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EXHIBIT 10.55
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IMC MORTGAGE COMPANY
Class A Convertible Preferred Stock
Class B Convertible Preferred Stock
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PREFERRED STOCK
PURCHASE AND OPTION AGREEMENT
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July 14, 1998
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TABLE OF CONTENTS
Page
SECTION 1. Authorization and Sale of the Shares
1.1 Authorization of the Shares...................................................................1
1.2 Sale of the Shares............................................................................2
SECTION 2. Closing; Delivery
2.1 Time and Place................................................................................2
2.2 Delivery......................................................................................2
SECTION 3. Option to Purchase Class B Preferred Shares
3.1 Option to Purchase Class B Preferred Shares...................................................3
SECTION 4. Representations and Warranties of the Company
4.1 Organization and Standing, Articles of Organization and By-Laws...............................5
4.2 Corporate Power...............................................................................5
4.3 Capitalization................................................................................5
4.4 Subsidiaries..................................................................................6
4.5 Authorization.................................................................................6
4.6 SEC Reports; Company Assets and Liabilities...................................................7
4.7 No Material Adverse Change....................................................................8
4.8 Outstanding Debt..............................................................................8
4.9 Taxes.........................................................................................9
4.10 Employee Benefits; ERISA......................................................................9
4.11 Litigation...................................................................................10
4.12 Consents.....................................................................................10
4.13 Properties; Liens and Encumbrances...........................................................11
4.14 Intellectual Property, etc...................................................................11
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4.15 Minute Books.................................................................................12
4.16 Offering.....................................................................................12
4.17 Compliance with Other Instruments............................................................12
4.18 Registration Rights..........................................................................12
4.19 Environmental and Safety Laws................................................................12
4.20 Disclosure...................................................................................13
SECTION 5. Representations and Warranties of Purchasers
5.1 Organization and Standing....................................................................13
5.2 Power and Authority..........................................................................13
5.3 Authorization................................................................................13
5.4 Experience...................................................................................13
5.5 Investment...................................................................................14
5.6 Access to Data...............................................................................14
SECTION 6. Conditions to Closing of Purchasers
6.1 Representations and Warranties Correct.......................................................14
6.2 Performance..................................................................................14
6.3 Opinion of Company's Counsel.................................................................15
6.4 Compliance Certificate.......................................................................15
6.5 Certificate of Designation...................................................................15
6.6 Consents.....................................................................................15
6.7 No Material Adverse Change...................................................................15
6.8 Consulting and Fee Agreement.................................................................15
6.9 Satisfactory Review of the Company...........................................................16
6.10 General......................................................................................16
SECTION 7. Conditions to Closing of Company
7.1 Representations and Warranties Correct.......................................................16
7.2 Performance..................................................................................16
7.3 Opinion of Purchasers' Counsel...............................................................17
7.4 Compliance Certificate.......................................................................17
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7.5 General......................................................................................17
SECTION 8. Covenants of the Company
8.1 Basic Financial Information..................................................................17
8.2 Additional Information.......................................................................18
8.3 Availability of Common Stock for Conversion..................................................18
8.4 Use of Proceeds..............................................................................18
SECTION 9. Covenants of the Purchasers
9.1 Certain Actions..............................................................................19
9.2 Right of First Offer.........................................................................20
SECTION 10. Approval Rights; Board Representation; Notice Requirements
10.1 Board Representation.........................................................................22
10.2 Notice Requirement...........................................................................23
10.3 Approval Rights..............................................................................23
SECTION 11. Restrictions on Transferability of Shares;
Compliance with Securities Act
11.1 Certain Definitions..........................................................................26
11.2 Restrictive Legend...........................................................................27
11.3 Notice of Proposed Transfers.................................................................27
11.4 Requested Registration.......................................................................28
11.5 Company Registration.........................................................................31
11.6 Expenses of Registration.....................................................................33
11.7 Registration Procedures......................................................................33
11.8 Indemnification..............................................................................37
11.9 Information by Holder........................................................................39
11.10 Rule 144 Reporting...........................................................................39
11.11 Transfer or Assignment of Registration Rights................................................40
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11.12 "Market Stand-off" Agreement.................................................................40
11.13 Shelf Registrations..........................................................................40
SECTION 12. Miscellaneous
12.1 Governing Law................................................................................41
12.2 Survival.....................................................................................41
12.3 Use of Purchasers' Names.....................................................................41
12.4 Successors and Assigns.......................................................................41
12.5 Substitution of Purchaser....................................................................41
12.6 Entire Agreement; Amendment..................................................................42
12.7 Notices, etc.................................................................................42
12.8 Delays or Omissions..........................................................................42
12.9 Rights; Separability.........................................................................43
12.10 Agent's Fees.................................................................................43
12.11 Expenses.....................................................................................43
12.12 Titles and Subtitles.........................................................................43
12.13 Counterparts.................................................................................44
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SCHEDULES AND EXHIBITS
Schedule of Exceptions
Exhibit 2.2 -- Company Account
Exhibit A -- Form of Certificate of Designation for Class A Preferred Stock
Exhibit B -- Form of Certificate of Designation for Class B Preferred Stock
Exhibit C -- Form of Opinion of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A.
Exhibit D -- Form of Opinion of Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
Exhibit E -- Form of Consulting and Fee Agreement
Exhibit F -- Form of Opinion of Counsel to the Purchasers
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IMC MORTGAGE COMPANY
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
PREFERRED STOCK PURCHASE AND OPTION AGREEMENT
Greenwich Street Capital Partners II, L.P. ("Greenwich II")
GSCP Offshore Fund, L.P. ("GSCP Offshore")
Greenwich Fund, L.P. ("GF")
Travelers Casualty and Surety Company ("Travelers")
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The undersigned, IMC Mortgage Company, a Florida corporation (the
"Company"), hereby agrees with each of you (together with your successors and
assigns, the "Purchasers") as follows:
SECTION 1.
Authorization and Sale of the Shares
1.1 Authorization of the Shares. (a) The Company has, or before the
Closing (as defined below) will have, authorized the issue and sale of 500,000
shares of its Class A Convertible Preferred Stock, liquidation value $100.00 per
share (the "Class A Preferred Shares"), having the powers, preferences and
rights set forth in the Company's Class A Convertible Preferred Stock
Certificate of Designation (the "Class A Certificate"), the form of which is
attached hereto as Exhibit A.
(b) The Company has, or before the Closing, will have, authorized the
issue and sale of 300,000 shares of its Class B Convertible Preferred Stock,
liquidation value $100.00 per share (the "Class B Preferred Shares"; and,
together with the Class A Preferred Shares, the "Shares"), which Class B
Preferred Shares shall be identical to the Class A Preferred Shares, except that
the conversion price for each such Class B Preferred Share shall be $22.50 per
share. The form of the Company's Class B Convertible Preferred Stock Certificate
of Designation (the "Class B Certificate"; and, together with the Class A
Certificate, the "Certificates") setting forth the specific powers, preferences
and rights of the Class B Preferred Shares, is attached hereto as Exhibit B.
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1.2 Sale of the Shares. Subject to the terms and conditions hereof and
in reliance upon the representations, warranties and agreements contained
herein, at the Closing, (i) the Company will issue and sell to Greenwich II and
Greenwich II will purchase from the Company, 369,182.7532 Class A Preferred
Shares for a purchase price of $36,918,275.32, (ii) the Company will issue and
sell to GSCP Offshore and GSCP Offshore will purchase from the Company,
5,781.8474 Class A Preferred Shares for a purchase price of $578,184.74, (iii)
the Company will issue and sell to GF and GF will purchase from the Company,
25,035.3994 Class A Preferred Shares for a purchase price of $2,503,539.94 and
(iv) the Company will issue and sell to Travelers and Travelers will purchase
from the Company 100,000 Class A Preferred Shares for a purchase price of
$10,000,000.
SECTION 2.
Closing; Delivery
2.1 Time and Place. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at the offices of Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. on a date mutually
agreed to by the Purchasers and the Company, but in any event not later than
July 15, 1998, unless otherwise mutually agreed to by the Purchasers and the
Company (the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to (i) Greenwich
II a certificate or certificates (in definitive form) in such denominations and
registered in Greenwich II's name (or the name of its nominee), representing
369,182.7532 Class A Preferred Shares against payment by Greenwich II of the
purchase price of $36,918,275.32 therefor, (ii) GSCP Offshore a certificate or
certificates (in definitive form) in such denominations and registered in GSCP
Offshore's name (or the name of its nominee), representing 5,781.8474 Class A
Preferred Shares against payment by GSCP Offshore of the purchase price of
$578,184.74 therefor, (iii) GF a certificate or certificates (in definitive
form) in such denominations and registered in GF's name (or the name of its
nominee), representing 25,035.3994 Class A Preferred Shares against payment by
GF of the purchase price of $2,503,539.94 therefor and (iv) Travelers a
certificate or certificates (in definitive form) in such denominations and
registered in
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Travelers' name (or the name of its nominee), representing 100,000 Class A
Preferred Shares against payment by Travelers of the purchase price of
$10,000,000 therefor. All such purchase price payments shall be made by the
applicable Purchaser by wire transfer of immediately available funds to the
account of the Company set forth on Exhibit 2.2 hereto, as such account
information may be modified from time to time by the Company by written notice
to the Purchasers, and all such certificates shall bear the legends set forth in
Section 11 hereof.
SECTION 3.
Option to Purchase Class B Preferred Shares
3.1 Option to Purchase Class B Preferred Shares. (a) (i) Greenwich II
shall have an option to purchase up to 221,509.652 shares of Class B Preferred
Shares, (ii) GSCP Offshore shall have an option to purchase up to 3,469.1084
shares of Class B Preferred Shares, (iii) GF shall have an option to purchase up
to 15,021.2396 shares of Class B Preferred Shares and (iv) Travelers shall have
an option (such options, individually, an "Option" and collectively, the
"Options") to purchase up to 60,000 shares of Class B Preferred Shares for a
purchase price per Class B Preferred Share equal to $100 per share (such
purchase price per Class B Preferred Share, the "Class B Preferred Share
Consideration") and on the other terms and conditions set forth in this Section
3.
(b) Each Purchaser may exercise its Option, in whole or in part, at any
time and from time to time from and after the Closing until the earlier of (x)
the third anniversary of the Closing, (y) the date on which such Purchaser
agrees to sell substantially all of such Purchaser's Shares to the Company
pursuant to a Dispute Resolution Offer (as defined in Section 10.3 hereof) (it
being understood that, in the event such sale is not ultimately consummated by
the Company in accordance with the applicable provisions of this Agreement, such
Purchaser's right to exercise its Option shall be deemed not to have been
terminated pursuant to this clause (y)) and (z) 5 business days after such
Purchaser receives written notice from the Company that the average of the
closing prices for the Company's Common Stock as reported on the NASDAQ National
Market, Inc. ("NASDAQ") for any 30 consecutive trading day period, or, if there
shall have been no sales of such stock on any such trading day, the average of
the closing bid and asked prices at the end of such trading day, has been equal
to or greater than $28.125, as such amount may be hereafter adjusted to give
effect to any stock dividend, stock split, reverse split, combination,
reclassification, merger,
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consolidation or like event with respect to or affecting the Company's Common
Stock. Any exercise shall be made by such Purchaser sending a written notice
(the "Notice of Exercise") to the Company of its intention to exercise the
Option, which Notice of Exercise shall indicate the number of Class B Preferred
Shares as to which such Purchaser is exercising the Option (which number,
together with all other Class B Preferred Shares previously purchased by such
Purchaser pursuant to this Section 3.1, shall not exceed (i) 221,509.652, in the
case of Greenwich II, (ii) 3,469.1084, in the case of GSCP Offshore, (iii)
15,021.2396, in the case of GF and (iv) 60,000, in the case of Travelers), and a
date (the "Class B Preferred Share Closing Date"), not more than 30 days nor
less than 10 days from the date of such notice, on which such Purchaser proposes
to purchase such Class B Preferred Shares.
(c) Subject to the terms and conditions of Section 3.1(d), on any Class
B Preferred Share Closing Date, the applicable Purchaser shall purchase the
number of Class B Preferred Shares specified in the applicable Notice of
Exercise for a purchase price equal to the number of such Class B Preferred
Shares times the Class B Preferred Share Consideration.
(d) On each Class B Preferred Share Closing Date, against delivery of
the applicable Class B Preferred Share Consideration for such Class B Preferred
Shares (as calculated pursuant to Section 3.1(c)), the Company will (x) deliver
to the applicable Purchaser a stock certificate registered in the name of such
Purchaser and representing the applicable number of Class B Preferred Shares
being purchased on such Class B Preferred Share Closing Date (as specified in
the applicable Notice of Exercise), which certificate shall bear the legends set
forth in Section 11 hereof and (y) a certificate, executed by a duly authorized
officer of the Company, certifying that the representations and warranties made
by the Company in Section 4 hereof with respect to the Shares are true and
correct in all material respects with respect to all of the Class B Preferred
Shares to be sold by the Company on such Class B Preferred Share Closing Date.
On or prior to each Class B Preferred Share Closing Date, such Purchaser shall
deliver the applicable Class B Preferred Share Consideration for such Class B
Preferred Shares being purchased on such Class B Preferred Share Closing Date
(as calculated pursuant to Section 3.1(c) in cash (payable by wire transfer of
immediately available funds) to an account previously designated in writing by
the Company prior to the Class B Preferred Share Closing Date (as such
designation may be changed from time to time by the Company), together with a
certificate, executed by such Purchaser, certifying that the representations and
warranties of the Purchaser made in Section 5 hereof with respect to the Shares
are true and correct
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in all material respects with respect to all of the Class B Preferred Shares to
be purchased by the Purchaser on such Class B Preferred Share Closing Date.
SECTION 4.
Representations and Warranties of the Company
Except to the extent set forth on the Company's Schedule of Exceptions
attached hereto (the "Schedule of Exceptions"), the Company hereby represents
and warrants to the Purchaser as follows:
4.1 Organization and Standing, Articles of Organization and By-Laws.
The Company and each material subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. The Company and each such subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on its and its subsidiaries' business or properties, taken as a
whole. The Company has furnished you with complete and correct copies of its
Articles of Incorporation and By-Laws and, in each case, all amendments to the
date of this Agreement.
4.2 Corporate Power. The Company and each of its subsidiaries has all
requisite corporate power and authority to own the properties owned by it and to
carry on its business as now conducted or proposed to be conducted. The Company
has all requisite corporate power and authority to enter into this Agreement and
will have at the Closing all requisite corporate power to issue and sell the
Shares, to issue the Common Stock (as defined in Section 4.3 hereof) issuable
upon conversion of the Shares and to carry out and perform its obligations under
the terms of this Agreement.
4.3 Capitalization. The Company's authorized capital stock consists of
(a) 50,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock") and (b) 10,000,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of which 500,000 shares have been designated Class A
Preferred Shares and 300,000 shares have been designated Class B Preferred
Shares. As of the date hereof, (i) 30,825,934 shares of Common Stock are issued
and outstanding, all of which are validly issued, fully paid and nonassessable
and not subject to preemptive rights; (ii) no shares of Common Stock are held in
the treasury of the Company as treasury stock; (iii) there are outstanding
options to purchase an aggregate of 3,722,657 shares of Common Stock (the
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"Stock Options"); and (iv) there are no outstanding Class A Preferred Shares,
Class B Preferred Shares or other shares of Preferred Stock. Except as set forth
in Section 4.3 of the Schedule of Exceptions, there are no stock appreciation
rights outstanding. Section 4.3 of the Schedule of Exceptions sets forth a list,
complete and correct as of the date hereof, of the holders of all Stock Options
and the number of shares of Common Stock issuable upon the exercise of each such
Stock Option and the exercise prices thereof. There are no bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which holders of Common Stock of the Company may vote. Except as
set forth in this Section 4.3 or in Section 4.3 of the Schedule of Exceptions,
no shares of capital stock or other voting securities are issued, reserved for
issuance or outstanding, nor are there any outstanding subscriptions, options,
warrants, rights, convertible securities or other agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of the Company or any of its subsidiaries obligating the Company or
any of its subsidiaries to issue, deliver, sell or purchase, or cause to be
issued, delivered, sold or purchased, any securities of the Company or any of
its subsidiaries. Except as set forth in Section 4.3 of the Schedule of
Exceptions, there are no voting trusts or other agreements or understandings to
which the Company or any of its subsidiaries is a party with respect to the
voting of capital stock of the Company or any of its subsidiaries.
4.4 Subsidiaries. Section 4.4 of the Schedule of Exceptions sets forth
a list, true and complete as of the date hereof, of all of the subsidiaries of
the Company. All of the outstanding shares of capital stock of each subsidiary
of the Company have been validly issued and are fully paid and nonassessable and
are owned by the Company or by a subsidiary of the Company free and clear of any
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens"). Except for the capital stock of
its subsidiaries or as set forth in Section 4.4 of the Schedule of Exceptions,
as of the date hereof, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, limited liability
company, partnership, joint venture or other entity.
4.5 Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the due authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein and therein, and for the due
authorization, issuance and delivery of the Shares and the shares of Common
Stock issuable upon conversion of the Shares has been taken or will be taken
prior to the Closing. This Agreement is a legal,
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valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally and subject to general
principles of equity. The execution, delivery and performance by the Company of
this Agreement and compliance herewith and the issuance and sale of the Shares
and the issuance of the Common Stock issuable upon conversion of the Shares does
not and will not result in any violation of or be in conflict with, or result in
a breach of, or constitute a default under, any term or provision of any state
or Federal law, ordinance, rule or regulation to which the Company is subject,
or the Company's Articles of Incorporation or By-Laws, as amended and in effect
on the date hereof, or any mortgage, indenture, agreement, instrument, judgment,
decree, order or other restriction to which the Company is a party or by which
it is bound, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company
pursuant to any such term. No stockholder has any preemptive right or rights of
first refusal by reason of the issuance of the Shares or the issuance of any
shares of Common Stock upon the conversion of any of the Shares. The Shares,
when issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable, and the Shares will be free of any Liens.
All shares of Common Stock issuable upon conversion of any Shares will be, when
issued in compliance with the applicable provisions of the Certificates, validly
issued, fully paid and nonassessable and not subject to preemptive rights, and
such shares of Common Stock will be free of any Liens.
4.6 SEC Reports; Company Assets and Liabilities. The Company has filed
all forms, reports, statements and schedules with the Securities and Exchange
Commission (the "Commission") required to be filed pursuant to the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated by the Commission (the "Commission Rules"), since April
23, 1997 (the "SEC Reports"). As of their respective filing dates, the SEC
Reports complied as to form in all material respects with all applicable
requirements of the Exchange Act and the Commission Rules applicable to such SEC
Reports, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The audited and unaudited consolidated financial
statements of the Company included (or incorporated by reference) in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles
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applied on a consistent basis (except as stated in the financial statements,
including the related notes, and except that the quarterly financial statements
do not contain all of the footnote disclosures required by generally accepted
accounting principles) and fairly present, in all material respects, the
financial position of the Company and its consolidated subsidiaries as of the
respective dates thereof and the results of their operations, stockholders'
equity and cash flows for the periods then ended, subject, in the case of the
unaudited financial statements, to normal year-end adjustments and any other
adjustments described therein. Except for liabilities and obligations incurred
in the ordinary course of business since the date of the most recent
consolidated balance sheet included in the SEC Reports, neither the Company nor
any of its subsidiaries has incurred any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which are reasonably
likely to have a material adverse effect on the Company and its subsidiaries,
taken as a whole, other than those reflected in the SEC Reports and in Section
4.6 of the Schedule of Exceptions and those incurred in connection with the
transactions contemplated hereby.
4.7 No Material Adverse Change. Except as and to the extent disclosed
in the SEC Reports or as set forth in Section 4.7 of the Schedule of Exceptions,
since December 31, 1997, there has not been (i) any material adverse change in
the business, operations or condition (financial or other) of the Company and
its subsidiaries taken as a whole, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (iii) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of the issuance of any securities in respect of or
in substitution for shares of its capital stock, (iv) any granting by the
Company (x) to any executive officer or other key employee of the Company of any
increase in compensation, except for normal increases in the ordinary course of
business consistent with past practice or as required under employment
agreements in effect as of the date of the most recent SEC Reports or set forth
in Section 4.7 of the Schedule of Exceptions or (y) to any such executive
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of the
date of the most recent SEC Reports or set forth in Section 4.7 of the Schedule
of Exceptions, (v) any damage, destruction or loss, whether or not covered by
insurance, that are reasonably likely to have a material adverse effect on the
Company's and its subsidiaries' business or properties, taken as a whole or (vi)
except as may have been required by a change in generally accepted accounting
principles or as disclosed in the SEC Reports, any change in accounting methods,
principles or practices
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by the Company or any of its subsidiaries materially affecting its assets,
liabilities or business.
4.8 Outstanding Debt. Neither the Company nor any of its subsidiaries
has any outstanding indebtedness for borrowed money except as reflected on the
Financial Statements and such additional borrowings under existing warehouse and
working capital credit lines as is consistent with the ordinary course of the
Company's business consistent with past practice, and is not a guarantor or
otherwise contingently liable for any such indebtedness. All such warehouse and
working capital credit lines are listed in Section 4.8 of the Schedule of
Exceptions. There exists no default under the provisions of any instrument
evidencing any indebtedness or otherwise or of any agreement relating thereto.
4.9 Taxes. The Company has duly filed within the time prescribed by law
(including extensions of time approved by the appropriate taxing authority) all
tax returns and reports required to be filed with the United States Internal
Revenue Service and with the state of Florida, and (except to the extent that
the failure to file is not reasonably likely to have a material adverse effect
on the condition or operations of the Company and its subsidiaries, taken as a
whole) with all other jurisdictions where such filing is required by law; all
such tax returns are true and correct in all material respects; and the Company
has paid all taxes, interest, penalties, assessments or deficiencies shown to be
due on such tax returns and reports. The Company knows of (i) no other tax
returns or reports which are required to be filed which have not been so filed
and (ii) no unpaid assessment for additional taxes for any fiscal period or any
basis therefor that is reasonably likely to have a material adverse effect on
the Company and its subsidiaries, taken as a whole. The Company's federal income
tax returns have not been audited by the Internal Revenue Service.
4.10 Employee Benefits; ERISA. (a) With respect to each employee
benefit plan (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (an "Employee Benefit Plan")
maintained by the Company, any of its subsidiaries or an "ERISA Affiliate" (as
defined below): (i) such plan has been administered and operated in compliance
with its terms and the applicable requirements of ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"); (ii) no event has occurred and there
exists no circumstance under which the Company or any such subsidiary could
incur liability under ERISA, the Code, or otherwise (other than for
contributions or benefits paid or payable in the ordinary course of operation of
such plan); (iii) there are no actions, suits or claims pending or threatened
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with respect to any Employee Benefit Plan or against the assets or a fiduciary
of any Employee Benefit Plan; (iv) no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) which is not covered by an
applicable exemption has occurred; (v) no "reportable event" (as defined in
Section 4043 of ERISA) has occurred; (vi) all contributions and premiums due
have been paid on a timely basis; and (vii) all contributions made under any
Employee Benefit Plan intended to be tax deductible meet the requirements for
deductibility under the Code. As used herein, the term "ERISA Affiliate" refers
to any organization that is (x) a member of a "controlled group" of which the
Company is a member or (y) under "common control" with the Company within the
meaning of Section 414(b) and (c) of the Code.
(b) Each Employee Benefit Plan maintained by the Company, any of its
subsidiaries or an ERISA Affiliate that is intended to qualify under Section
401(a) of the Code has received a favorable letter of determination from the
Internal Revenue Service that it so qualifies and that its related trust is
exempt from taxation under Section 501(a) of the Code. No event has occurred
that will or could give rise to disqualification or loss of tax-exempt status of
any such Employee Benefit Plan or trust under Sections 401(a) or 501(a) of the
Code.
(c) No Company, any subsidiary or ERISA Affiliate benefit plan is a
"defined benefit plan" within the meaning of Section 3(35) of ERISA, a
"multiemployer plan" within the meaning of Section 3(37) of ERISA, or a
"multiple employer plan" within the meaning of Section 413 of the Code.
(d) Except as set forth in Section 4.10 of the Schedule of Exceptions,
neither the approval or execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement will (i) entitle any individual to
severance pay or (ii) accelerate the time of payment or vesting of, or increase
the amount of, compensation due to any individual.
4.11 Litigation. Except as set forth in Section 4.11 of the Schedule of
Exceptions, there is no pending or, to the Company's knowledge and belief,
threatened action, suit, proceeding or claim, whether or not purportedly on
behalf of the Company or any of its subsidiaries, to which the Company or any of
its subsidiaries is or may be named as a party or to which its property is or
may be subject which is reasonably likely, individually or in the aggregate with
all such actions, suits, proceedings or claims, to have a material adverse
effect on the condition, financial or otherwise, or operations of the Company
and its subsidiaries, taken as a whole; and the Company has no knowledge of
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any unasserted claim, the assertion of which is likely and which is reasonably
likely, individually or in the aggregate with all such unasserted claims, to
have a material adverse effect on the condition, financial or otherwise, or
operations of the Company and its subsidiaries, taken as a whole.
4.12 Consents. No consent, approval, qualification, order or
authorization of, or filing with, any governmental authority is required in
connection with the Company's valid execution, delivery or performance of this
Agreement, or the offer, issue or sale of the Shares by the Company, the
issuance of Common Shares upon conversion of the Shares, or the consummation of
any other transaction contemplated on the part of the Company hereby, except the
filing of the Certificates with the Secretary of State of the State of Florida
and other filings required under federal securities laws or state "blue sky"
laws.
4.13 Properties; Liens and Encumbrances. The Company has a valid and
indefeasible ownership interest in all its real and personal property and
assets, free from all Liens, except (i) as listed in Section 4.13 of the
Schedule of Exceptions; and (ii) tax, materialmen's or like liens for
obligations not yet due or payable or being contested in good faith by
appropriate proceedings. The Company maintains insurance which is reasonably
adequate to protect the Company and its financial condition against the risks
involved in the business conducted by the Company.
4.14 Intellectual Property, etc. (a) Section 4.14 of the Schedule of
Exceptions sets forth a complete list of all material intellectual property and
proprietary rights owned or used by the Company and its subsidiaries, including,
without limitation, all franchises, permits, licenses, software, trademarks,
service marks, domain names, trade rights, trade dress, patents, patent
applications and copyrights (together with all inventions, know-how and other
confidential information, "Intellectual Property"). The Company or its
subsidiaries have all franchises, permits, licenses and other similar authority
necessary for the conduct of its business as now being conducted by it and as
planned to be conducted, the lack of which could materially and adversely affect
the operations or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole, and it is not in default under any of such
franchises, permits, licenses or other similar authority which default is
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole. The Company or its subsidiaries are the
exclusive owner of all right, title and interest in and or have the valid and
legal right to use all Intellectual Property necessary to conduct their business
as now being conducted and as planned to be conducted without conflict with or
infringement upon any valid rights of others except for infringements or
conflicts which are not reasonably likely
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to materially and adversely affect the operations or condition, financial or
otherwise, of the Company and its subsidiaries, taken as a whole. Neither the
Company nor any of its subsidiaries has received any written notice that the
conduct of the business infringes upon or conflicts with the asserted
intellectual property or proprietary rights of others and has no knowledge that
any person is infringing upon or in conflict with its asserted rights.
(b) Except as set forth in Section 4.14(b) of the Schedule of
Exceptions, to the Company's knowledge, all software used in its and its
subsidiaries' business that contains or calls on a calendar function, provides
specific dates or calculates spans of dates is able to record, store, process
and provide true and accurate dates and calculations for dates and spans of
dates including and following January 1, 2000.
4.15 Minute Books. The minute books of the Company and its subsidiaries
provided to the special counsel for the Purchasers contain a reasonably complete
summary of all meetings of directors and stockholders since the time of
incorporation and reflect all material transactions referred to in such minutes
accurately in all material respects.
4.16 Offering. Neither the Company nor anyone acting on its behalf in
connection with the offering or sale of the Shares or any similar securities of
the Company has directly or indirectly offered the Shares or any part thereof or
any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, anyone
other than you. The offer, issuance and sale of the Shares as contemplated by
this Agreement (including, without limitation, the conversion of any of the
Shares into shares of Common Stock in accordance with the Certificates) are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and from any registration or filing requirements
of any applicable state securities laws, and neither the Company nor anyone
acting on its behalf will take any action hereafter that would cause the loss of
such exemption.
4.17 Compliance with Other Instruments. Neither the Company nor any of
its subsidiaries is in violation of any term of its Articles of Incorporation or
By-Laws, in each case, as in effect on the date hereof. Neither the Company nor
any of its subsidiaries is (and consummation of the transactions contemplated by
this Agreement will not cause the Company to be) in violation of any term of any
mortgage, indenture, contract, agreement, instrument, judgment, decree, order,
statute, rule or regulation to which the Company or any such subsidiary is
subject and which violation is reasonably
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likely to have a material adverse effect on the condition, financial or
otherwise, or operations of the Company and its subsidiaries, taken as a whole.
4.18 Registration Rights. Except as provided for in this Agreement and
as set forth in Section 4.18 of the Schedule of Exceptions, the Company is not
under any obligation to register (as defined in Section 11.1 below) any of its
currently outstanding securities or any of its securities which may hereafter be
issued.
4.19 Environmental and Safety Laws. Neither the Company nor any of its
subsidiaries is in material violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
the Company's knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
4.20 Disclosure. This Agreement and the Schedule of Exceptions do not
contain any untrue statement of a material fact and do not omit to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
SECTION 5.
Representations and Warranties of Purchasers
Each Purchaser hereby severally represents and warrants to the Company
as follows:
5.1 Organization and Standing. Such Purchaser is a corporation or
partnership, as the case may be, duly organized or formed, validly existing and
in good standing under the laws of its jurisdiction of organization or
formation.
5.2 Power and Authority. Such Purchaser has all requisite power and
authority to enter into this Agreement and to carry out and perform its
obligations under the terms of this Agreement.
5.3 Authorization. All action on the part of such Purchaser necessary
for the due authorization, execution, delivery and performance by such Purchaser
of this Agreement and the consummation of the transactions contemplated herein
has been taken or will be taken prior to the Closing. This Agreement is a legal,
valid and binding obligation of such Purchaser, enforceable against it in
accordance with its terms, subject
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to applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws of general application affecting enforcement of creditors' rights
generally and subject to general principles of equity. The execution, delivery
and performance by such Purchaser of this Agreement and compliance herewith does
not and will not result in any violation of or be in conflict with, or result in
a breach of, or constitute a default under, any term or provision of any state
or Federal law, ordinance, rule or regulation to which such Purchaser is
subject, or such Purchaser's organizational documents, as in effect on the date
hereof, or any mortgage, indenture, agreement, instrument, judgment, decree,
order or other restriction to which such Purchaser is a party or by which it is
bound.
5.4 Experience. Such Purchaser is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act or an entity in which all of the
equity owners or partners, as the case may be, are accredited investors within
the meaning of Rule 501(a) under the Securities Act. Such Purchaser is
experienced in evaluating and investing in companies such as the Company.
5.5 Investment. Such Purchaser is acquiring the Shares, and will
acquire the shares of Common Stock issuable upon conversion of the Shares, for
investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof, provided that the disposition of such
Purchaser's property shall at all times be within such Purchaser's control. Such
Purchaser understands that the Shares and the Common Stock issuable upon
conversion of the Shares have not been registered under the Securities Act by
reason of specified exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of such
Purchaser's investment intent as expressed herein.
5.6 Access to Data. Such Purchaser has had an opportunity to discuss
the Company's business, management and financial affairs with its management and
have had the opportunity to review the Company's facilities.
SECTION 6.
Conditions to Closing of Purchasers
Each Purchaser's obligation to purchase the Class A Preferred Shares to
be purchased by such Purchaser at the Closing is subject to the fulfillment to
such
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Purchaser's satisfaction on or prior to the date of the Closing of each of the
following conditions:
6.1 Representations and Warranties Correct. The representations and
warranties made by the Company herein and pursuant hereto shall have been true
and correct in all material respects when made, and shall be true and correct in
all material respects on the date of the Closing with the same force and effect
as if they had been made at and as of the date of the Closing.
6.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
the Closing shall have been performed or complied with in all material respects
and at such time the Company shall not be in default in the performance of or
compliance with any of the provisions of this Agreement or of its Articles of
Incorporation.
6.3 Opinion of Company's Counsel. You shall have received from Kramer,
Levin, Naftalis & ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A., counsel to the Company,
an opinion addressed to you, dated the date of the Closing, and in substantially
the form attached as Exhibits C and D hereto, respectively.
6.4 Compliance Certificate. The Company shall have delivered to you a
certificate of the Chief Financial Officer of the Company, dated the date of the
Closing, certifying to the fulfillment of the conditions specified in Sections
6.1 and 6.2 hereof and other matters you reasonably request.
6.5 Certificate of Designation. The Company shall have duly filed with
the Secretary of State of the State of Florida the Certificates and the Articles
of Incorporation, as so amended, shall be in full force and effect and shall not
have been further amended.
6.6 Consents. All consents set forth in Section 6.6 of the Schedule of
Exceptions shall have been obtained without any term or condition materially
adverse to the Company and all material governmental consents or approvals
required to be made or obtained by the Company in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby shall have been made or obtained.
6.7 No Material Adverse Change. There shall have been no material
adverse change in the condition of the Company and its subsidiaries, taken as a
whole,
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nor shall the Company or any of its subsidiaries have suffered any material
damage, destruction or loss (whether or not covered by insurance) that
materially adversely affects the condition or prospects of the Company and its
subsidiaries, taken as a whole.
6.8 Consulting and Fee Agreement. Each of GSCP, Inc. ("Greenwich
Street") and Travelers shall have entered into a Consulting and Fee Agreement
with the Company, substantially in the form of Exhibit E hereto, providing for,
among other things, a monitoring fee of $400,000 and $100,000 paid annually in
advance by the Company to Greenwich Street and to Travelers respectively. Each
such agreement shall remain in effect for as long as Greenwich II and Travelers,
as the case may be, "beneficially owns" (within the meaning of Rule 13d-3 under
the Exchange Act) at least 25% of the shares of Common Stock beneficially owned
by such Purchaser on the Closing Date, in each case after giving effect to any
stock dividend, stock split, reverse split, combination, reclassification,
recapitalization, merger, consolidation or like event with respect to or
affecting such Common Stock (as to each such Purchaser, the "Minimum
Percentage").
6.9 Satisfactory Review of the Company. The Purchasers and their
accountants, legal counsel and other authorized representatives shall have been
given reasonable access during normal business hours to and been permitted to
review the assets, books and records of the Company and its subsidiaries and
such other information as shall have been reasonably requested by and provided
to the Purchasers in order that the Purchasers may have the opportunity to make
such investigation as they shall desire to make of the affairs of the Company
and its subsidiaries and the assets and the Company and its subsidiaries.
6.10 General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Purchasers, and the
Purchasers shall have received counterpart original, or certified or other
copies, of all documents, including records of proceedings, that it may
reasonably request in connection therewith.
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SECTION 7.
Conditions to Closing of Company
The Company's obligation to sell the Shares to be purchased at the
Closing is subject to the fulfillment to its satisfaction on or prior to the
Closing Date of each of the following conditions:
7.1 Representations and Warranties Correct. The representations and
warranties made by the Purchasers herein and pursuant hereto shall have been
true and correct in all material respects when made, and shall be true and
correct in all material respects on the date of the Closing with the same force
and effect as if they had been made at and as of the date of the Closing.
7.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Purchasers on or prior to
the Closing shall have been performed or complied with in all material respects
and at such time the Purchasers shall not be in default in the performance of or
compliance with any of the provisions of this Agreement.
7.3 Opinion of Purchasers' Counsel. The Company shall have received
from Debevoise & ▇▇▇▇▇▇▇▇, counsel to the Purchasers, an opinion addressed to
you, dated the date of the Closing, and in substantially the form attached as
Exhibit F hereto.
7.4 Compliance Certificate. The Purchasers shall have delivered to the
Company a certificate, dated the date of the Closing, certifying to the
fulfillment of the conditions specified in Sections 7.1 and 7.2 hereof and other
matters the Company reasonably requests.
7.5 General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Company, and the Company
shall have received counterpart original, or certified or other copies, of all
documents, including records of proceedings, that it may reasonably request in
connection therewith.
SECTION 8.
Covenants of the Company
The Company hereby covenants and agrees, so long as the Purchasers own
any Shares or any Common Stock issued upon conversion of Shares, as follows:
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8.1 Basic Financial Information. The Company will furnish the following
reports to each Purchaser so long as such Purchaser beneficially owns the
Minimum Percentage applicable to it:
(a) Copies of its annual reports on Form 10-K and its quarterly reports
on Form 10-Q, respectively promptly upon filing thereof with the Commission;
(b) As soon as practicable after the end of each month and in any event
within thirty days thereafter, a consolidated balance sheet of the Company and
its subsidiaries, if any, as at the end of such month, and consolidated
statements of income and of sources and applications of funds of the Company and
its subsidiaries, for each month and for the current fiscal year of the Company
to date, prepared in accordance with generally accepted accounting principles
consistently applied, together with a comparison of such statements to the
Company's operating plan then in effect and approved by its Board of Directors
(the "Board"), or the Executive Committee thereof, and a comparison of such
statements to the statements for the corresponding periods of the Company's
previous fiscal year, and certified, subject to changes resulting from year-end
audit adjustments, by the principal financial or accounting officer of the
Company; and
(c) As soon as available (but in any event within sixty days prior to
the commencement of its fiscal year) a summary of the business plan and
financial plan of the Company for the next fiscal year, as contained in its
operating plan approved by the Board. Any material changes in such financial
plan shall be submitted as promptly as practicable after such changes have been
approved by the Board; provided that the Company shall be required to furnish to
any Purchaser any of the information referred to in the preceding clauses (b)
and (c) of this Section 8.1 only at the same time and to the same extent it is
required to furnish such information to its banks or other lenders pursuant to
any of the Company's financing arrangements; and provided further, that each
Purchaser agrees to keep all non-public information furnished to it pursuant to
this Agreement confidential and not to take any actions with respect thereto
which violate any applicable laws.
8.2 Additional Information. So long as any Purchaser beneficially owns
the Minimum Percentage applicable to it, the Company will permit such Purchaser
to visit and inspect any of the properties of the Company, including its books
of account, and to discuss its affairs, finances and accounts with the Company's
officers and its
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independent public accountants on reasonable notice, all at such reasonable
times during normal business hours and as often as any such person may
reasonably request.
8.3 Availability of Common Stock for Conversion. The Company will
reserve 6,200,000 shares of Common Stock for issuance upon conversion of the
Shares. The Company will not issue or agree to issue any shares of Common Stock
or options, rights or warrants to purchase Common Stock or securities
convertible into or exchangeable for Common Stock or take any other action if,
after giving effect thereto, the number of shares of Common Stock remaining
unissued and duly reserved for issuance upon conversion of the Shares shall be
insufficient to permit conversion of all of the Shares (including all Shares
subject to the Options), provided that the Company shall not be so required to
continue to reserve any shares of Common Stock with respect to any Class B
Preferred Shares which are not purchased prior to the expiration of the Options.
8.4 Use of Proceeds. The Company will use the proceeds from the sale of
the Shares for the reduction of outstanding indebtedness and general corporate
purposes.
SECTION 9.
Covenants of the Purchasers
9.1 Certain Actions. In the event that during the three-year period
following the Closing, any of Greenwich II, GSCP Offshore or GF (collectively,
the "Greenwich Purchasers") beneficially own any Common Stock or any other
securities of the Company eligible to vote at shareholder meetings of the
Company (all such Common Stock and securities, the "Voting Securities"), such
Greenwich Purchaser shall (i) be present in person or represented by proxy at
all such stockholder meetings so that all such Voting Securities shall be
counted for the purpose of determining the presence of quorum at such meetings,
(ii) shall vote or cause to be voted all such Voting Securities for the election
as Directors of the Company those persons recommended for election by the Board,
(iii) with respect to all other matters submitted to a vote of the Company's
common stockholders, shall vote or cause to be voted all such Voting Securities
in favor and against any such matter, pro rata, to the percentages of "in favor"
and "against" votes with respect to such matter made by all outstanding Voting
Securities not beneficially owned by Greenwich II, provided that the provisions
of this Section 9.1 shall not apply to any such matter relating to any proposed
or existing stock option, stock incentive, employee benefit or other like plan
or arrangement and (iv) shall not, directly or
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indirectly, without having been specifically requested to do so in writing by
the Company or the Board vote any Voting Securities in favor of the removal of,
or otherwise seek to remove from the Board, any person whose removal is not
recommended by the Board. In addition, during the three-year period following
the Closing, the Greenwich Purchasers shall not (i) propose or disclose an
intent to propose any form of business combination, acquisition, restructuring,
recapitalization or other similar transaction relating to the Company, (ii)
acquire or agree, offer, seek or propose to acquire, or make any proposal with
respect to the possible acquisition of, ownership (including, without
limitation, beneficial ownership) of any securities or business or any
substantial part of the assets of the Company or any of its subsidiaries or any
rights or options to acquire such ownership from a third party or otherwise,
except any such acquisition resulting from the exercise of their respective
Options or their respective conversion of any Shares into Common Stock or for
any other acquisitions which, after giving effect thereto, do not in the
aggregate exceed 1% of the Company's issued and outstanding Common Stock as of
the date of such acquisition, (iii) seek or propose to control the Company's
management or policies (except by virtue of the exercise of their respective
approval rights set forth in Section 10.3 hereof), (iv) except as approved by
the Board, make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the Commission Rules) to
vote, or seek to advise or influence any person or entity with respect to the
voting of, any Voting Securities of the Company, (v) enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing, (vi) disclose any intention, plan or arrangement
inconsistent with the foregoing, or (vii) request the Company, directly or
indirectly, to amend or waive any provisions of this Section 9.1.
9.2 Right of First Offer. (a) Each Purchaser shall, prior to selling
any Shares or Common Stock issued upon conversion of any Shares (collectively,
the "Offered Shares"), to a third party or parties, other than to one another or
to an affiliate of such Purchaser, deliver to the Company a written letter
setting forth:
(i) the number of Offered Shares such Purchaser wishes to
sell;
(ii) whether such sale shall be a public sale pursuant to the
Purchaser's exercise of its registration rights under Section 11 hereof
or otherwise (each, a "Public Sale") or a private sale (a "Private
Sale"), respectively;
(iii) the material terms and conditions on which such
Purchaser wishes to sell such Shares, including the purchase price per
Offered Share and the name
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or names of the purchaser(s) of such Offered Shares, to the extent then
known to such Purchaser; and
(iv) such Purchaser's offer (irrevocable by its terms for 5
business days following receipt, in the case of a Public Sale, and for
10 business days following receipt in the case of a Private Sale) to
sell to the Company all (but not less than all) of the Offered Shares,
for a purchase price per Offered Share, and on the other terms and
conditions set forth pursuant to subparagraph (iii) of this Section
9.2, provided that in the case of any Public Sale, such purchase price
shall equal the average of the closing prices of the Common Stock as
reported on NASDAQ for the ten consecutive trading days immediately
preceding the closing date of such Public Sale (the "Purchaser Offer").
(b) Notwithstanding anything in this Agreement to the contrary, it is
understood and agreed that a Purchaser may satisfy its obligations under Section
9.2(a) hereof with respect to any Public Sale that it proposes to effect by
exercising its registration rights under Section 11 hereof by delivering a
Purchase Offer to the Company 5 business days in advance of its exercise of any
such registration rights.
(c) The Company may accept a Purchaser Offer with respect to all, but
not less than all, of such shares by delivering to such Purchaser a written
acceptance of such Purchaser Offer within 5 business days of its receipt of such
Purchase Offer, in the case of any Public Sale, and within 10 business days of
its receipt of such Purchase Offer, in the case of a Private Sale. Such written
acceptance by the Company shall set forth closing arrangements and a closing
date not more than 3 days after the date of such written acceptance, in the case
of any Public Sale, and 30 days after the date of such written acceptance, in
the case of any Private Sale. At the time of such written acceptance by the
Company of such Purchaser Offer, the Company shall demonstrate to the reasonable
satisfaction of such Purchaser its financial capacity to consummate the purchase
of such Offered Shares and that there are no contractual or other like
restrictions on such purchase (or that any such restrictions, if they do exist,
will be waived prior to such proposed closing date). If the Company accepts the
Purchaser Offer, the closing of the purchase and sale of the Offered Shares
subject to the Purchaser Offer shall take place at the principal offices of such
Purchaser or at such other place on which such Purchaser and the Company may
agree, on the closing date specified by the Company in its written acceptance or
such other date on which such Purchaser and the Company may agree. If the
Company does not accept a Purchaser Offer with respect to any proposed Private
Sale, it may, prior to the 10th day following its receipt thereof, deliver to
the applicable
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Purchaser a written list specifying those entities with which the Company
believes it directly competes at such time (the "Competitor List"); it being
understood and agreed that any such Competitor List (i) may contain only those
entities who are engaged, directly or indirectly, at the time in question, in
the business of making, acquiring and securitizing "sub-prime" mortgage loans
and (ii) shall in any event be reasonably acceptable to the applicable
Purchaser. If any Competitor List so delivered to such Purchaser is not
reasonably acceptable to such Purchaser, the Company and the Purchaser shall
seek in good faith to resolve any differences which they may have with respect
to the entities specified in the Competitor List and such revised list shall
thereafter constitute the applicable "Competitor List" for purposes of this
Article IX.
(d) If, upon the expiration of such 5 or 10 business day period, as the
case may be, the Company has not accepted the Purchaser Offer, or if the Company
has not demonstrated to the reasonable satisfaction of such Purchaser the
Company's financial and contractual capacity to consummate the purchase of the
Offered Shares, such Purchaser may sell such shares to any third party at any
time within the 180-day period thereafter (the "Purchaser Sales Period"),
provided that (i) in the case of any Private Sale only, the price at which the
Offered Shares are sold to such third-party purchaser shall not be less than an
amount equal to 90% of the price at which the Offered Shares were offered to the
Company in the Purchaser Offer, (ii) the other terms and conditions on which the
Offered Shares are sold to any such third party shall not be materially less
favorable to such Purchaser than those contained in the Purchaser Offer and
(iii) in the case of any Private Sale to any entity on any Competitor List
delivered by the Company with respect to such Purchaser Offer, the applicable
Purchaser shall have first given the Company a "right of first refusal" to
purchase such Offered Shares on the same basis as is set forth in Sections
9.2(a), (c) and (d) hereof, except that the Company shall have 15 business days
(instead of 10) to accept or decline such opportunity. Prior to consummating any
such sale, such Purchaser shall, upon request from the Company, provide the
Company with reasonable supporting documentation with respect to the terms and
conditions of any such sale so as to demonstrate to the Company's reasonable
satisfaction that such Purchaser has complied with the provisions of the
preceding proviso.
(e) If the Offered Shares subject to a Purchaser Offer have not been
sold to a third-party purchaser in accordance with subsection (d) of this
Section 9.2 by the expiration of the Purchaser Sales Period, such shares may not
thereafter be sold or transferred by such Purchaser unless the procedures set
forth in this Section 9.2 have again been complied with.
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SECTION 10.
Approval Rights; Board Representation;
Notice Requirements
10.1 Board Representation. For so long as either the Greenwich
Purchasers, collectively, on the one hand, or Travelers, on the other, own at
least 25% of the Shares owned by such group or entity, as the case may be, on
the Closing Date (after giving effect to any stock dividend, stock split,
reverse split, combination, reclassification, merger, consolidation or like
event with respect to or affecting such Shares), the Company shall take all
action necessary to cause two persons designated by the Purchasers to be
nominated for election to the Board (the "Purchasers' Designees") at each annual
meeting of stockholders, and the Company shall use its best efforts to cause the
Purchasers' Designees to be elected to the Board at such meetings. The Company
shall cause Purchasers' Designees who are elected directors of the Company to be
covered by the Company's directors' and officers' insurance and indemnification
policies and arrangements to the same extent that such policies and arrangements
provide such insurance and indemnification for all other persons who are
directors and officers of the Company.
10.2 Notice Requirement. In addition to any notice requirements imposed
by applicable law, the Company shall give the Purchaser Designees (or if, for
any reason, there are no such designees, the Purchasers) at least seven days'
advance notice of all meetings of the Board and of all meetings of all
committees of the Board, except where seven days' notice is not practicable (in
which case, the Company will give the Purchaser Designees, or the Purchasers, as
the case may be, as much advance notice as is practicable), provided that, for
so long as the Company is obligated to nominate the Purchaser Designees pursuant
to Section 10.1 hereof, at any time during which there are no Purchasers'
Designees on the Board, representatives of the Purchasers shall have the right
to attend any meetings of the Board, and provided, further that the executive
committee of the Board may act by written consent with respect to routine
matters taken in the ordinary course of business of the Company so long as a
copy of such action is provided to the Purchasers' Designees or the Purchasers,
as the case may be, immediately following the taking of such action.
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10.3 Approval Rights. (a) Subject to Section 10.3(b) hereof, for so
long as the Company is obligated to nominate the Purchaser Designees pursuant to
Section 10.1 hereof, the Company shall not take, and shall not permit any of its
subsidiaries to take, any of the following actions (each a "Major Event")
without the written consent of at least one of the Purchasers' Designees (or if,
for any reason, there are no such designees at such time, the written consent of
the Purchasers then holding a majority of all Shares then held by all the
Purchasers):
(i) declare or pay any dividend on, or make any payment on
account of, or set apart any assets (other than setting aside Common
Stock for exercise of options or conversion rights) for a sinking or
other analogous fund for, the purchase, redemption, defeasance,
retirement, or other acquisition of, any shares of any class of capital
stock of the Company or any warrants or options to purchase any such
capital stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether
in cash or in obligations or other securities of the Company, except
that the Company may:
(A) make cash payments of up to $10,000,000 in any fiscal year
of the Company to redeem any shares of any class of
capital stock of the Company or any warrants or options to
purchase any such capital stock, whether now or hereafter
outstanding; and
(B) make any redemptions of any shares of any class of capital
stock of the Company or any warrants or options to
purchase any such capital stock to the extent such
redemption is expressly permitted pursuant to any of the
agreements listed in Section 10.3 of the Schedule of
Exceptions or the Company's Executive Restricted Stock
Plan or pursuant to any amendment to any such agreement or
any other agreement which is expressly approved by the
Purchasers' Designees (or if, for any reason, there are no
such designees at such time, the Purchasers holding the
majority of the Shares);
(ii) (i) merge or consolidate with or into any other
corporation or entity, or (ii) convey, sell, lease or otherwise dispose
of in any transaction or related series of transactions all or
substantially all of the property, business or
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assets of the Company and its subsidiaries (including the capital stock
or assets of its subsidiaries);
(iii) acquire by purchase the business, assets or stock of any
business for an aggregate purchase price (as determined in good faith
by the Board) of more than $100 million; or
(iv) effect any voluntary liquidation, dissolution or winding
up of the Company.
(b) If there is a proposed Major Event which is not approved by or
otherwise consented to by the Purchasers' Designees or the Purchasers, as the
case may be, pursuant to Section 10.1 hereof, the Company and the Purchasers
shall thereafter consult with one another in good faith for a period of at least
one week to attempt to resolve their differences concerning such Major Event. If
the parties are unable to resolve such differences during such one-week period,
the Company shall have the option of either not proceeding with such Major
Event, in which case the remaining provisions of this Section 10.3 shall not
apply, or proceeding with such Major Event, in which case the Company may
consummate such Major Event if (and only if) (i) such Major Event is
re-authorized by a majority of the members of the Board (any such
re-authorization being referred to herein as a "Triggering Event"), and (ii)
prior to the taking or consummation of such Major Event, the Company makes a
Dispute Resolution Offer with respect to such Major Event in the manner required
by Section 10.3(c) hereof and purchases all of the Shares which are duly
tendered to it by any Purchaser in response to such Dispute Resolution Offer.
(c) Upon the occurrence of a Triggering Event, each Purchaser shall
have the right to require the Company to repurchase all or any part of such
Purchaser's Shares at a purchase price in cash equal to 107% of the aggregate
liquidation value of such shares, as further described below.
(i) Within 10 days following any Triggering Event and, in any
event, prior to the taking or consummation of the Major Event to which
such Triggering Event relates, the Company shall mail a notice (a
"Dispute Resolution Offer") to each Purchaser stating (1) that a
Triggering Event has occurred and that such Purchaser therefore has the
right to require the Company to purchase all or any part of such
Purchaser's Shares at a purchase price in cash equal to 107% of the
aggregate liquidation value thereof, (2) the circumstances and relevant
facts
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regarding such Triggering Event and the related Major Event and (3) the
repurchase date (which shall be no earlier than 15 days nor later than
30 days from the date such notice is mailed).
(ii) Purchasers electing to have all or any portion of its
Preferred Stock purchased shall be required to surrender such Preferred
Stock to the Company at the address specified in the Dispute Resolution
Offer at least two business days prior to the purchase date. Purchasers
shall be entitled to withdraw their election if the Company receives
not later than one business day prior to the purchase date a facsimile
transmission or letter setting forth the name of the Purchaser, the
number of Shares which were previously delivered for purchase by such
Purchaser and a statement specifying the portion of such Shares for
which such Purchaser is withdrawing its election to have such Shares
purchased.
(iii) On the purchase date, all Shares purchased by the
Company under this Section shall be delivered to the Company for
cancellation or purchase, properly endorsed and free of any Liens and
with full warranties of title, and the Company shall pay the purchase
price, together with any amounts payable pursuant to Section 12.10
hereof, to the Purchasers entitled thereto in immediately available
funds to an account or accounts previously specified by the Purchasers.
SECTION 11.
Restrictions on Transferability of
Shares; Compliance with Securities Act
11.1 Certain Definitions. As used in this Section 11, the following
terms shall have the following respective meanings:
"Holder" shall mean any holder of the outstanding Shares or Registrable
Securities which have not been sold to the public.
"Initiating Holders" shall mean each Purchaser and its assignees under
Section 11.12 hereof who in the aggregate are Holders of more than 19.9% of the
Registrable Securities which have not been sold to the public, but in no event
less than 50,000 Shares or the number of shares of Common Stock into which
50,000 Shares were converted (in each case, after giving effect to any stock
dividend, stock split, reverse split,
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combination, reclassification, recapitalization, merger, consolidation or like
event with respect to or affecting such Shares or Common Stock, as the case may
be).
"Registrable Securities" shall mean (i) Common Stock issued or issuable
upon conversion of the Shares and (ii) any Common Stock issued in respect of
securities issued pursuant to the conversion of the Shares upon any stock split,
stock dividend, recapitalization or similar event.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company
in compliance with Sections 11.4 and 11.5 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements, not to exceed $25,000, of one counsel for all the selling Holders
and other security holders, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legends set forth in Section 11.2 hereof.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and transfer taxes applicable to the sale of Registrable Securities,
which shall be paid by the selling Holders.
11.2 Restrictive Legend. Each certificate representing (i) the Shares,
(ii) the Company's Common Stock issued upon conversion of the Shares, or (iii)
any other securities issued in respect of the Shares or the Common Stock issued
upon conversion of the Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted or unless the securities evidenced by such certificate shall
have been registered under the Securities Act or sold pursuant to Rule 144 or
Regulation A thereunder) be stamped or otherwise imprinted with legends in the
following form (in addition to any legends required under applicable state
securities laws):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
EXEMPTION FROM SUCH REGISTRATION UNDER SAID ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, A VOTING AGREEMENT AND OTHER CONDITIONS, AS
SPECIFIED IN THE PREFERRED STOCK PURCHASE AND OPTION AGREEMENT, COPIES
OF WHICH ARE ON FILE AT THE OFFICE OF THE COMPANY AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER OF SUCH SECURITIES UPON WRITTEN REQUEST.
Upon request of a holder of such a certificate, the Company shall
remove the first foregoing legend from the certificate or issue to such holder a
new certificate therefor free of any transfer legend, if, with such request, the
Company shall have received either the opinion referred to in Section 11.3 to
the effect that any transfer by such holder of the securities evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws.
11.3 Notice of Proposed Transfers. The holder of each certificate
representing Shares or shares of Common Stock into which such Shares have been
converted by acceptance thereof agrees to comply in all respects with the
provisions of this Section 11.3. Prior to any proposed transfer of any such
securities (other than under circumstances described in Sections 11.4 and 11.5
hereof), the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied (except in transactions in compliance with Rule 144) by a
written opinion of Debevoise & ▇▇▇▇▇▇▇▇ or legal counsel who shall be reasonably
satisfactory to the Company, addressed to the Company and the Company's transfer
agent and reasonably satisfactory in form and substance to the Company's
counsel, to the effect that the proposed transfer of such securities may be
effected without registration under the Securities Act. Each certificate
evidencing securities transferred as above provided shall bear the appropriate
restrictive legend set forth in Section 11.2 above, except that such certificate
shall not bear such restrictive legend if the opinion of
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counsel referred to above is to the further effect that such legend is not
required or appropriate in order to establish compliance with any provisions of
the Securities Act.
11.4 Requested Registration.
(a) Request for Registration. If the Company shall receive from
Initiating Holders a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will:
(i) promptly give written notice of the proposed registration
to all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws,
appropriate compliance with applicable regulations issued under the
Securities Act and listing on appropriate exchanges) as may be so
requested and as would permit or facilitate the sale and distribution
of all or such portion of such Registrable Securities as are specified
in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a written request given within thirty days after receipt
of such written notice from the Company; provided that the Company
shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section 11.4 (A) in any jurisdiction
in which the Company would be required to execute a general consent to
service of process in effecting such registration, qualification or
compliance, or in which the cost of the foregoing is unreasonable in
light of the number of Registrable Securities requested to be sold in
such jurisdiction, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act
or applicable rules or regulations thereunder, and (B) after the
Company has effected three such registrations pursuant to this Section
11.4(a), and such registrations have been declared or ordered effective
and the sales of such Registrable Securities shall have closed, and
provided further that the Company may defer the filing (but not the
preparation) of any registration otherwise required pursuant to this
Section 11.4 (X) if another registration of equity securities of the
Company under the Securities Act is then pending or has been duly and
validly demanded by any holder of securities of the Company who is
entitled, by contract with the Company, to have securities included in
such a registration (such persons
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collectively, the "Other Shareholders") and such contractual
arrangement prohibits the Company from effecting such registration at
such time pursuant to this Agreement, or (Y) if a period of less than
three months shall have elapsed from the effective date of the most
recent registration previously effected by the Company. Subject to the
foregoing clauses, the Company shall file a registration statement
covering the Registrable Securities so requested to be registered as
soon as practicable, after receipt of the request or requests of the
Initiating Holders.
Notwithstanding the foregoing, if the Company shall at any time furnish
to the Holders a certificate of the Company stating that counsel to the Company,
which counsel shall be reasonably satisfactory to the Holders, or the Board
shall have determined that the Company has pending or in progress a material
transaction or other development, the disclosure of which would, in the good
faith judgment of the Company, materially and adversely affect the Company,
then, the Company may defer the filing (but not the preparation) of a
registration statement, and may withhold efforts to cause the registration
statement to become effective if the registration has been filed, for up to 120
days, but the Company shall use all reasonable efforts to resolve the
transaction and, in accordance with Section 11.7, to file the registration
statement and cause it to become effective as soon as possible. If the Company
shall so defer the filing of any such registration statement, or so withhold
efforts to cause the registration statement to become effective, the Holders
shall have the right to withdraw the demand for registration by giving written
notice to the Company from the Initiating Holders within 20 days after receipt
of the applicable notice of deferment (and, in the event of such withdrawal,
such demand shall not be counted for purposes of determining the number of
demands for registration to which the holders of Registrable Securities are
entitled pursuant to this Section 11.4). Notwithstanding anything else to the
contrary in this Section 11, the aggregate number of days during which otherwise
qualifying Holders shall be prohibited from registering and selling Registrable
Securities under this Section 11.4 shall not exceed 180 days during any
consecutive 12-month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 11.4(b) below,
include other securities of the Company which are held by Other Shareholders,
but except as provided in the last sentence of Section 11.4(b) below the Company
shall have no right to include any of its securities in any such registration.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so
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advise the Company as a part of their request made pursuant to Section 11.4 and
the Company shall include such information in the written notice referred to in
Section 11.4(a)(i) above. The right of any Holder to registration pursuant to
Section 11.4 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder with respect to such participation and
inclusion) to the extent provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities he holds.
If Other Shareholders request such inclusion, the Initiating Holders
shall, on behalf of all Holders, offer to include the securities of such Other
Shareholders in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Section 11. The Company
shall (together with all Holders and Other Shareholders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form (including, without limitation, customary indemnification and
contribution provisions on the part of the Company) with the representative of
the underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders and reasonably acceptable to the Company;
provided that such underwriting agreement shall not provide for indemnification
or contribution obligations on the part of Holders greater than the obligations
of the Holders pursuant to Section 11.8(b). Notwithstanding any other provision
of this Section 11.4, if such representative advises the Initiating Holders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the securities of the Company held by Other Shareholders (other
than Registrable Securities) shall be excluded from such registration to the
extent so required by such limitation and if a limitation of the number of
shares is still required, the Initiating Holders shall so advise all Holders of
Registrable Securities whose securities would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the registration and underwriting shall be allocated among all such Holders
in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities and other securities which they held at the time of the
request for registration made by the Initiating Holders pursuant to Section
11.4(a). No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder of Registrable Securities or Other
Shareholder who has requested inclusion in such registration as provided above
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter and the Initiating
Holders no later than ten days prior to the expected effective date of the
relevant registration statement. The
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securities so withdrawn shall also be withdrawn from registration. If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the underwriter so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
(c) The Initiating Holders may issue up to three written requests under
this Section 11.4, only one of which may be a shelf registration (a "Shelf
Registration") pursuant to Section 415 under the Securities Act (or any
successor rule or regulation).
11.5 Company Registration.
(a) If the Company shall determine to register any of its securities
either for its own account or the account of a security holder or holders
exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Commission Rule 145 transaction or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company:
(i) will promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws);
(ii) will include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified
in a written request or requests, made by any Holder within fifteen
days after receipt of the written notice from the Company described in
clause (i) above, except as set forth in Section 11.5(b) below. Such
written request may specify all or a part of a Holder's Registrable
Securities; and
(iii) may, at its sole election, withdraw such registration at
any time without penalty or liability.
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(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to Section
11.5(a)(i). In such event the right of any Holder to registration pursuant to
Section 11.5 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein, including, without limitation, the
agreement to any lock-up agreement required by the underwriter or underwriters
selected for underwriting by the Company. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the Other Shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with such underwriter,
provided that such underwriting agreement shall not provide for indemnification
or contribution obligations on the part of Holders greater than the obligations
of the Holders pursuant to Section 11.8(b). Notwithstanding any other provision
of this Section 11.5, if the underwriter determines that marketing factors
require a limitation on the number of shares to be underwritten, the Company
will cause to be included in such registration to the extent of such limitation
on the number of shares to be underwritten, first, the securities being sold by
the Company, second, all securities proposed to be registered in such offering
by the Company for the accounts of Other Shareholders if such securities must be
included prior to the Registrable Securities to prevent a breach of any
applicable registration rights agreement between the Company and such Other
Shareholders, but only in such amount and to the extent required by such
agreement and third, the Registrable Securities proposed to be registered in
such offering by the Holders of such Registrable Securities and all such other
securities proposed to be registered in such offering by the Company for the
accounts of each Other Shareholder (not included in those securities to be
registered pursuant to clause second above), pro rata among the Holders of such
Registrable Securities and all such Other Shareholders on the basis of the
number of securities requested to be included by such Holders and such Other
Shareholders. If any Holder of Registrable Securities or Other Shareholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter no later than ten
days prior to the expected effective date of the relevant registration
statement. Any Registrable Securities or other securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.
11.6 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Section 11 shall be borne by the Company, and all Selling Expenses shall be
borne by the holders of
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the securities so registered pro rata on the basis of the number of their shares
so registered; provided, however, that the Company shall not be required to pay
any Registration Expenses if, as a result of the withdrawal of a request for
registration by Initiating Holders (other than due to a material adverse change
in the business of the Company or any refusal to proceed based upon the advice
of counsel that the registration statement, or any prospectus contained therein,
contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing), the registration
statement does not become effective, in which case the Holders and Other
Shareholders requesting registration shall bear such Registration Expenses pro
rata on the basis of the number of their shares so included in the registration
request, and provided, further, that such registration shall not be counted as a
registration pursuant to Section 11.4(a)(ii)(B).
11.7 Registration Procedures. In the case of each registration effected
by the Company pursuant to Section 11, the Company will keep each Holder advised
in writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will:
(i) prepare, and as soon as practicable, but in any event
within 60 days thereafter file with the Commission, a registration
statement with respect to the Registrable Securities, make all required
filings with the National Association of Securities Dealers, Inc.
("NASD") and use its reasonable best efforts to cause such registration
statement to become effective;
(ii) prepare and promptly file with the Commission such
amendments and post-effective amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
so long as is required to comply with the provisions of the Securities
Act and to complete the disposition of all securities covered by such
registration statement in accordance with the intended method or
methods of disposition thereof, but in no event for a period of more
than four months after such registration statement becomes effective;
(iii) furnish to counsel selected by the Holders copies of all
documents proposed to be filed with the Commission in connection with
such registration;
(iv) furnish to each seller of Registrable Securities, without
charge, such number of conformed copies of such registration statement
and of each such
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amendment and supplement thereto (in each case including all exhibits
and documents filed therewith) and such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller in
accordance with the intended method or methods of disposition thereof;
(v) use its reasonable best efforts to register or qualify
such Registrable Securities covered by such registration statement
under the securities or blue sky laws of such jurisdictions as each
seller shall reasonably request, and do any and all other acts and
things which may be necessary or advisable to enable such seller to
consummate the disposition of such Registrable Securities in such
jurisdictions in accordance with the intended method or methods of
disposition thereof, provided that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, subject
itself to taxation in any jurisdiction wherein it is not so subject, or
take any action which would subject it to general service of process in
any jurisdiction wherein it is not so subject;
(vi) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies, authorities or
self-regulatory bodies as may be necessary by virtue of the business
and operations of the Company to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
(vii) furnish to each seller of Registrable Securities a
signed counterpart, addressed to the sellers, of
(A) an opinion of counsel for the Company experienced
in securities law matters, dated the effective date of the
registration statement (and, if such registration includes an
underwritten public offering, the date of the closing under
the underwriting agreement); and
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(B) a "comfort" letter dated the effective date of
such registration statement (and if such registration includes
an underwritten public offering, dated the date of the closing
under the underwriting agreement), signed by the independent
public accountants who have issued an audit report on the
Company's financial statements included in the registration
statement, covering such matters as are customarily covered in
opinions of issuer's counsel and in accountants' letters
delivered to the underwriters in underwritten public offerings
of securities;
(viii) notify each seller of any Registrable Securities
covered by such registration statement at any time when the Company has
knowledge that a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event or
existence of any fact as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing,
and, as promptly as is practicable, prepare and furnish to such seller
a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(ix) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement of the Company (in form complying with the
provisions of Rule 158 under the Securities Act) covering the period of
at least 12 months, but not more than 18 months, beginning with the
first month after the effective date of the registration statement;
(x) notify each seller of any Registrable Securities covered
by such registration statement (i) when the prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by
the Commission for amendments or supplements to such registration
statement or to amend or to supplement such prospectus or for
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additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of such registration statement
or the initiation of any proceedings for that purpose of which the
Company has knowledge and (iv) of the suspension of the qualification
of such securities for offering or sale in any jurisdiction, or of the
institution of any proceedings for any of such purposes of which the
Company has knowledge;
(xi) use every reasonable effort to obtain the lifting of any
stop order that might be issued suspending the effectiveness of such
registration statement at the earliest possible moment;
(xii) use its reasonable best efforts (i) (A) to list such
Registrable Securities on any securities exchange on which the equity
securities of the Company are then listed or (B) if no such equity
securities are then listed, to secure designation of such securities as
a NASDAQ "national market system security" within the meaning of Rule
11Aa2-1 under the Exchange Act or, failing that, to secure NASDAQ
authorization for such Registrable Securities, and, without limiting
the foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD, and
(ii) to provide a transfer agent and registrar for such Registrable
Securities not later than the effective date of such registration
statement;
(xiii) enter into such agreements and take such other actions
as the sellers of Registrable Securities or the underwriters reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities, including, without limitation, to the extent
that the offering in question is an underwritten offering, preparing
for, and participating in, such number of "road shows" and all such
other customary selling efforts as the underwriters reasonably request
in order to expedite or facilitate such disposition; and
(xiv) use its reasonable best efforts to take all other steps
necessary to effect the registration of such Registrable Securities
contemplated hereby.
The Company may require each seller of any Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller, including, without limitation, its ownership
of Registrable Securities and the disposition of such Registrable Securities, as
the Company may from time to time reasonably request in writing and as shall be
required by law in connection
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therewith. Each such Holder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the Holder of any Registrable Securities,
without the consent of such seller, such consent not to be unreasonably
withheld, unless such disclosure is required by law.
11.8 Indemnification.
(a The Company will, and hereby does, indemnify each Holder, each of
its officers, directors and partners, and each person controlling such Holder,
with respect to which registration, qualification or compliance has been
effected pursuant to this Section 11, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus (including any related registration statement) incident to any
such registration, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of such prospectus, in light of the
circumstances under which made) not misleading, or any violation by the Company
of the Securities Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
such Holder, each of its officers, directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein.
(b Each Holder and Other Shareholder will, if Registrable Securities
held by him are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers
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and each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act and the rules and regulations
thereunder, each other such Holder and Other Shareholder and each of their
officers, directors and partners, and each person controlling such Holder or
Other Shareholder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement or prospectus, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the case of such prospectus, in light of the
circumstances under which made, not misleading, and will reimburse the Company
and such Holders, Other Shareholders, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or prospectus in reliance upon
and in conformity with written information furnished to the Company by such
Holder or Other Shareholder and stated to be specifically for use therein;
provided, however, that the obligations of such Holders and Other Shareholders
hereunder shall be limited to an amount equal to the proceeds to each such
Holder or Other Shareholder of securities sold as contemplated herein.
(c Each party entitled to indemnification under this Section 11.8 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
failure of any Indemnified Party to give notice shall not relieve the
Indemnifying Party of its obligation under this Section 11.8, except to the
extent of any actual prejudice resulting from such failure. The Indemnifying
Party will be entitled to participate in, and to the extent that it may elect by
written notice delivered to the Indemnified Party promptly after receiving the
aforesaid notice from such Indemnified Party, at its expense to assume, the
defense of any such claim or any litigation resulting therefrom, with counsel
reasonably satisfactory to such Indemnified Party, provided that the Indemnified
Party may participate in such defense at its expense, notwithstanding the
assumption of such defense by the Indemnifying Party, and provided, further,
that if the defendants in any such action shall include both the Indemnified
Party and the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be legal defenses available to it and/or other
Indemnified Parties which are different from or additional to those available to
the
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Indemnifying Party, the Indemnified Party or Parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
Parties and the fees and expenses of such counsel shall be paid by the
Indemnifying Party with respect to such different or additional defense. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom. No Indemnified Party shall consent to the entry
of any judgment nor enter into any settlement without the prior written consent
of the Indemnifying Party.
11.9 Information by Holder. Each Holder of Registrable Securities, and
each Other Shareholder holding securities included in any registration, shall
furnish to the Company such information regarding such Holder or Other
Shareholder and the distribution proposed by such Holder or Other Shareholder as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 11.
11.10 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the Restricted Securities to the public without registration, the Company agrees
to use its reasonable best efforts to:
(a make and keep public information available as those terms
are understood and defined in Rule 144 under the Securities Act;
(b file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Exchange Act at any time after it has become subject to such
reporting requirements; and
(c so long as you own any Restricted Securities, furnish to
you forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the
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Company, and such other reports and documents so filed as you may
reasonably request in availing yourself of any rule or regulation of
the Commission allowing you to sell any such securities without
registration.
11.11 Transfer or Assignment of Registration Rights. The rights to
cause the Company to register your securities granted to you by the Company
under this Section 11 may, in your discretion, be transferred or assigned by you
to a transferee or assignee of any of your Restricted Securities, provided that
the Company is given written notice by you at the time of or within a reasonable
time after such transfer or assignment, stating the name and address of such
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and provided, further,
that the transferee or assignee of such rights assumes your obligations under
this Section 11.
11.12 "Market Stand-off" Agreement. You agree, if requested by the
Company and an underwriter of Common Stock (or other equity securities) of the
Company, not to sell or otherwise transfer or dispose of any Common Stock (or
other equity securities) of the Company held by you during the ninety-day period
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that, if requested by such underwriter, all
Holders, all officers and directors and all other shareholders of the Company
who acquire equity securities of the Company in a privately negotiated
transaction after June 25, 1996 enter into similar agreements. Notwithstanding
the foregoing, shareholders of the Company who acquire such equity securities in
return for the equity securities of an entity acquired by the Company, and who
have no "demand" registration rights in respect thereof, shall not be required
to enter into such agreements.
Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of such ninety-day period.
11.13 Shelf Registrations. If, at any time when a Shelf Registration is
effective with respect to any Registrable Securities, the Company shall furnish
to the Holders a certificate of the Company stating that counsel to the Company,
which counsel shall be reasonably satisfactory to the Holders, or the Board,
shall have determined that the Company has pending or in progress a material
transaction or other development, the disclosure of which would, in the good
faith judgment of the Company, materially and adversely affect the Company, then
such Holders shall thereafter not dispose of any
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Registrable Securities under such Shelf Registration until the earlier of (i)
the time when such transaction or development is resolved in a manner that
allows, or renders unnecessary, appropriate disclosure with respect to such
transaction or development and (ii) the 121st day after the delivery of such
certificate, provided the Company shall at all times use all reasonable efforts
to resolve the transaction or other development in question so as to enable the
Purchaser to recommence selling under such Shelf Registration as promptly as
possible, and provided further that the four month period referred to in Section
11.7(ii) shall be suspended or "tolled" during any such period when the Holders
are unable to so utilize such Shelf Registration.
SECTION 12.
Miscellaneous
12.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York.
12.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by you and (ii)
the Closing.
12.3 Use of Purchasers' Names. The Company agrees and acknowledges that
the Purchasers have no, and have not assumed any, responsibility for the
management, business or operations of the Company. Except as required by law,
the Company shall not use the name of either Purchaser or their respective
affiliates in (i) any publicly available or otherwise widely disseminated
document or communication and (ii) any other document used for marketing
products and services without the prior written consent of the Purchaser the
name of which or the name of the affiliate of which is to be disclosed.
12.4 Successors and Assigns. Except as otherwise expressly provided
herein or in any applicable assignment instrument, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto; provided, however, the
Company may not assign its rights hereunder.
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12.5 Substitution of Purchaser. You shall have the right to substitute
any of your affiliates as the purchaser of the Shares which you have agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both you and such affiliate, shall contain such affiliate's agreement
to be bound by this Agreement and shall contain a confirmation by such affiliate
of the accuracy with respect to it of the representations set forth in Section
5. Upon receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 12.4), such word shall be deemed to refer
to such affiliate in lieu of you. In the event that such affiliate is so
substituted as a purchaser hereunder and such affiliate thereafter transfers to
you all of the Shares then held by such affiliate, upon receipt by the Company
of notice of such transfer and confirmation by you of the continued accuracy
with respect to you of the representations set forth in Section 5, wherever the
word "you" is used in this Agreement, such word shall no longer be deemed to
refer to such affiliate, but shall refer to you, and you shall have all the
rights of an original holder of the Shares under this Agreement.
12.6 Entire Agreement; Amendment. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the Company and you.
12.7 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered either by hand or by messenger, addressed to the
addresses set forth at the beginning of this Agreement, or at such other address
as such Purchaser shall have furnished to the Company in writing, or (b) if to
any other holder of any Shares or any Common Stock issued upon conversion of
Shares, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder thereof who has so furnished an address
to the Company, or (c) if to the Company.
12.8 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default
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theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
12.9 Rights; Separability. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
12.10 Agent's Fees.
(a The Company hereby agrees to indemnify and to hold you harmless from
and against any liability for commission or compensation in the nature of an
agent's fee to any broker or other person or firm (and the costs and expenses of
defending against such liability or asserted liability) arising from any act by
the Company or any of its employees or representatives.
(b You (i) represent and warrant that you have retained no finder or
broker in connection with the transactions contemplated by this Agreement and
(ii) hereby agree to indemnify and to hold the Company harmless from any
liability for any commission or compensation in the nature of an agent's fee to
any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which you, or any of your
employees or representatives, are responsible.
12.11 Expenses. The Company shall bear its own expenses and legal fees
incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby, and the Company will pay (i) up to $250,000 of the fees,
charges and disbursements incurred by the Purchasers (and their advisers,
counsel, accountants and other representatives) in connection with this
Agreement and the transactions contemplated hereby and (ii) in the event a
Dispute Resolution Offer is accepted by any Purchaser in accordance with Section
10.3 hereof, an amount equal to $1,500,000 multiplied by the ratio determined by
dividing (x) the number of Class A Preferred Shares originally owned by such
Purchaser by (y) 500,000.
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12.12 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
12.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Confirmation of execution by
electronic transmission of a facsimile signature page shall be binding upon any
party so confirming.
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If you are in agreement with the foregoing, please sign where indicated
below and thereupon this letter shall become a binding agreement between you and
the Company.
Very truly yours,
IMC MORTGAGE COMPANY
By
----------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By:
-----------------------------------
Name:
Title: Managing Member
TRAVELERS CASUALTY AND SURETY COMPANY
By
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Name:
Title: