration Date.
(f) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price,
the Warrant Agent shall: (i) cause an amount equal to the Exercise Price to be
paid to the Company by crediting the same to the account designated by the
Company in writing to the Warrant Agent for that purpose; (ii) advise
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the Company immediately by telephone of the amount so deposited to the Company's
account and promptly confirm such telephonic advice in writing; and (iii) as
soon as practicable, advise the Company in writing of the number of Warrants
exercised in accordance with the terms and conditions of this Agreement and the
Warrant Certificates, the instructions of each exercising holder of the Warrant
Certificates with respect to delivery of the Warrant Shares to which such holder
is entitled upon such exercise, and such other information as the Company shall
reasonably request.
(g) Subject to the provisions of Section 14 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the registered holder of the Warrant Certificate evidencing such
exercised Warrant or Warrants, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants, in fully
registered form, registered in such name or names as may be directed by such
holder pursuant to the Election to Exercise, as set forth on the reverse of the
Warrant Certificate or on the Warrant Endorsement, together with cash as
provided in Section 14 hereof; provided, however, that if any consolidation,
merger or lease or sale of assets is proposed to be effected by the Company as
described in subsection (k) of Section 13 hereof, or a tender offer or an
exchange offer for shares of Common Stock of the Company shall be made, upon
such surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall, as soon as possible, but in any event not later than two business
days thereafter, issue and cause to be delivered the full number of Warrant
Shares issuable upon the exercise of such Warrant in the manner described in
this sentence together with cash as provided in Section 14 hereof. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record or such Warrant Shares as of the date of the surrender of such Warrants
and payment of the Exercise Price. No fractional shares shall be issued upon
exercise of any Warrants in accordance with Section 14 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent and be disposed of in a manner satisfactory to
the Company.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders during
normal business hours at its office. The Company shall supply the Warrant Agent
from time to time with such numbers of copies of this Agreement as the Warrant
Agent may request.
SECTION 8. Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Warrants are outstanding, the Company
will furnish to the holders of Warrants all financial information that would be
required to be contained in an annual report prepared in compliance with Rule
14a-3 under the Exchange Act, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and a report thereon by the
Company's independent certified public accountants. In addition, whether or not
required by
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the rules and regulations of the SEC, the Company will make such information
available to investors, securities analysts and broker-dealers who request it in
writing.
SECTION 9. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrants and of Warrant
Shares upon the exercise of Warrants; provided, however, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 10. Mutilated or Missing Warrant Certificates. If any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
shall issue and the Warrant Agent shall countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and to the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity and security therefor, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
SECTION 11. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise of
Warrants, the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or the transfer agent for the Common Stock (the "Transfer
Agent") and every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the rights of purchase
aforesaid will be irrevocably authorized and directed at all times to reserve
such number of authorized shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 14 hereof. The Company will
furnish such Transfer Agent
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a copy of all notices of adjustments and certificates related thereto,
transmitted to each holder pursuant to Section 15 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 13 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon payment of the Exercise Price and issue, be
fully paid, nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issue thereof.
SECTION 12. Registration and Listing of Common Stock. The Company
hereby represents and warrants that the Warrants and the Warrant Shares have
been duly registered or approved, as the case may be, with the appropriate
governmental authorities under applicable federal and state laws. The Warrants
and the Warrant Shares have been approved for listing or quotation on each
national securities exchange or inter-dealer quotation system on which the
Common Stock is listed or quoted, and the Company shall maintain the listing or
quotation of such Warrants and Warrant Shares; and the Company, upon official
notice of issuance, will list or quote on such national securities exchange,
will register under the Exchange Act and will maintain such listing or quotation
of, any Other Securities (as defined below) that at any time are issuable upon
exercise of the Warrants, if and at the time that any securities of the same
class shall be listed or quoted on such national securities exchange or inter-
dealer quotation system by the Company.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 13 hereof or otherwise.
SECTION 13. Adjustment of Exercise Rate. The Exercise Rate is
subject to adjustment from time to time upon the occurrence of the events
enumerated in this Section 13. For purposes of this Section 13, "Common Stock"
means the Common Stock and any other stock of the Company, however designated,
for which the Warrants may be exercisable.
(a) Adjustment for Change in Capital Stock.
If the Company:
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(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
capital stock,
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such holder would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action or immediately
prior to the record date applicable thereto, if any.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If, after an adjustment, a holder of a Warrant upon exercise may receive
shares of two or more classes of capital stock of the Company, the Exercise Rate
of each class of capital stock shall thereafter be subject to adjustment on
terms comparable to those applicable to Common Stock in this Section 13.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(b) Adjustment for Rights Issue or Sale of Common Stock Below
Current Market Value.
If the Company (i) distributes any rights, warrants or options to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than 94% (100% if a stand-by
underwriter is used and charges the Company a commission) of the Current Market
Value at the Time of Determination (each as defined in paragraph (d) of this
Section 13) or (ii) sells any Common Stock or any securities convertible into or
exchangeable or exercisable for the Common Stock (other than pursuant to (1) the
exercise of the Warrants, (2) any security convertible into, or exchangeable or
exercisable for, the Common Stock as to which the issuance thereof has
previously been the subject of any required adjustment (whether or not actually
made) pursuant to this Section 13 or (3) the
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conversion of any convertible notes issued or issuable in connection with the
transactions contemplated by the Merger Agreement) at a price per share less
than the Current Market Value, the Exercise Rate shall be adjusted in accordance
with the formula:
E ' = E x (O + N)
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(O + (N x P/M))
where:
E' = the adjusted Exercise Rate;
E = the current Exercise Rate;
O = the number of shares of Common Stock outstanding on the record date for the
distribution to which this paragraph (b) is being applied or on the date of
sale of Common Stock at a price per share less than the Current Market
Value to which this paragraph (b) applies, as the case may be;
N = the number of additional shares of Common Stock issuable upon exercise of
all rights, warrants and options so distributed or the number of shares of
Common Stock so sold or the maximum stated number of shares of Common Stock
issuable upon the conversion, exchange or exercise of any such convertible,
exchangeable or exercisable securities, as the case may be;
P = the offering price per share of the additional shares of Common Stock upon
the exercise of any such rights, options or warrants so distributed or
pursuant to any such convertible, exchangeable or exercisable securities so
sold or the sale price of the shares so sold, as the case may be; and
M = the Current Market Value as of the Time of Determination or at the time of
sale, as the case may be.
The adjustment shall be made successively whenever any such rights,
warrants or options are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, warrants or options. If at the end of the period during which such
rights, warrants or options are exercisable, not all rights, warrants or options
shall have been exercised, the Exercise Rate shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
No adjustment shall be made under this paragraph (b) if the application of
the formula stated above in this paragraph (b) would result in a value of E '
that is lower than the value of E.
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(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of its
assets or debt securities or any rights, warrants or options to purchase any of
its debt securities or assets, the Exercise Rate shall be adjusted in accordance
with the formula:
E ' = E x M
---
M-F
where:
E ' = the adjusted Exercise Rate;
E = the current Exercise Rate;
M = the Current Market Value; and
F = the fair market value (on the record date for the distribution to which
this paragraph (c) applies) of the assets, securities, rights, warrants
or options to be distributed in respect of each share of Common Stock in
the distribution to which this paragraph (c) is being applied
(including, in the case of cash dividends or other cash distributions
giving rise to an adjustment, all such cash distributed concurrently).
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. If at the
end of the period during which such rights, warrants or options are exercisable,
not all rights, warrants or options shall have been exercised, the Exercise Rate
shall be immediately readjusted to what it would have been if such rights,
warrants or options which are not exercised had not been issued.
This subsection (c) does not apply to cash dividends or cash distributions
paid out of consolidated retained earnings as shown on the books of the Company
prepared in accordance with generally accepted accounting principles other than
any Extraordinary Cash Dividend (as defined below). An "Extraordinary Cash
Dividend" shall be that portion, if any, of the aggregate amount of all cash
dividends paid in any fiscal year which exceeds the sum of (A) the Company's
cumulative undistributed earnings on the date of this Agreement, plus (B) the
cumulative amount of earnings, as determined by the Board of Directors, after
such date, minus (C) the cumulative amount of dividends accrued or paid in
respect of the Common Stock. In all cases, the Company shall give the Warrant
holders advance notice of a record date for any dividend payment on the Common
Stock which notice is delivered on a date at least as early as the date of
notice to the holders of Common Stock.
(d) Current Market Value at the Time of Determination.
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"Current Market Value" per share of Common Stock or of any other security
at any date shall be the average of the daily market price, for the twenty (20)
consecutive trading days immediately preceding the day of such determination.
The market price for each such trading day shall be: (i) the last reported sales
price, regular way on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular way,
in either case as reported on the New York Stock Exchange ("NYSE") or, (ii) if
such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, (iii) if not listed or admitted for trading on any
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or, (iv) if such security is not quoted on such National Market System, the
average of the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, (v) if bid and asked prices for such security
on such day shall not have been reported through NASDAQ, the average of the bid
and asked prices on such day as furnished by any NYSE member firm regularly
making a market in such security selected for such purpose by the Chairman of
the Board or the Board of Directors or, (vi) if such bid and asked prices are
not so furnished, then the fair market value of the security as established by
the Board of Directors acting in their good faith reasonable judgment.
"Time of Determination" means the time and date of the earlier of (i) the
determination of stockholders entitled to receive rights, warrants, or options
or a distribution, in each case, to which paragraphs (b) or (c) apply and (ii)
the time ("Ex-Dividend Time") immediately prior to the commencement of "ex-
dividend" trading for such rights, warrants or distribution on such national or
regional exchange or market on which the Common Stock is then listed or quoted.
(e) Consideration Received.
For purposes of any computation respecting consideration received pursuant
to subsection (b) of this Section 13, the following shall apply:
(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no case
shall any deduction be made for any commissions, discounts or other expenses
incurred by the Company for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors (irrespective of the accounting treatment
thereof), whose determination shall be conclusive, and described in a Board
resolution which shall be filed with the Warrant Agent; and
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall be
deemed to be the
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consideration received by the Company for the issuance of such securities plus
the additional minimum consideration, if any, to be received by the Company upon
the conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of this
subsection).
(f) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Rate need be made unless the adjustment would
require an increase or decrease of at least 1% in the Exercise Rate. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment.
All calculations under this Section 13 shall be made to the nearest 1/100th
of a share.
(g) When No Adjustment Required.
No adjustment need be made for a transaction referred to in subsections
(a), (b) or (c) of this Section 13 if Warrant holders are offered the
opportunity to participate in the transaction on a basis and with notice that
the Board of Directors determines to be fair and appropriate in light of the
basis and notice on which holders of Common Stock participate in the
transaction.
To the extent the Warrants become convertible into cash, no adjustment need
be made thereafter as to the cash. Interest will not accrue on the cash.
(h) Notice of Adjustment.
Whenever the Exercise Rate is adjusted, the Company shall provide the
notices required by Section 15 hereof.
(i) Voluntary Adjustment.
The Company from time to time may, as the Board of Directors deems
appropriate, increase the Exercise Rate by any amount for any period of time if
the period is at least 20 days and if the increase is irrevocable during the
period.
Whenever the Exercise Rate is increased, the Company shall mail to Warrant
holders a notice of the increase. The Company shall mail the notice at least 15
days before the date the increased Exercise Rate takes effect. The notice shall
state the increased Exercise Rate and the period it will be in effect.
An increase of the Exercise Rate pursuant to this Section 13(i), other than
an increase which the Company has irrevocably committed will be in effect for so
long as any Warrants are outstanding, does not change or adjust the Exercise
Rate otherwise in effect for purposes of subsections (a), (b) or (c) of this
Section 13.
-13-
(j) Notice of Certain Transactions.
If:
(1) The Company takes any action that would require an adjustment in
the Exercise Rate pursuant to subsections (a), (b) or (c) of this Section 13 and
if the Company does not arrange for Warrant holders to participate pursuant to
subsection (g) of this Section 13;
(2) The Company takes any action that would require a supplemental
Warrant Agreement pursuant to subsection (k) of this Section 13; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(k) Reorganization of the Company.
If the Company consolidates or merges with or into, or transfers or leases
all or substantially all its assets to, any Person, upon consummation of such
transaction the Warrants shall automatically become exercisable for the kind and
amount of securities, cash or other assets which the holder of a Warrant would
have owned immediately after the consolidation, merger, transfer or lease if the
holder had exercised the Warrant immediately before the effective date of the
transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than the Company, or the Person to which such sale or conveyance shall have been
made (any such Person, the "Successor Guarantor"), shall enter into a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 13. The Successor Guarantor shall mail
to Warrant holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants under the
supplemental Warrant Agreement is an Affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
If this subsection (k) applies, subsections (a), (b) or (c) of this Section
13 do not apply.
-14-
(l) The Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to subsection (a), (b), (c), (d), (e) or (g) of this Section 13 is
conclusive.
(m) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under this
Section 13 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under subsection (k) of this Section 13 are correct. The
Warrant Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of Warrants. The Warrant Agent shall
not be responsible for the Company's failure to comply with this Section 13.
(n) When Issuance or Payment May Be Deferred.
In any case in which this Section 13 shall require that an adjustment in
the Exercise Rate be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Rate and (ii) paying to
such holder any amount in cash in lieu of a fractional share pursuant to Section
14 hereof; provided, however, that the Company shall deliver to such holder a
due ▇▇▇▇ or other appropriate instrument evidencing such holder's right to
receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(o) Form of Warrants.
Irrespective of any adjustments in the Exercise Rate, Warrants theretofore
or thereafter issued may continue to express the same price and number and kind
of shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
(p) Adjustments to Par Value.
The Company shall from time to time make such adjustments to the par value
of the Common Stock as may be necessary so that at all times, upon exercise of
the Warrants, the Warrant Shares will be fully paid and nonassessable.
(q) Priority of Adjustments. If this Section 13 requires adjustments
to the Exercise Rate under more than one of paragraphs (a), (b) or (c), and the
record dates for the distributions giving rise to such adjustments shall occur
on the same date, then such adjustments
-15-
shall be made by applying, first, the provisions of paragraph (a), second, the
provisions of paragraph (c) and, third, the provisions of paragraph (b).
(r) Multiple Adjustments. After an adjustment to the Exercise Rate
under this Section 13, any subsequent event requiring an adjustment under this
Section 13 shall cause an adjustment to the Exercise Rate as so adjusted.
SECTION 14. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 14,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall notify the Warrant Agent in writing of the amount to be paid in
lieu of the fraction of a Warrant Share and concurrently pay or provide to the
Warrant Agent for payment to the Warrant holder an amount in cash equal to the
product of (i) such fraction of a Warrant Share and (ii) the difference of the
Current Market Value of a share of Common Stock as of the date of exercise of
the Warrants and the Exercise Price.
SECTION 15. Notices to Warrant Holders. Upon any adjustment of the
Exercise Rate pursuant to Section 13 hereof, the Company shall promptly
thereafter (i) cause to be filed with the Warrant Agent a certificate of a firm
of independent public accountants of recognized standing selected by the Company
(who may be the regular auditors of the Company) setting forth the Exercise Rate
after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting
forth the number of Warrant Shares (or portion thereof) issuable after such
adjustment in the Exercise Rate, upon exercise of a Warrant and payment of the
Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause to be given to each
of the registered holders of the Warrant Certificates at such registered
holder's address appearing on the Warrant register written notice of such
adjustments by first-class mail, postage prepaid. Where appropriate, such notice
may be given in advance and included as a part of the notice required to be
mailed under the other provisions of this Section 15.
In the event:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants (other
than rights, options or warrants issued to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common Stock at a price
per share not less than 94% (100% if a stand-by underwriter is used and charges
the Company commission) of the Current Market Value); or
-16-
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in subsection (a) of Section 13 hereof); or
(c) of any consolidation or merger to which the Company is a party or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action (other than actions of
the character described in Section 13(a)) which would require an adjustment of
the Exercise Rate pursuant to Section 13;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of the Warrant Certificates at its
address appearing on the Warrant register, at least 20 days (or 15 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 15 or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company.
SECTION 16. Merger, Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated,
-17-
or any corporation resulting from any merger or consolidation to which the
Warrant Agent shall be a party, or any corporation succeeding to the business of
the Warrant Agent, shall be the successor to the Warrant Agent hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor warrant agent under the provisions of Section 18
hereof. In case at the time such successor to the Warrant Agent shall succeed to
the agency created by this Agreement, and in case at that time any of the
Warrant Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may countersign
such Warrant Certificates either in the name of the predecessor Warrant Agent or
in the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 17. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
-18-
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties. The Warrant Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or revision of this Agreement
or any of the terms hereof, unless evidenced by a writing between the Company
and the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes
(including withholding taxes) and governmental charges and other charges of any
kind and nature incurred by the Warrant Agent in the execution, delivery and
performance of its responsibilities under this Agreement and to indemnify the
Warrant Agent and save it harmless against any and all liabilities, including
judgments, costs and reasonable counsel fees, for anything done or omitted by
the Warrant Agent in the execution, delivery and performance of its
responsibilities under this Agreement except as a result of its negligence or
bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred, but this provision
shall not affect the power of the Warrant Agent to take such action as it may
consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery or judgment shall
be for the ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.
(g) Except as may be limited by applicable law, the Warrant Agent,
and any stockholder, director, officer or employee of it, may buy, sell or deal
in any of the Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence or bad
faith.
-19-
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Rate or other securities or property
deliverable as provided in this Agreement, or to determine whether any facts
exist which may require any of such adjustments, or with respect to the nature
or extent of any such adjustments, when made, or with respect to the method
employed in making the same. The Warrant Agent shall not be accountable with
respect to the validity or value or the kind or amount of any Warrant Shares or
of any securities or property which may at any time be issued or delivered upon
the exercise of any Warrant or with respect to whether any such Warrant Shares
or other securities will when issued be validly issued and fully paid and
nonassessable, and makes no representation with respect thereto.
SECTION 18. Change of Warrant Agent. If the Warrant Agent shall become
incapable of acting as Warrant Agent or shall resign as provided below, the
Company shall appoint a successor to such Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such incapacity or resignation by the Warrant Agent or by
the registered holders of a majority of Warrant Certificates, then the
registered holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to such Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company. The holders of two-thirds of the unexercised Warrants shall be
entitled at any time to require the Company to remove the Warrant Agent and
appoint a successor to such Warrant Agent. Upon receipt of such request, the
Company shall promptly provide the Warrant Agent with 30 days prior written
notice of the effective date of such removal of Warrant Agent and shall appoint
a successor to such Warrant Agent. Such successor to the Warrant Agent need not
be approved by the Company or the former Warrant Agent. Any successor to the
Warrant Agent, whether appointed by the Company, the court or the holders of a
majority of the unexercised Warrants, shall be (a) a corporation or other entity
organized and doing business under the laws of the United States or any state of
the United States, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by Federal or state authority and which has at the time of its
appointment as Warrant Agent a combined capital and surplus of at least
$25,000,000, or (b) an affiliate of a corporation or other entity described in
clause (a) of this sentence. After appointment the successor to the Warrant
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Warrant Agent without further act or deed;
but the former Warrant Agent shall deliver and transfer to the successor to the
Warrant Agent any property at the time held by it hereunder and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Failure to give any notice provided for in this Section 18, however, or
any defect therein, shall not affect the legality or validity of the appointment
of a successor to the Warrant Agent.
The Warrant Agent may resign at any time and be discharged from the
obligations hereby created by so notifying the Company in writing at least 30
days in advance of the proposed
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effective date of its resignation. If no successor Warrant Agent accepts the
engagement hereunder by such time, the Company shall act as Warrant Agent.
SECTION 19. Notices to the Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant Certificate to or on the Company shall
be sufficiently given or made when and if deposited in the mail, first class or
registered postage prepaid, addressed (until another address is filed in writing
by the Company with the Warrant Agent) as follows:
Homestead Village Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Client Administration
Notice may also be given by facsimile transmission (effective when receipt
is acknowledged) (effective at the time of delivery) or by overnight delivery
service (effective the next business day).
SECTION 20. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement and the terms of the
Warrants without the approval of any holders of Warrant Certificates in order to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not in any way adversely affect the interests of the holders of
Warrant Certificates. Any amendment or supplement to this Agreement that has an
adverse effect on the
-21-
interests of holders shall require the written consent of registered holders of
a majority of the then outstanding Warrants; provided, however, that the consent
of each holder of a Warrant affected shall be required for any amendment
pursuant to which the Exercise Price would be increased, the number of Warrant
Shares purchasable upon exercise of Warrants would be decreased, the period of
time during which the Warrants are exercisable is reduced, the percentage
required for modification is reduced, or any change to this Section 20 is
effected (other than in accordance with Section 13 or 14 hereof).
SECTION 21. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 22. Termination. This Agreement shall terminate at 5:00 p.m.,
New York, New York time on ____________ __, 1997. Notwithstanding the
foregoing, this Agreement will terminate on such earlier date on which all
Warrants have been exercised. The provisions of Section 17 hereof shall survive
such termination.
SECTION 23. Governing Law; Jurisdiction. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Maryland and for all purposes shall be governed by and
construed in accordance with the internal laws of said State.
SECTION 24. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrant Certificates.
SECTION 25. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 26. Further Assurances. From time to time on and after the date
hereof, the Company shall deliver or cause to be delivered to the Warrant Agent
such further documents and instruments and shall do and cause to be done such
further acts as the Warrant Agent shall reasonably request (it being understood
that the Warrant Agent shall have no obligation to make such request) to carry
out more effectively the provisions and purposes of this Agreement, to evidence
compliance herewith or to assure itself that it is protected hereunder.
-22-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
HOMESTEAD VILLAGE INCORPORATED
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Chairman
THE FIRST NATIONAL BANK OF BOSTON
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------
▇▇▇▇▇ ▇▇▇▇▇
Director
S-1
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
CUSIP #_______
No. ___ _____ Warrants
Warrant Certificate
Homestead Village Incorporated
This Warrant Certificate certifies that ____________, or registered
assigns, is the registered holder of ____________ Warrants expiring
____________, 1997 (the "Warrants") to purchase shares of the Common Stock, par
value $.01 per share (the "Common Stock"), of Homestead Village Incorporated, a
Maryland corporation (the "Company"). Each Warrant entitles the holder upon
exercise to receive from the Company at any time from 9:00 a.m. __________, 1996
to 5:00 p.m., New York, New York time on ____________, 1997, one fully paid,
registered and nonassessable share of Common Stock (a "Warrant Share", which may
also include any other securities or property purchasable upon exercise of a
Warrant, such adjustment and inclusion each as provided in the Warrant
Agreement) at the initial exercise price (the "Exercise Price") of ten dollars
($10.00) per share payable in United States dollars by certified or official
bank check to the order of the Company, upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office or agency maintained
for that purpose by the Company (the "Warrant Agent Office"), subject to the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. The Company has initially designated the corporate trust office
of the Warrant Agent in the Borough of Manhattan, the City of New York, as the
initial Warrant Agent Office. The number or amount of Warrant Shares for which a
Warrant may be exercised (the "Exercise Rate") is subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement. All capitalized
terms not defined herein shall have the meanings assigned to such terms in the
Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York, New York time
on ___________, 1997 and to the extent not exercised by such time Warrants shall
become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of Maryland.
IN WITNESS WHEREOF, Homestead Village Incorporated has caused this
Warrant Certificate to be signed by its Chairman and by its Secretary, each by a
facsimile of his signature, and has caused a facsimile of its corporate seal to
be affixed hereunto or imprinted hereon.
Dated: HOMESTEAD VILLAGE INCORPORATED
-------------
By:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Chairman
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON
as Warrant Agent
By:
--------------------------------
Authorized Signatory
A-2
Form of Warrant Certificate
[REVERSE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m., New York, New York time, on
_________, 1997 entitling the holder on exercise to receive shares of Common
Stock of the Company (the "Common Stock"), and are issued pursuant to a Warrant
Agreement dated as of _________, 1996 (the "Warrant Agreement"), duly executed
and delivered by the Company to The First National Bank of Boston, as warrant
agent (the "Warrant Agent"), which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
Subject to the provisions of the Warrant Agreement, the holder of each
Warrant shall have the right to purchase from the Company (and the Company shall
issue and sell to such holder of the Warrant), at any time on any Business Day
from 9:00 a.m. on __________, 1996 until 5:00 p.m., New York, New York time, on
_____________, 1997, one (or such other number as may result from adjustments as
provided in the Warrant Agreement) fully paid, registered and nonassessable
share of Common Stock at the Exercise Price (and any other securities or
property purchasable upon exercise of such Warrant at the time of such exercise
as provided in the Warrant Agreement). Warrants may be exercised by (i)
surrendering at any Warrant Agent Office this Warrant Certificate with the form
of Election to Exercise set forth hereon duly completed and executed and (ii)
paying in full the Warrant Exercise Price for each such Warrant exercised and
any other amounts required to be paid pursuant to the Warrant Agreement in
United States dollars by certified or official bank check to the order of the
Company.
If all of the items referred to in the last sentence of the preceding
paragraph are received by the Warrant Agent at or prior to 2:00 p.m., New York,
New York time, on a Business Day, the exercise of the Warrant to which such
items relate will be effective on such Business Day. If any items referred to
in the last sentence of the preceding paragraph are received after 2:00 p.m.,
New York, New York time, on a Business Day, the exercise of the Warrants to
which such item relates will be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on
_____________, 1997, if all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 5:00 p.m.,
New York, New York time, on such Expiration Date, the exercise of the Warrants
to which such items relate will be effective on the Expiration Date.
A-3
As soon as practicable after the exercise of any Warrant or Warrants,
the Company shall issue or cause to be issued to or upon the written order of
the registered holder of this Warrant Certificate, a certificate or certificates
evidencing the Warrant Shares to which such holder is entitled, in fully
registered form, registered in such name or names as may be directed by such
holder pursuant to the Election to Exercise, as set forth on the reverse of this
Warrant Certificate. Such certificate or certificates evidencing the Warrant
Shares shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Warrant Shares as of the close of business on the exercise date.
The Warrant Agreement provides that upon the occurrence of certain
events the number and kind of Warrant Shares for which a Warrant may be
exercised (the "Exercise Rate") may, subject to certain conditions, be adjusted.
No fractions of a share of Common Stock will be issued upon the exercise of any
Warrant, but the Company will pay the cash value thereof determined as provided
in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-4
Form of Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ____ shares of Common Stock
and herewith (check item) tenders payment for such shares to the order of the
Company, in the amount of $____ per share of Common Stock in accordance with the
terms hereof, as follows:
[_] $____________ in cash; or
[_] $____________ by wire transfer of immediately available funds;
or
[_] $ ___________ by certified or official bank check to the order of the
Company.
The undersigned requests that a certificate for such shares be registered
in the name of ________________, whose address is _____________________ and that
such shares be delivered to ________________________ whose address is
__________________.
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_________, whose address is ______________, and that such Warrant Certificate be
delivered to ___________________, whose address is _________________________.
Signature(s):
----------------------------------
Note: The above signature(s) must
correspond with the name written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If this
Warrant is held of record by two or
more joint owners, all such owners
must sign.
Date:
---------------
Signature Guaranteed*:
----------------------------------
*Note: The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP); or
(3) The Stock Exchange Medallion Program (SEMP).
A-5
ASSIGNMENT FORM
To assign this Warrant, fill in the form below: (I) or (we) assign and
transfer this Warrant to
-------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________________ to transfer this Warrant on
the books of the Company. The agent may substitute another to act for him.
--------------------------------------
Signature(s):
------------------------------------
Note: The above signature(s) must
correspond with the name written upon
the face of this Warrant Certificate
in every particular, without
alteration or enlargement or any
change whatsoever. If this Warrant is
held of record by two or more joint
owners, all such owners must sign.
Date:
------------------
Signature Guaranteed*:
------------------------------------
*Note: The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP); or
(3) The Stock Exchange Medallion Program (SEMP).
A-6