Form of Warrant Agrmt - Ahmh And Friedman

EXHIBIT 10.12


================================================================================


AMERICAN HOME MORTGAGE HOLDINGS, INC.


and


FRIEDMAN, BILLINGS, RAMSEY & CO., INC.


as Representative of the holders


_____________


FORM OF WARRANT AGREEMENT


Dated as of September __, 1999


_____________


================================================================================


WARRANT AGREEMENT


This Agreement is made as of September __, 1999 between American Home Mortgage Holdings, Inc., a Delaware corporation (the "Company"), and Friedman, Billings, Ramsey & Co., Inc., (the "Representative").


RECITALS


A. The Company proposes to sell, pursuant to an Underwriting Agreement dated September __, 1999 between the Company and Friedman, Billings, Ramsey & Co., Inc. and Advest, Inc. (the "Underwriting Agreement"), 2,500,000 shares (the "Initial Shares") of Common Stock, par value $.01 per share, of the Company (the "Common Stock"), to certain underwriters, for which Friedman, Billings, Ramsey & Co., Inc. is acting as lead representative (the "Underwriters") and up to 375,000 shares (the "Option Shares") of Common Stock, to cover over-allotments, if any.


B. The Company deems it advisable, in consideration for the services rendered to the Company by Friedman, Billings, Ramsey & Co., Inc. as lead underwriter in connection with the offering of the Common Stock, to issue to Friedman, Billings, Ramsey & Co., Inc. warrants (the "Warrants") entitling the holders thereof to purchase an aggregate of 250,000 shares of Common Stock. The shares of Common Stock issued upon exercise of the Warrants are referred to as the "Warrant Shares".


C. The Company desires to enter into this Agreement to set forth the terms and conditions of the Warrants and the rights of the holders thereof.


NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained, the parties hereto agree as follows:


ARTICLE I


ISSUANCE, EXECUTION, EXPIRATION AND TRANSFER OF WARRANT
CERTIFICATES


SECTION 1.01. Form of Warrant Certificates. The Warrants shall be
---------------------------- evidenced by certificates in temporary or definitive fully registered form (the "Warrant Certificates") substantially in the form of Exhibit A and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange, or to conform to usage, or as consistently herewith may be determined by the officers executing such Warrant Certificates as evidenced by their execution of the Warrant Certificates. Each Warrant Certificate shall evidence the right, subject to the provisions of this Agreement and of the Warrant Certificate, to purchase the


number of shares of Common Stock stated therein, adjusted as provided for in Article III hereof, upon payment of the Exercise Price (as defined in Section 2.01).


SECTION 1.02. Execution of Warrant Certificates. Each Warrant
--------------------------------- Certificate, whenever issued, shall be dated as of the date of signature thereof by the Company either upon initial issuance or upon exchange, substitution or transfer, shall be signed manually by, or bear the facsimile signature of, the Chairman of the Board or the President or a Treasurer or a Vice President of the Company, shall have the Company's seal or a facsimile thereof affixed or imprinted thereon and shall be attested by the manual or facsimile signature of the Secretary or an Assistant Secretary of the Company. In case any officer of the Company whose manual or facsimile signature has been placed upon any Warrant Certificate shall have ceased to be such before such Warrant Certificate is issued, it may be issued with the same effect as if such officer had not ceased to be such at the date of issuance. 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 an officer.


SECTION 1.03. Issuance, Delivery and Registration of Warrant Certificates.
----------------------------------------------------------- The Company shall issue and deliver, at the closing of the sale of the Initial Shares to the Underwriters as provided in the Underwriting Agreement, to the Representative or its designees, a Warrant Certificate representing the Warrants, in substantially the form of Exhibit A. Additionally, the Company shall sign and deliver Warrant Certificates upon exchange, transfer or substitution for one or more previously signed Warrant Certificates as hereinafter provided. The Company shall maintain books for the registration of transfer and registration of Warrant Certificates (the "Warrant Register").


SECTION 1.04. Transfer and Exchange of Warrant Certificates. The Company,
--------------------------------------------- from time to time, shall register the transfer of any outstanding Warrant Certificates in the Warrant Register upon surrender at the principal office of the Company of Warrant Certificates accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the Warrantholder or the Warrantholder's attorney duly authorized in writing, and evidence, satisfactory to the Company, of compliance with the provisions of Section 6.04. Upon any such registration of transfer, a new Warrant Certificate shall be signed by the Company and issued to the transferee and the surrendered Warrant Certificate shall be canceled by the Company. Warrant Certificates may be exchanged at the option of the holder thereof, upon surrender, properly endorsed, at the principal office of the Company, with written instructions, for other Warrant Certificates signed by the Company entitling the registered holder thereof, subject to the provisions thereof and of this Agreement, to purchase in the aggregate a like number of shares of Common Stock as the Warrant Certificate so surrendered. 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.


2


ARTICLE II


SHARES OF COMMON STOCK ISSUABLE, EXERCISE PRICE, EXPIRATION
DATE AND EXERCISE OF WARRANTS


SECTION 2.01. Warrant Shares Issuable; Exercise Price; Expiration Date.
-------------------------------------------------------- Each Warrant Certificate shall entitle the registered holder thereof, subject to the provisions thereof and of this Agreement, to purchase from the Company at any time from the first anniversary of the effective date (the "Effective Date") of the registration statement (No. 333-82409) filed by the Company on Form S-1 under the Securities Act of 1933, as amended (the "Securities Act") to the close of business on the fifth anniversary of such date (or, if such date is not a Business Day (as defined below), the first following Business Day) the number of shares of Common Stock stated therein, adjusted as provided in Article III, upon payment of $_____ per share (which price is equal to 130% of the initial public offering price), adjusted as provided in Article III. Such price, as in effect from time to time as provided in Article III, is referred to as the "Exercise Price". Each share of Common Stock issuable upon exercise of a Warrant is referred to as a "Warrant Share". Each Warrant not exercised during the period set forth above shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease, at the end of such period. For purposes of this Agreement, the term "Business Day" means any day of the week other than a Saturday, Sunday or a day which in The City of New York or in the city in which the principal office of the Company is located shall be a legal holiday or a day on which banking institutions are authorized or required by law to close.


SECTION 2.02. Exercise of Warrants. (a) Warrants may be exercised by
-------------------- surrendering the Warrant Certificate evidencing such Warrants at the principal office of the Company, with the Election to Exercise form set forth on the reverse of the Warrant Certificate duly completed and signed, and by paying in full to the Company (i) in cash, or (ii) by certified or official bank check, or (iii) by any combination of the foregoing, the Exercise Price for each Warrant Share as to which Warrants are then being exercised and any applicable taxes, other than taxes that the Company is required to pay hereunder. A Warrantholder may exercise such holder's Warrant for the full number of Warrant Shares issuable upon exercise thereof or any lesser number of whole Warrant Shares.


(b) As soon as practicable after the exercise of any Warrants and payment by the Warrantholder of the full Exercise Price for the Warrant Shares as to which such Warrants are then being exercised, the Company shall requisition from the transfer agent of the shares of Common Stock and deliver to or upon the order of such Warrantholder a certificate or certificates for the number of full Warrant Shares to which such Warrantholder is entitled, registered in the name of such Warrantholder or as such Warrantholder shall direct. Fractional Warrant Shares that otherwise would be issuable in respect of such exercise shall be paid in cash as provided in Section 2.03, and the number of Warrant Shares issuable to such Warrantholder shall be rounded down to the next nearest whole number. If such Warrant Certificate shall not have been exercised in full, the Company will issue to such


3


Warrantholder a new Warrant Certificate exercisable for the number of shares of Common Stock as to which such Warrant shall not have been exercised. The Company will cancel all Warrants so surrendered.


(c) Each person in whose name any such certificate for Warrant Shares is issued shall for all purposes be deemed to have become the holder of record of such Warrant Shares on the date on which the Warrant Certificate was surrendered to the Company and payment of the Exercise Price and any applicable taxes was made to the Company, irrespective of the date of delivery of such certificate for Warrant Shares.


(d) All Warrant Shares will be duly authorized, validly issued, fully paid and nonassessable. The Company will pay all documentary stamp taxes attributable to the initial issuance of Warrant Shares. The Company will not be required, however, to pay any tax imposed in connection with any transfer involved in the issue of the Warrant Shares in a name other than that of the Warrantholder. In such case, the Company will not be required to issue any certificate for Warrant Shares until the person or persons requesting the same shall have paid to the Company the amount of any such tax or shall have established to the Company's satisfaction that the tax has been paid or that no tax is due.


SECTION 2.03. No Fractional Shares to Be Issued. If more than one Warrant
--------------------------------- Certificate shall be surrendered for exercise at one time by the same holder, the number of full Warrant Shares which shall be issuable upon exercise thereof shall be computed on the basis of the aggregate number of Warrants so surrendered. The Warrantholders, by their acceptance of the Warrant Certificates, expressly waive their right to receive any fraction of a Warrant Share or a share certificate representing a fraction of a Warrant Share. In lieu thereof, the Company will purchase such fractional interest for an amount in cash equal to the current market value of such fractional interest, as reasonably determined by the Board of Directors of the Company.


SECTION 2.04. Cancellation of Warrants. The Company shall cancel any
------------------------ Warrant Certificate delivered to it for exercise, in whole or in part, or delivered to it for transfer, exchange or substitution, and no Warrant Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall destroy canceled Warrant Certificates. If the Company shall acquire any of the Warrants, such acquisition shall not operate as a redemption or termination of the right represented by such Warrants unless and until the Warrant Certificates evidencing such Warrants are surrendered to the Company for cancellation.


4


ARTICLE III


ADJUSTMENT OF EXERCISE PRICE; MERGER, ACQUISITION, ETC.;
RESERVATION OF SHARES OF COMMON STOCK; PAYMENT OF TAXES


SECTION 3.01. Adjustment of Exercise Price and Number of Warrant Shares.
--------------------------------------------------------- The Exercise Price shall be subject to adjustment from time to time as provided in this Article III. After each adjustment of the Exercise Price, each Warrantholder shall at any time thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of Warrant Shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant to the provisions of such Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.


SECTION 3.02. Stock Dividends. If the Company shall declare a dividend or
--------------- any other distribution upon any capital stock which is payable in shares of Common Stock or securities convertible into shares of Common Stock, the Exercise Price shall be reduced to the quotient obtained by dividing (i) the number of shares of Common Stock outstanding immediately prior to such declaration multiplied by the then effective Exercise Price by (ii) the total number of shares of Common Stock outstanding immediately after such declaration. All shares of Common Stock and all convertible securities issuable in payment of any dividend or other distribution upon the capital stock of the Company shall be deemed to have been issued or sold without consideration.


SECTION 3.03. Stock Splits and Reverse Stock Splits. If the Company shall
------------------------------------- subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of each Warrant shall be proportionately increased. If the Company shall combine the outstanding shares of Common Stock into a smaller number of shares, the Exercise Price shall be proportionately increased and the number of Warrant Shares issuable upon exercise of each Warrant shall be proportionately decreased.


SECTION 3.04. Reorganizations and Asset Sales. If any capital
------------------------------- reorganization or reclassification of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of the assets of the Company shall be effected in such a way that the holders of the shares of Common Stock shall be entitled to receive securities or assets with respect to or in exchange for shares of Common Stock, adequate provision shall be made, prior to and as a condition of such reorganization, reclassification, consolidation, merger or sale, whereby each Warrantholder shall have the right to receive, upon the terms and conditions specified herein and in lieu of the Warrant Shares otherwise receivable upon the exercise of such Warrants, such securities or assets as may be issued or payable with respect to or in exchange for the number of outstanding shares of Common Stock equal to the number of Warrant Shares otherwise receivable had such reorganization, reclassification, consolidation, merger or sale not taken place. In any such


5


case appropriate provision shall be made with respect to the rights and interests of such Warrantholder so that the provisions of this Agreement shall be applicable with respect to any securities or assets thereafter deliverable upon exercise of the Warrants. The Company shall not effect any such consolidation, merger or sale unless prior to or simultaneously with the consummation thereof the survivor or successor corporation resulting from such consolidation or merger or the purchaser of such assets shall assume by written instrument delivered to each holder of Warrants the obligation to deliver to such holder such securities or assets as such holder may be entitled to receive, subject to payment of the Exercise Price. Notwithstanding any other provision contained herein, the Company may, upon notice and subject to the provisions of Section 4.03 hereof, terminate the Warrants in the event of a consolidation or merger described in this Section 3.0 ...