Ex-4.7
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
dated as of March 29, 1996
among
FIRST MORTGAGE NETWORK, INC.
and
THE PURCHASERS LISTED ON SCHEDULE 1.01
TABLE OF CONTENTS
1. PURCHASE, SALE AND TERMS OF SHARES ...................................... 1
1.01. The Preferred Shares.............................................. 1
1.02. The Conversion Shares............................................. 1
1.03. Purchase Price and Funding........................................ 1
1.04. Use of Proceeds................................................... 2
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................ 2
2.01. Organization, Standing and Power.................................. 2
2.02. Authority; Enforceability; No Conflict............................ 2
2.03. Capitalization.................................................... 3
2.04. Subsidiaries...................................................... 5
2.05. Status of Shares.................................................. 6
2.06. Financial Statements.............................................. 6
2.07. Liabilities....................................................... 6
2.08. Indebtedness...................................................... 7
2.09. Title to Assets................................................... 7
2.10. Actions Pending................................................... 7
2.11. Compliance with Law............................................... 7
2.12. Taxes............................................................. 7
2.13. ERISA............................................................. 8
2.14. No Material Adverse Change........................................ 8
2.15. Certain Fees...................................................... 8
2.16. Disclosure........................................................ 8
2.17. Proprietary Rights................................................ 9
2.18. Environmental and Safety Matters.................................. 9
2.19. Books and Records................................................. 10
2.20. Material Agreements............................................... 10
2.21. Transactions with Affiliates...................................... 10
2.22. Securities Act of 1933............................................ 10
2.23. Governmental Approvals............................................ 11
2.24. Insurance......................................................... 11
2.25. Employees......................................................... 11
2.26. Absence of Certain Developments................................... 11
2.27. United States Real Property Holding Corporation................... 13
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS......................... 13
3.01. Organization and Standing of the Purchasers....................... 13
3.02. Authority; Enforceability; No Conflict........................... 13
3.03. Acquisition for Investment........................................ 14
3 04. Financing......................................................... 14
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4. CONDITIONS TO PURCHASERS' OBLIGATIONS FOR FUNDING........................ 14
4.01. Representations and Warranties.................................... 14
4.02. Secretary's Certificate........................................... 14
4.03. Officer's Certificate............................................. 15
4.04. Consents, Licenses, Approvals, etc. .............................. 15
4.05. Good Standing Certificates........................................ 15
4.06. No Proceedings or Litigation...................................... 15
4.07. Articles of Amendment............................................. 16
4.08. Bylaws............................................................ 16
4.09. Legal Opinion..................................................... 16
4.10. Shareholders Agreement............................................ 16
4.11. Voting Agreement.................................................. 16
4.12. Noncompetition Agreement.......................................... 16
4.13. Expenses.......................................................... 16
4.14. Other Purchasers.................................................. 16
4.15. Board of Directors................................................ 16
4.16. Subordinated Debenture Repayment.................................. 17
4.17. Merger Documents.................................................. 17
4.18. Compliance with this Agreement and Related Agreements............. 17
4.19. Proceedings Satisfactory.......................................... 17
5. AFFIRMATIVE COVENANTS OF THE COMPANY..................................... 17
5.01. Inspection Rights................................................. 17
5.02. Budgets Approval.................................................. 17
5.03. Financings........................................................ 18
5.04. Meetings of Directors............................................. 18
5.05. Bylaws; Meetings and Indemnification.............................. 18
5.06. Corporate Existence............................................... 18
5.07. Properties, Business, Insurance................................... 18
5.08. Expenses of Directors............................................. 18
5.09. Compliance with Laws.............................................. 18
5.10. Noncompetition Agreements......................................... 18
5.11. Keeping of Records and Books of Account........................... 19
5.12. Size of Board and Committees...................................... 19
5.13. Rule 144A Information............................................. 19
5.14. Reporting Requirements............................................ 19
5.15. Amended and Restated Articles of Incorporation ................... 21
6. NEGATIVE COVENANTS OF THE COMPANY........................................ 21
6.01. Dealings with Affiliates.......................................... 21
6.02. Compensation to Officers.......................................... 21
6.03. Sale of Assets.................................................... 21
6.04. Mergers, Etc. .................................................... 21
6.05. Maintenance of Ownership of Subsidiaries.......................... 22
6.06. Conduct of Business............................................... 22
6.07. Investments in Other Corporations or Entities..................... 22
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6.08. Transfers of Proprietary Rights................................... 23
6.09. Amendments........................................................ 23
6.10. Other Agreements.................................................. 23
6.11. Registration Rights Agreements.................................... 23
6.12. Existing Subordinated Indebtedness................................ 23
6.13. Existing Preferred Stock.......................................... 24
7. REGISTRATION RIGHTS...................................................... 24
7.01. Demand Registrations.............................................. 24
7.02. Incidental Registration........................................... 27
7.03. Registrations on Form S-3......................................... 28
7.04. Holdback Agreements............................................... 29
7.05. Registration Procedures........................................... 29
7.06. Indemnification................................................... 32
7.07. Rule 144.......................................................... 36
8. RIGHT OF FIRST OFFER..................................................... 37
8.01. Right of First Offer ............................................. 37
8.02. Notice of Acceptance ............................................. 37
8.03. Conditions to Acceptances and Purchase ........................... 38
8.04. Further Sale ..................................................... 39
8.05. Offer Participation Requirement .................................. 39
8.06. Termination and Waiver of Right of First Offer ................... 39
8.07. Exception ........................................................ 39
9. DEFINITIONS AND ACCOUNTING TERMS......................................... 40
9.01. Certain Defined Terms............................................. 40
9.02. Accounting Terms.................................................. 49
10. INDEMNIFICATION.......................................................... 49
10.01. General Indemnity................................................. 49
10.02. Indemnification Procedure......................................... 49
11. MISCELLANEOUS............................................................ 50
11.01. No Waiver; Cumulative Remedies.................................... 50
11.02. Amendments. Waivers and Consents.................................. 50
11.03. Addresses for Notices............................................. 51
11.04. Costs. Expenses and Taxes......................................... 51
11.05. Binding Effect; Assignment........................................ 52
11.06. Survival of Representations and Warranties........................ 52
11.07. Prior Agreements.................................................. 52
11.08. Severability...................................................... 52
11.09. Confidentiality................................................... 52
11.10. Governing Law..................................................... 53
11.11. Headings.......................................................... 53
11.12. Counterparts...................................................... 53
iii
11.13. Further Assurances................................................ 53
11.14. Waiver............................................................ 53
11.15. Specific Enforcement.............................................. 54
iv
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
Dated as of March 29, 1996
Each of the Purchasers
Listed on Schedule 1.01
Ladies and Gentlemen:
FIRST MORTGAGE NETWORK, INC., a Florida corporation (the "Company"),
hereby agrees with each of you as follows:
1. PURCHASE, SALE AND TERMS OF SHARES
1.01. The Preferred Shares. The Company has authorized the issuance and
sale of 1,171,191 shares (the "Preferred Shares") of its authorized but unissued
shares of Preferred Stock, $.01 par value (the "Preferred Stock") designated
Series B Preferred Stock (the "Series B Preferred Stock"), at a purchase price
of $5.50 per share to the persons (individually a "Purchaser" and collectively
the "Purchasers") and in the respective amounts set forth in Schedule 1.01
hereto. The designation, rights, preferences and other terms and provisions of
the Series B Preferred Stock are set forth in the Articles of Amendment attached
as Exhibit A hereto.
1.02. The Conversion Shares. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
similar contractual rights of stockholders, a sufficient number of authorized
but unissued shares of Common Stock to satisfy the rights of conversion of the
Holders of the Preferred Shares. Any shares of Common Stock issuable upon
conversion of the Preferred Shares (and such shares when issued) are herein
referred to as the "Conversion Shares." The Preferred Shares and the Conversion
Shares are sometimes collectively referred to as the "Shares."
1.03. Purchase Price and Funding. The Company agrees to issue and sell to
the Purchasers and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally but not jointly, agree to purchase that number of the
Preferred Shares set forth opposite their respective names in Schedule 1.01. The
aggregate purchase price of the Preferred Shares being acquired by each
Purchaser is set forth opposite such Purchaser's name in Schedule 1.01. The
funding of the purchase and sale of the Preferred Shares to be acquired by the
Purchasers from the Company under this Agreement (the "Funding") shall take
place at the offices of Messrs.
LaBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on April 30, 1996 (the "Funding
Date"). At the Funding, the Company will deliver to each Purchaser certificates
for the number and series of Preferred Shares set forth opposite its name under
the headings "Number of Preferred Shares" in Schedule 1.01 registered in such
Purchaser's name (or its nominee), against delivery of a check or checks payable
to the order of the Company, presentment of certificates representing securities
of a different series for conversion into shares of Series B Preferred Stock, or
a transfer of funds to the account of the Company by wire transfer, representing
the net cash consideration set forth opposite each such Purchaser's name on
Schedule 1.01.
1.04. Use of Proceeds. The Company shall use the cash proceeds from the
issuance and sale of the Preferred Shares for general working capital purposes.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as follows:
2.01. Organization, Standing and Power. Each of the Company and the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and the Subsidiaries has all requisite power and authority to own, lease
and operate its properties and assets and to conduct its business as now being
conducted and is duly qualified to do business in good standing in those foreign
jurisdictions in which such qualification is required.
2.02. Authority; Enforceability: No Conflict. The Company has all
requisite corporate power and authority to enter into this Agreement and each
Related Agreement to which it is a party, to issue and sell the Shares, and to
carry out its obligations hereunder and under each Related Agreement to which it
is a party. The execution, delivery and performance of this Agreement and each
Related Agreement to which it is a party by the Company and the issuance and
sale of the Shares by the Company have been duly and validly authorized by all
requisite corporate proceedings on the part of the Company. This Agreement and
each Related Agreement to which it is a party when executed and delivered by the
Company is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium,
rehabilitation, liquidation, conservatorship, receivership or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. Except as set forth on
Schedule 2.02, the execution and delivery of this Agreement and each Related
Agreement to which it is a party by the Company does not, and the consummation
by the Company of the transactions contemplated hereby and thereby will not
result in or constitute: (a) a default, breach or violation of or under the
Articles of Incorporation or the
2
Bylaws, (b) a default, breach or violation of or under any mortgage, deed of
trust, indenture, note, bond, license, lease agreement or other instrument
or obligation to which the Company or any Subsidiary is a party or by which
any of their respective properties or assets are bound, (c) a violation of any
statute, rule, regulation, order, judgment or decree of any court, public body
or authority by which the Company, any Subsidiary or any of their respective
properties or assets are bound, (d) an event which (with notice or lapse of
time or both) would permit any Person to terminate, accelerate the performance
required by, or accelerate the maturity of any indebtedness or obligation of the
Company or any Subsidiary under any agreement or commitment to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary is bound
or by which any of their respective properties or assets are bound, (e) the
creation or imposition of any lien, charge or encumbrance on any property of the
Company or any Subsidiary under any agreement or commitment to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary is bound
or by which any of their respective properties or assets are bound, or (f) an
event which would require any consent under any agreement to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary is bound
or by which any of their respective properties or assets are bound.
2.03. Capitalization. The authorized capital stock of the Company
consists of (a) 15,000,000 shares of Common Stock, of which 1,031,942 shares are
outstanding, 1,171,191 are reserved for issuance upon conversion of the Series B
Preferred Stock, 100,000 are reserved for issuance upon conversion of the
Special Preferred Stock (Northern California Division), 350,000 are reserved for
issuance under the Stock Option Plan, 252,500 are reserved for issuance upon the
exercise of the warrants held by the former 14% Subordinated Debenture Holders,
500,000 are reserved for issuance upon the exercise of the warrants held or
which may be obtained by Superior Bank FSB, 33,333 are reserved for issuance
upon the conversion of the 12% Subordinated Debentures, 25,000 are reserved for
issuance upon the exercise of the options held by ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
(the "Buscema Options"), 109,728 are reserved for issuance upon the exercise of
the warrants held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (other than as a former 14% Subordinated
Debenture Holder), 25,000 are reserved for issuance upon the exercise of the
options held by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇▇ Options"), and 28,242 are
reserved for issuance upon the exercise of the warrants held by ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates (the "▇▇▇▇▇▇▇ ▇▇▇▇▇ Warrants") and (b) 15,000,000 shares of preferred
Stock, of which 225,225 have been designated Series A Preferred Stock (all of
which are outstanding), 1000 have been designated Special Preferred Stock
(Northern California Division) (all of which are outstanding), 320,455 have been
designated Interim Series B Preferred Stock (234,827 of which are outstanding)
and 1,171,191 have been designated Series B Preferred Stock (all of which are to
be issued hereunder). All of the outstanding shares of Common Stock, Series A
Preferred Stock, Special Preferred Stock (Northern California Division) and
Interim Series B Preferred Stock have been duly authorized and validly issued,
and are fully paid and non-assessable. Except for the options and warrants
referred to in clause (a) above, or as required by the terms of the Special
3
Preferred Stock (Northern California Division), the Interim Series B Preferred
Stock or the Letter Agreement, dated November 16, 1995 between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and the Company which provides for the issuance of 22,727 shares of Common Stock
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as compensation for services, or as provided herein or in
any of the Related Agreements, there are no outstanding preemptive, conversion
or other rights, options, warrants or agreements granted or issued by or binding
upon the Company for the purchase or acquisition of any shares of capital stock
of the Company or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of such capital stock. All
outstanding shares of capital stock convertible securities, rights, options and
warrants of the Company are owned by the stockholders and in the numbers
specified on Schedule 2.03. Except as required by the terms of the Buscema
Options and the Special Preferred Stock (Northern California Division), the
contingent repurchase rights of Superior Bank FSB under the Superior Bank
Purchase and Sale Agreement, the oral agreement of the Company to redeem
Preferred Shares held by former 14% Debenture Holders with any proceeds from the
sale of Preferred Shares hereunder in excess of $3,000,000, and as required in
the Articles of Amendment, the Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any convertible securities, rights or options of
the type described in the preceding sentence. Except as required by the terms of
the ▇▇▇▇▇▇▇▇▇ Options and the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Warrants, as provided in the
▇▇▇▇▇-▇▇▇▇▇▇▇▇ Registration Rights Agreement and as provided herein, the Company
is not a party to any agreement granting registration rights to any person with
respect to any of its equity or debt securities. Except as set forth in the
Shareholders Agreement, the Voting Agreement and the Merger Agreement (which
restricts the transfer of the Special Preferred Stock (Northern California
Division)), the Company is not a party to, and it has no knowledge of,
any agreement restricting the voting or transfer of any shares of the capital
stock of the Company. The offer and sale of all capital stock, convertible
securities, rights or options of the Company issued prior to the Funding Date
complied with or was exempt from all applicable federal and state securities
laws and no stockholder has a right of rescission or damages with respect
thereto.
2.04. Subsidiaries. Schedule 2.04 sets forth each Subsidiary and each
Independent Division, showing the jurisdiction of the incorporation or
organization of each Subsidiary and showing the percentage of each Person's
ownership of the outstanding stock or other interests of each such Subsidiary or
Independent Division. All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, and are fully paid and
non-assessable. Except as set forth on Schedule 2.04 (i) there are no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any Subsidiary or the Company
with respect to any Subsidiary or Independent Division for the purchase or
acquisition of any shares of capital stock of any Subsidiary or any other
securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of such capital stock or any other similar ownership
interests of any Independent Division and (ii) neither the Company nor any
Subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any
4
shares of capital stock or any convertible securities, rights, options or
warrants of any Subsidiary or similar ownership interests of any Independent
Division. Except as set forth herein, neither the Company nor any Subsidiary is
a party to, nor has any knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of any Subsidiary or similar
ownership interests of any Independent Division.
2.05. Status of Shares. The Preferred Shares to be issued at the Funding
have been duly authorized by all necessary corporate action on the part of the
Company. When issued and paid for as provided in this Agreement, the Preferred
Shares will be validly issued and outstanding, fully paid and nonassessable, and
the issuance of such Preferred Shares is not and will not be subject to
preemptive or other similar contractual rights of any other stockholder of the
Company. The Conversion Shares have been duly authorized by all necessary
corporate action on the part of the Company and have been duly reserved for
issuance. When the Conversion Shares are issued such shares will be validly
issued and outstanding, fully paid and nonassessable and the issuance of such
shares will not be subject to preemptive or other similar contractual rights of
any other stockholder of the Company.
2.06. Financial Statements.
(a) As set forth on Schedule 2.06(a) hereto, the audited consolidated
balance sheets of the Company and the Subsidiaries as at April 15, 1994 and
March 31, 1995, and the related consolidated income statements and statements of
cash flows and changes in stockholders' equity of the Company and the
Subsidiaries for the fiscal years then ended, together with the opinion thereon
of Price Waterhouse, independent certified public accountants, and the interim
consolidated balance sheet of the Company and the Subsidiaries as at February
29, 1996, and the related consolidated income statement and statement of cash
flows and changes in stockholders' equity of the Company and the Subsidiaries
for the eleven month period then ended, are complete and correct in all material
respects and fairly present the financial condition of the Company and the
Subsidiaries at such dates and the results of the operations of the Company and
the Subsidiaries for the periods covered by such statements, all in accordance
with GAAP consistently applied.
(b) The projections (including, without limitation, the financial
projections attached as Schedule 2.06(b)) and pro forma financial information
furnished to the Purchasers are based on good faith estimates and assumptions by
the management of the Company, it being recognized by the Purchasers, however,
that projections as to future events are not to be viewed as fact and that
actual results during the period or periods covered by any such projections may
differ from the projected results and that the differences may be material.
2.07. Liabilities. Since February 29, 1996, neither the Company nor any
Subsidiary has incurred any material liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or
5
otherwise) that would be required to be disclosed on a consolidated balance
sheet of the Company and the Subsidiaries (including the notes thereto) in
conformity with GAAP, other than in the ordinary course of business.
2.08. Indebtedness. Schedule 2.08 sets forth all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.
2.09. Title to Assets. Each of the Company and the Subsidiaries has good
and marketable title to all of its real and personal property reflected in the
financial statements referred to in Section 2.06, free of any mortgages,
pledges, charges, liens, security interests or other encumbrances, except those
indicated on Schedule 2.09. Each of the Company and the Subsidiaries enjoys
peaceful and undisturbed possession under all leases under which it is
operating, and all said leases are valid and subsisting and in full force and
effect.
2.10. Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary which questions the validity of this Agreement or any
of the Related Agreements or any action taken or to be taken pursuant hereto or
thereto. Except as set forth on Schedule 2.10, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company, any Subsidiary or any of their
respective properties or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary.
2.11. Compliance with Law. The business of the Company and the
Subsidiaries has been and is presently being conducted so as to comply with all
applicable federal, state, and local governmental laws, rules, regulations and
ordinances (including, without limitation, all rules and regulations pertaining
to the producing, processing, underwriting, selling and servicing of residential
mortgage loans, loan brokerage operations and the sale of "business
opportunities"). Each of the Company and the Subsidiaries has all franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of its business as now being conducted
by it.
2.12. Taxes. Each of the Company and the Subsidiaries has accurately
prepared and timely filed all federal, state and other tax returns required by
law to be filed by it, has paid or made provisions for the payment of all taxes
shown to be due and all additional assessments, and adequate provisions have
been and are reflected in the financial statements of the Company and the
Subsidiaries for all current taxes and other charges to which the Company or any
Subsidiary is subject and which are not currently due and payable. The Company
knows of no additional assessments, adjustments or contingent tax liability
(whether federal or state) pending or threatened
6
against the Company or any Subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.
2.13. ERISA. Schedule 2.13 lists each "employee benefit plan", as defined
in Section 3(3) of ERISA, and any other bonus, severance or termination pay,
stock option or stock purchase, incentive pay or other plan, program or
arrangement covering present or former employees of the Company or any
Subsidiary which is maintained or contributed to by the Company or any
Subsidiary (the "Plans"). None of the Plans is subject to the provisions of
Title IV of ERISA, and none of the Plans is a Multiemployer Plan as defined in
Section 3(37) of ERISA (a "Multiemployer Plan"). Neither the Company nor any
Subsidiary has incurred any liability to the Pension Benefit Guaranty
Corporation or has incurred any liability with respect to a Multiemployer Plan.
None of the Plans is subject to the minimum funding standards set forth in
Section 302 of ERISA or Section 412 of the Code. None of the Company, any
Subsidiary or any of their respective officers or employees has engaged in a
"prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of
the Code with respect to any Plan which would subject any of such parties to a
civil penalty under Section 502(i) of ERISA or an excise tax under Section 4975
of the Code. Each of the Plans has been operated in all material respects in
accordance with applicable law, including ERISA and the Code. None of the Plans
is an employee welfare plan, as defined in Section 3(1) of ERISA, which provides
health or life insurance benefits to employees of the Company or any Subsidiary
following their retirement. Each Plan that is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service indicating that such Plan was so qualified as at the time of its
review, and the Company knows of no reason that would cause such letter to be
revoked.
2.14. No Material Adverse Change. Since February 29, 1996, (a) there has
been no material adverse change in the business, assets, operations, affairs,
prospects or financial condition of the Company or any Subsidiary; and (b)
neither the business, financial condition, operation, prospects or affairs of
the Company, any Subsidiary nor any of their respective properties or assets
have been adversely affected in any material respect as the result of any
legislative or regulatory change, any revocation or change in any franchise,
permit, license or right to do business, or any other event or occurrence,
whether or not insured against.
2.15. Certain Fees. Except as set forth on Schedule 2.15, no broker's,
finder's or financial advisory fees or commissions will be payable by the
Company or any Subsidiary with respect to the transactions contemplated by this
Agreement and the Related Agreements.
2.16. Disclosure. Neither this Agreement or the Schedules hereto, any of
the Related Agreements, the Business Plan nor any other document, certificate or
instrument furnished to the Purchasers by or on behalf of the Company in
connection with the transactions contemplated by this Agreement or any of the
Related Agreements, contains any untrue statement of a material fact or omits to
state a
7
material fact necessary in order to make the statements contained herein or
therein not misleading. The parties further agree that any agreement, event,
condition or other item which is disclosed on a particular Schedule hereto shall
be deemed to be disclosed for the purposes of all other Schedules to which it is
relevant, provided that all of the terms or effects of any such item which are
relevant to any Schedule hereto are adequately disclosed.
2.17. Proprietary Rights. Schedule 2.17 contains a complete and accurate
list of (a) all patented and registered Proprietary Rights owned by the Company
or any Subsidiary, (b) all pending trademark applications and applications for
registrations of other Proprietary Rights filed by the Company or any
Subsidiary, (c) all unregistered trade names and corporate names owned or used
by the Company or any Subsidiary and (d) all unregistered trademarks, service
marks and copyrights and computer software owned or used by the Company or any
Subsidiary. Schedule 2.17 also contains a complete and accurate list of all
licenses and other rights granted by the Company or any Subsidiary to any third
party with respect to computer software owned by the Company and any other
Proprietary Rights and all licenses and other rights granted by any third party
to the Company or any Subsidiary with respect to computer software or other
Proprietary Rights, together with a short description of such licenses. Each of
the Company and the Subsidiaries owns or has the right to use pursuant to a
valid and enforceable license all Proprietary Rights necessary for the operation
of its business. No loss or expiration of any Proprietary right owned or used by
the Company or any Subsidiary is pending or, to the best of the Company's
knowledge, threatened. Each of the Company and the Subsidiaries has taken all
necessary actions to maintain and protect the Proprietary Rights which it owns
or uses. The Company has no knowledge that the owners of any Proprietary Rights
licensed to the Company or any Subsidiary have not taken all necessary actions
to maintain and protect the Proprietary Rights which are subject to such
licenses. Except as set forth on Schedule 2.17, (i) there are no material claims
against the Company or any Subsidiary asserting the invalidity, misuse,
unenforceability or ownership of any Proprietary Rights owned or used by the
Company or any Subsidiary, and to the best of the Company's knowledge, no such
claims are threatened and there are no grounds for the same, (ii) neither the
Company nor any Subsidiary has received a notice of nor is aware of any facts
which in the Company's reasonable judgment indicate a reasonable likelihood of
any conflict with the asserted Proprietary Rights of others within the last five
years and (iii) the conduct of the Company's and each Subsidiary's business has
not infringed or misappropriated and does not infringe or misappropriate any
Proprietary Rights of other Persons, nor would any future conduct as presently
proposed infringe any Proprietary Rights of other Persons and, to the best of
the Company's knowledge, the Proprietary Rights owned by the Company or any
Subsidiary are not currently being infringed or misappropriated by other
Persons.
2.18. Environmental and Safety Matters. Except as set forth on Schedule
2.18, each of the Company and the Subsidiaries is in material compliance with
the provisions of all federal, state and local laws relating to pollution,
protection of the
8
environment or occupational safety and health applicable to it or to real
property owned or leased by it or to the use, operation or occupancy thereof.
Except as set forth on Schedule 2.18, neither the Company nor any Subsidiary has
engaged in any activity in violation of any provision of any federal, state or
local law relating to pollution, protection of the environment or occupational
safety and health. Neither the Company nor any Subsidiary has any liability,
absolute or contingent, under any federal, state or local law relating to
pollution, protection of the environment or occupational safety and health.
2. 19. Books and Records. The records and documents of the Company and
the Subsidiaries accurately and completely reflect in all material respects
information relating to the business of the Company and the Subsidiaries, the
location and collection of their assets, and the nature of all transactions
giving rise to the obligations or accounts receivable of the Company and the
Subsidiaries.
2.20. Material Agreements. Except as set forth on Schedule 2.20, neither
the Company nor any Subsidiary is a party to any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, a copy of
which would be required to be filed with the Commission as an exhibit to a
registration statement on Form S-1 or Form S-18 if the Company or any Subsidiary
were registering securities under the Securities Act, or any other agreement
which could have a Material Adverse Effect. The Company, each Subsidiary and, to
the best of the Company's knowledge, each other party thereto have in all
material respects performed all the obligations required to be performed by them
to date, have received no notice of default and are not in default under any
lease, agreement or contract now in effect to which the Company or any
Subsidiary is a party or by which they or their property may be bound. Except as
set forth on Schedule 2.20, each of the contracts or agreements listed on
Schedule 2.20 is in full force and effect and there exists no default,
anticipated or threatened default or failure of performance or observance of any
obligations or conditions contained therein, and none of the foregoing parties
nor the Company or any Subsidiary has provided any notice of default or of its
intention to terminate these agreements.
2.21. Transactions with Affiliates. Except as set forth on Schedule 2.21,
there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between
(a) the Company, any Subsidiary or any of their respective customers or
suppliers, and (b) any officer, employee, consultant or director of the Company
or any Subsidiary or any Person owning any capital stock of the Company or any
Subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.
9
2.22. Securities Act of 1933. The Company has complied and will comply with
all applicable federal and state securities laws in connection with the offer,
issuance and sale of the Preferred Shares hereunder. Neither the Company nor
anyone acting on its behalf has or will sell, offer to sell or solicit offers to
buy the Preferred Shares or similar securities to, or solicit offers with
respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of the Preferred Shares under the registration provisions of the Securities
Act and applicable state securities laws.
2.23. Governmental Approvals. Except as set forth on Schedule 2.23 and
except for the filing of any notice prior or subsequent to the Funding that may
be required under applicable state and/or federal securities laws (which, if
required, shall be filed on a timely basis), no authorization, consent,
approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the
execution and delivery by the Company of this Agreement, for the offer, issue,
sale, execution or delivery of the Preferred Shares, or for the performance by
the Company of its obligations under this Agreement and each Related Agreement
to which it is a party.
2.24. Insurance. Each of the Company and the Subsidiaries carries insurance
as set forth on Schedule 2.24 covering its properties and business which is
adequate and customary for the type and scope of the properties, assets and
business, and which is similar to that of companies of comparable size and
condition similarly situated in the same industry in which the Company or such
Subsidiary operates, but in any event in amounts sufficient to prevent the
Company or such Subsidiary from becoming a co-insurer or self-insurer, with
provision for reasonable deductibles.
2.25. Employees. Neither the Company nor any Subsidiary has any collective
bargaining arrangements or agreements covering any of its employees. Except as
set forth on Schedule 2.25, neither the Company nor any Subsidiary has any
employment contract, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant, relating to the right
of any officer, employee, or consultant to be employed or engaged by the Company
or such Subsidiary because of the nature of the business conducted or to be
conducted by the Company or such Subsidiary or relating to the use of trade
secrets or proprietary information of others, and the continued employment or
engagement of the Company's or such Subsidiary's officers, employees or
consultants does not subject the Company, any Subsidiary or any Purchaser to any
liability with respect to any of the foregoing matters. Except as set forth on
Schedule 2.25, no officer, consultant or Key Employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, could
have an adverse effect on the Company or any Subsidiary, has terminated or to
the best knowledge of the Company, has any present
10
intention of terminating, his employment or engagement with the Company or any
Subsidiary.
2.26. Absence of Certain Developments. Except as provided in Schedule 2.26,
since February 29, 1996, neither the Company nor any Subsidiary has:
(a) issued any stock, bonds or other corporate securities or any
rights, options or warrants with respect thereto;
(b) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such Subsidiary's business;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability "absolute or contingent), other than current liabilities
paid in the ordinary course of business;
(d) declared or made any payment or distribution of cash or other
property to stockholders with respect to its stock, or purchased or redeemed, or
made any agreements so to purchase or redeem, any shares of its capital stock;
(e) mortgaged or pledged any of its assets, tangible or intangible, or
subjected them to any liens, charge or other encumbrance, except liens for
current property taxes not yet due and payable and except for security interests
in mortgage loans granted in connection with the Warehouse Lines of Credit;
(f) sold, assigned or transferred any other tangible assets, or
cancelled any debts or claims, except in the ordinary course of business;
(g) sold, assigned or transferred any Proprietary Rights or disclosed
any proprietary confidential information to any person;
(h) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the loss
of any material amount of prospective business;
(i) made any changes in employee compensation except in the ordinary
course of business and consistent with past practices;
(j) made capital expenditures or commitments therefor that aggregate
in excess of $25,000;
11
(k) entered into any other transaction other than in the ordinary
course of business, or entered into any other material transaction, whether or
not in the ordinary course of business;
(l) made charitable contributions or pledges;
(m) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(n) experienced any problems with labor or management in connection
with the terms and conditions of their employment; or
(o) effected any two or more events of the foregoing kind which in the
aggregate would be material to the Company or any Subsidiary.
2.27. United States Real Property Holding Corporation. Neither the Company
nor any Subsidiary is now nor has ever been a "United States Real Property
Holding Corporation" as defined in Section 897(c)(2) of the Code and Section
1.897-2(b) of the Regulations promulgated by the Internal Revenue Service.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers severally but not jointly hereby represents and
warrants to the Company as follows:
3.01. Organization and Standing of the Purchasers. Each of the Purchasers
(excluding those Purchasers that are individuals) is a corporation, partnership,
limited liability company or trust duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization.
3.02. Authority: Enforceability; No Conflict. Each of the Purchasers
(excluding those Purchasers that are individuals) has all requisite corporate,
partnership, limited liability company or trust power and authority to enter
into this Agreement and each Related Agreement to which it is a party and to
carry out its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and each Related Agreement to which it is a party
by each of the Purchasers have been duly and validly authorized by all requisite
corporate, partnership, limited liability company or trust proceedings on the
part of each of the Purchasers (excluding those Purchasers that are
individuals). This Agreement and each Related Agreement to which it is a party
when executed and delivered by each of the Purchasers is a valid and binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses
12
and to the discretion of the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement and each Related Agreement
to which it is a party by each of the Purchasers does not, and consummation by
such Purchaser of the transactions contemplated hereby will not, result in or
constitute (a) a default, breach or violation of or under the organizational
documents of such Purchaser if such Purchaser is a corporation or partnership,
(b) a default, breach or violation of or under any mortgage, deed of trust,
indenture, note, bond, license, lease agreement or other instrument or
obligation to which such Purchaser is a party or by which any of its properties
or assets are bound, except for any defaults, breaches or violations which would
not, individually or in the aggregate, have a material adverse effect on such
Purchaser or prevent or materially delay the consummation by such Purchaser of
the transactions contemplated hereby, or (c) a violation of any statute, rule,
regulation, order, judgment or decree of any court, public body or authority,
except for any violations which would not, individually or in the aggregate,
have a material adverse effect on such Purchaser or prevent or materially delay
the consummation by such Purchaser of the transactions contemplated hereby.
3.03. Acquisition for Investment. Each of the Purchasers is an "accredited
investor" as defined in Regulation D under the Securities Act, and is acquiring
the Preferred Shares solely for its own account for the purpose of investment
and not with a view to or for sale in connection with any distribution thereof,
and it has no present intention or plan to effect any distribution of the
Preferred Shares. Each of the Purchasers acknowledges that it is able to bear
the financial risks associated with an investment in the Preferred Shares and
that it has been given full access to such records of the Company and to the
officers of the Company as it has deemed necessary and appropriate to conducting
its due diligence investigation. The Shares may bear a legend to the following
effect:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the laws of any state and
may not be sold or transferred except in compliance with that Act and such
laws."
3.04. Financing. Each of the Purchasers has sufficient funds and will have
sufficient funds at all times through the Funding Date to consummate the
transactions contemplated hereby. None of the Purchasers will be rendered
insolvent by reason of its investments in the Company nor will it be left with
unreasonably small capital for purposes of operating its businesses.
13
4. CONDITIONS TO PURCHASERS' OBLIGATIONS FOR FUNDING
The obligation of each of the Purchasers to purchase and pay for the
Preferred Shares to be purchased by it at the Funding is subject to the
following conditions:
4.01. Representations and Warranties. Each of the representations and
warranties set forth in Section 2 hereof shall be true, accurate and correct at
the Funding Date with the same effect as though made at and as of such time.
4.02. Secretary's Certificate. The Purchasers shall have received a
certificate of the Secretary or an Assistant Secretary of the Company, dated the
Funding Date, (a) attesting to all action taken by the shareholders of the
Company, including the approval of an amendment to the Articles of Incorporation
to increase the number of authorized shares of Preferred Stock to allow for the
issuance of 780,283 shares of Series B Preferred Stock, (b) attesting to all
corporate action taken by the Company including the resolutions of the Board of
Directors authorizing (i) the approval of the Articles of Amendment and the
amendments to the Bylaws, (ii) the execution, delivery and performance by the
Company of this Agreement and each Related Agreement to which it is a party,
(iii) the issuance of the Preferred Shares, and (iv) the execution, delivery and
performance by the Company of all other agreements or matters contemplated
hereby or executed in connection herewith, (c) certifying the names and true
signatures of the officers of the Company authorized to sign this Agreement and
the Related Agreements to which it is a party, the certificates for the
Preferred Shares and the other documents, instruments or certificates to be
delivered pursuant hereto and thereto, together with the true signatures of such
officers and (d) verifying that the Articles of Incorporation and the Bylaws (as
attached thereto) are true, correct and complete as of the Funding Date.
4.03. Officer's Certificate. The Purchasers shall have received a
certificate of the President and Treasurer of the Company, dated the Funding
Date, which shall certify that the representations and warranties contained in
Section 2 hereof are true and correct as of the Funding Date and that all
conditions required to be performed prior to or at the Funding have been
performed as of the Funding Date.
4.04. Consents, Licenses, Approvals, etc. The Purchasers shall have
received certified true copies of all consents, licenses and approvals required
or advisable in connection with the execution, delivery, performance, validity
and enforceability of this Agreement, and each Related Agreement, and such
consents, licenses and approvals shall be in full force and effect and be
reasonably satisfactory in form and substance to the Purchasers.
4.05. Good Standing Certificates. The Purchasers shall have received a
certificate of the appropriate public official in the jurisdiction of
incorporation of the Company and each Subsidiary as to the due incorporation and
good standing of the Company and each Subsidiary together with certified copies
of all charter documents of the Company and each Subsidiary and shall have
received certificates of
14
appropriate public officials of each other jurisdiction in which the Company and
each Subsidiary is required to qualify to do business as a foreign corporation
as to the due qualification and good standing of the Company and each
Subsidiary.
4.06. No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced and no
investigation by any governmental authority shall have been threatened against
the Company or any Subsidiary, or any of the officers or directors of the
Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, and each Related Agreement, or
seeking damages in connection with such transactions.
4.07. Articles of Amendment. The Articles of Amendment creating the Series
B Preferred Stock of the Company, setting forth, without limitation, the
designations, preferences, powers, qualifications, special or relative rights
and privileges of the Series B Preferred Stock (the "Articles of Amendment"), in
the form of Exhibit A, shall have been filed with the Secretary of State of
Florida.
4.08. Bylaws. The amendments to the Bylaws of the Company (as amended, the
"Bylaws") set forth in Exhibit B, shall have been adopted by the Board of
Directors.
4.09. Legal Opinion. The Purchasers shall have received a legal opinion
from ▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel to the Company and the Subsidiaries, dated
the Funding Date and substantially in the form of Exhibit C and as to such other
matters as the Purchasers may reasonably request.
4.10. Shareholders Agreement. Each of the Purchasers, the Founders and the
Company shall have entered into a Shareholders Agreement (as amended from time
to time, the "Shareholders Agreement"), substantially in the form of Exhibit D.
4.11. Voting Agreement. Each of the Purchasers, the Founders, the Series A
Holders and the Company shall have entered into a Voting Agreement (as amended
from time to time, the "Voting Agreement"), substantially in the form of
Exhibit E.
4.12. Noncompetition Agreement. Each of the Key Employees (other than ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇) shall have entered into a Noncompetition, Nondisclosure
and Proprietary Information Agreement substantially in the form of Exhibit F (as
amended from time to time, the "Noncompetition Agreements").
4.13. Expanses. All fees and disbursements required to be paid pursuant to
Section 11.04 hereof shall have been paid in full.
4.14. Other Purchasers. No Purchaser shall have failed to execute and
deliver this Agreement or to accept delivery of or make payment for the Shares
to be purchased by it on the Funding Date.
15
4.15. Board of Directors. The members of the Board of Directors immediately
following the Funding shall consist of not more than ten members, who initially
shall be ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and a
nominee of Dominion. The Board of Directors shall establish an Executive
Committee, an Executive Compensation Committee and an Audit Committee. The
Executive Committee shall consist of not more than three (3) members, two (2) of
whom shall be Series B Directors. The Executive Compensation Committee shall
consist of not more than four (4) members, two (2) of whom shall be Series B
Directors; provided, however, that on or prior to April 30, 1997, the number of
members of the Executive Compensation Committee shall be reduced to three (3),
two (2) of whom shall be Series B Directors. The Audit Committee shall consist
of no more than three (3) members.
4.16. Subordinated Debenture Repayment. The Purchasers shall have received
satisfactory evidence of (i) the delivery to the Company of the 14% Subordinated
Debentures by the holders thereof for cancellation in exchange for the issuance
of 234,828 shares of Interim Series B Preferred Stock to such holders, and (ii)
the delivery to the Company of all shares of Interim Series B Preferred Stock
for conversion into shares of Series B Preferred Stock to be issued hereunder.
4.17. Merger Documents. The Merger shall have been consummated and the
Purchasers shall have received certified, complete and correct copies of the
Merger Documents satisfactory in form and substance to the Purchasers.
4.18. Compliance with this Agreement and Related Agreements. The Company
shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement or any Related
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Funding.
4.19. Proceedings Satisfactory. All proceedings taken in connection with
the issuance and sale of the Shares and all documents and papers relating
thereto shall be satisfactory in form and substance to the Purchasers. Each
Purchaser shall have received copies of such documents and papers as such
Purchaser may reasonably request in connection with this Agreement and the
Related Agreements.
5. AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that on and after the Funding Date and
until the consummation of a Qualified Public Offering it will:
5.01. Inspection Rights. Permit during normal business hours, upon
reasonable request and reasonable notice, each Purchaser or any employees,
agents or representatives thereof, to examine and make copies of and extracts
from the records and books of account of, and visit and inspect the properties,
assets,
16
operations and business of the Company and any Subsidiary, and to discuss the
affairs, finances and accounts of the Company and any Subsidiary with any of its
officers, consultants, directors, Key Employees, attorneys or independent
accountants.
5.02. Budgets Approval. At least thirty (30) days prior to the commencement
of each fiscal year, prepare and submit to, and obtain in respect thereof the
approval of the majority of the members of the Board of Directors, a business
plan and monthly operating budget in detail for each fiscal year, monthly
operating expenses and profit and loss projections and cash flow projections and
a capital expenditure budget for the fiscal year.
5.03. Financings. Promptly, fully and in detail, inform all of the members
of the Board of Directors of any discussions, offers or contracts relating to
possible financings of any material nature for the Company or any Subsidiary,
whether initiated by the Company, any Subsidiary or any other Person.
5.04. Meetings of Directors. Hold meetings of the Board of Directors not
less than on a quarterly basis.
5.05. Bylaws; Meetings and Indemnification. Use its best efforts to at all
times cause its Bylaws to provide that (a) any Series B Director shall have the
right to call a meeting of the Board of Directors, (b) any holder or holders of
at least 10% of the outstanding shares of Series B Preferred Stock shall have
the right to call a meeting of stockholders, and (c) a quorum for any special
meeting of the Board of Directors or any committee thereof of which a Series B
Director is a member shall require the attendance of at least one Series B
Director unless the Series B Directors have received at least 5 days prior
written notice of such special meeting. The Company shall at all times maintain
provisions in the Bylaws or the Articles of Incorporation indemnifying all
officers and directors against liability to the maximum extent permitted under
the laws of the state of its incorporation.
5.06. Corporate Existence. Maintain, and cause each of its Subsidiaries, to
maintain their respective corporate existence, Proprietary Rights, other rights
and franchises in full force and effect to the extent appropriate in accordance
with good business practice.
5.07. Properties, Business Insurance. Maintain, and cause each of its
Subsidiaries, to maintain as to their respective properties and business, with
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies of a similar size and financial condition similarly situated within
the same industry.
5.08. Expenses of Directors. Promptly reimburse in full each director of
the Company who is not an officer or employee of the Company for all of his
reasonable
17
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors or any committee thereof.
5.09. Compliance with Laws. Comply, and cause each Subsidiary to comply,
with all applicable laws, rules, regulations and orders, noncompliance with
which could have a material adverse effect on its business, assets, operations
or condition, financial or otherwise.
5.10. Noncompetition Agreements. Enter into, and cause each Subsidiary to
enter into, noncompetition, nondisclosure and proprietary information agreements
with each executive officer, Key Employee and any other employee of the Company
or any Subsidiary as may be requested by any of the Purchasers, subsequent to
the Funding Date, the format and content of which shall be approved by the Board
of Directors.
5.11. Keeping of Records and Books of Account. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions of the Company and such Subsidiary, and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
5.12. Size of Board and Committees. Fix and maintain the number of
directors on the Board of Directors at no more than ten members, which members
shall in any event include one director nominated by any Person or
affiliated group of Persons who own 363,000 or more Shares; fix and maintain the
number of members of the Executive Committee and the Audit Committee of the
Board of Directors at no more than three; and fix and maintain the number of
members of the Executive Compensation Committee at no more than four at any time
prior to April 30, 1997 and at no more than three at any time on or after April
30, 1997. The members of the Executive Committee and the Executive Compensation
Committee shall include two Series B Directors. The Executive Compensation
Committee shall have, among its responsibilities, the review and recommendation
to the Board of Directors of stock option grants and executive compensation and
bonuses. The Audit Committee shall have, among its responsibilities, the
engagement, appointment and removal of the independent public accountants or
auditors of the Company.
5.13. Rule 144A Information. At all times during which the Company is
neither subject to the reporting requirements of Section 13 or 1 5(d) of the
Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the
Exchange Act, promptly as practicable (in any event not later than twenty (20)
days after initial request) in written form, upon the written request of any
Purchaser or a prospective buyer of Shares from any Purchaser, furnish all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as promptly
as practicable (in any event not later than twenty (20)
18
days after initial request) to cooperate with and assist any Purchaser or any
member of the NASD system for Private Offerings Resales and Trading through
Automated Linkage ("PORTAL") in applying to designate and thereafter maintain
the eligibility of the Shares for trading through PORTAL. The Company's
obligations under this Section 5.13 shall at all times be contingent upon the
relevant Purchaser's obtaining from a prospective purchaser an agreement to take
all reasonable precautions to safeguard the Rule 144A Information from
disclosure to anyone other than a person who will assist such purchaser in
evaluating the purchase of the Shares.
5.14. Reporting Requirements. Furnish the following to each Purchaser:
(a) Monthly Reports: as soon as available and in any event within 30
days after the end of each fiscal month of the Company, consolidated and
consolidating balance sheets of the Company and the Subsidiaries as of the end
of such period and consolidated and consolidating statements of income and
statements of cash flows and changes in stockholders' equity of the Company and
the Subsidiaries for such period and for the period commencing at the end of the
previous fiscal year and ending with the end of such period, setting forth in
each case in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, including comparisons to the budget or
business plan and an analysis of the variances from the budget or business plan,
prepared in accordance with GAAP consistently applied, and also including
information (broken down by geographical region) as to the number of mortgage
loans funded and new mortgage loan applications received during such fiscal
period;
(b) Annual Reports: as soon as available and in any event within 90
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for the Company and the Subsidiaries, including
therein consolidated and consolidating balance sheets of the Company and the
Subsidiaries as of the end of such fiscal year and consolidated and
consolidating statements of income and statements of cash flows and changes in
stockholders' equity of the Company and the Subsidiaries for such fiscal year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year, all such consolidated statements to be duly certified by
the chief financial officer of the Company and an independent public accountant
of recognized national standing approved by the Board of Directors;
(c) Reports and Other Information: within 10 days after receipt,
publication, commencement or occurrence, copies of all consulting reports,
management reports, notices of all material actions, filings made with the
Commission, such information as the Company or any Subsidiary shall make
available to any of its stockholders, and such other information as any
Purchaser shall reasonably request;
(d) Officer's Certificate: as soon as possible and in any event within
30 days after the end of a fiscal quarter, a certificate executed by a duly
authorized
19
officer of the Company representing as to the compliance of the Company with the
provisions of Section 5 and Section 6;
(e) Accountants' Letters: within 10 days after receipt, copies of all
accountants' letters, reviews and reports to management;
(f) Budgets and Operating Plan: as soon as available and in any event
at least 30 days before the beginning of each fiscal year of the Company, a
business plan and monthly operating budgets for the forthcoming fiscal year;
(g) Notice of Adverse Changes: promptly after the occurrence thereof
and in any event within 10 days after each occurrence, notice of any default
under any material agreement; or any material litigation, proceedings, suits or
investigations affecting the Company or any Subsidiary; or any material adverse
change in the business, assets, operations or condition of the Company or any
Subsidiary;
(h) SEC Filings: within 10 days of occurrence, copies of all filings
made with the Commission; and
(i) Business Information: informational reports and other data useful
in the understanding and management of the Company's or any Subsidiary's
business supplied to the Chief Executive Officer of the Company or such
Subsidiary in the ordinary course of business.
5.15. Amended and Restated Articles of Incorporation. Amend and restate
the Articles of Incorporation to remove the designation of the Interim Series B
Preferred Stock, as soon as practicable following the Funding Date.
6. NEGATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that on and after the Funding Date and
until the consummation of a Qualified Public Offering it will not:
6.01. Dealings with Affiliates. Enter into, or permit any Subsidiary to
enter into, any material transaction, including, without limitation, any loan or
extension of credit, release of guarantee, management contract or royalty
agreement, deferred or contingent compensation agreement, consulting or other
agreement with any Affiliate.
6.02. Compensation to Officers. Amend, modify or waive, or permit any
Subsidiary to amend, modify or waive, in any material respect any employment,
benefit or compensation arrangement with any Key Employee, or pay to any Key
Employee, senior manager or officer compensation (including salary and bonus) in
excess of that approved by the Executive Compensation Committee of the Board of
Directors.
20
6.03. Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease, assign, transfer or
otherwise dispose of, any material portion of its now owned or hereafter
acquired property (including, without limitation, shares of stock and
indebtedness, receivables and leasehold interests), except (a) for the sale or
other disposition of property no longer used or useful in the conduct of its
business and (b) that the Company or any Subsidiary may sell, lease, assign, or
otherwise transfer its property to the Company or any wholly-owned Subsidiary.
6.04. Mergers, Etc. Merge or consolidate with, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter acquired)
to, any Person, or acquire all or substantially all of the assets or the
business of any Person (or enter into any agreement to do any of the foregoing),
or permit any of its Subsidiaries to do so, except that the Company or any
Subsidiary may merge into or consolidate with or transfer assets to the Company
or any wholly-owned Subsidiary.
6.05. Maintenance of Ownership of Subsidiaries. Sell or otherwise dispose
of any shares of capital stock of any Subsidiary, except to a wholly-owned
Subsidiary, or permit any Subsidiary to issue, sell or otherwise dispose of any
shares or rights to acquire any of its capital stock or the capital stock of any
Subsidiary, except to the Company or a wholly-owned Subsidiary; provided,
however, that the Company may liquidate, merge or consolidate any Subsidiary
into or with itself, provided that the Company is the surviving entity, or into
or with a wholly-owned Subsidiary, or the Company may sell all or a portion of
any Subsidiary to a wholly-owned Subsidiary.
6.06. Conduct of Business. Engage, or permit any Subsidiary to engage, in
any business other than the business engaged in or proposed to be engaged in by
the Company or any Subsidiary on the date hereof and any businesses or
activities substantially similar or related thereto.
6.07. Investments in Other Corporations or Entities. Make or permit any
Subsidiary to make, any loan or advance to any Person, or purchase, otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, the capital
stock, assets comprising the business of, obligations of, or any interest in,
any other corporation or entity which will not be operated as a wholly-owned
Subsidiary, except:
(a) investments by the Company or a Subsidiary in evidences of
indebtedness issued or fully guaranteed by the United States of America or any
state or public subdivision thereof;
(b) investments by the Company or a Subsidiary in certificates of
deposit, notes, acceptances and repurchase agreements having a maturity of not
more than one year from the date of acquisition issued by a fiscally sound and
reputable
21
bank organized in the United States having capital, surplus and undivided
profits of at least $500,000,000;
(c) investments by the Company or a Subsidiary in the highest-rated
commercial paper;
(d) investments by the Company or a Subsidiary in "Money Market" fund
shares, or in money market accounts fully insured by the Federal Deposit
Insurance Corporation and sponsored by banks and other financial institutions,
provided that the investments consist principally of the types of investments
described in clauses (a), (b) or (c) of this Section 6.07;
(e) loans or advances from a Subsidiary to the Company or from the
Company to a wholly-owned Subsidiary;
(f) mortgage loans originated by the Company or a Subsidiary in the
ordinary cause of business;
(g) advances or investments in the ordinary course of business to or
in Controlled Business Arrangements or members thereof which do not exceed
$50,000; or
(h) investments by the Company or any Subsidiary in such financial
instruments and with such financial advisors, as may be approved from time to
time by the Board of Directors.
6.08. Transfers of Proprietary Rights. Transfer, sell, dispose of, assign,
lease, license or donate, or permit any Subsidiary to transfer, sell, dispose
of, assign, lease or donate, any ownership or other interest in, or material
rights relating to, any its Proprietary Rights any person or entity other than
the Company or a wholly-owned Subsidiary except for the licensing of software to
customers in the ordinary course of business.
6.09. Amendments. Amend or waive any provision of the Articles of
Incorporation, the Bylaws, any of the Merger Documents or any other agreement
providing preemptive, conversion, redemption, registration or other rights
relating to, or options, warrants or other rights to purchase, any shares of the
Company's capital stock in any way that would adversely affect the liquidation
preferences, dividend rights, voting rights or redemption rights of the Holders
of the Series B Preferred Stock.
6.10. Other Agreements. Enter into any agreement in which the terms of such
agreement would restrict or impair the right to perform of the Company or any
Subsidiary under this Agreement, the Articles of Amendment or any other Related
Agreement.
22
6.11. Registration Rights Agreements. (a) Register and sell any securities
for its own account in a Registration effected pursuant to Section 7.01 unless
the Company shall have obtained written agreements from ▇▇▇▇▇-▇▇▇▇▇▇▇▇ and any
other holders of securities of the Company which have been granted rights to
require the Company to effect a Registration or to include any securities held
by them in any other Registration effected by the Company ("Registration
Rights") to waive any priority they may otherwise have over the Purchasers to
include any securities held by them in such Registration or (b) enter into an
agreement with any Person which grants Registration Rights to such Person unless
such Agreement expressly subordinates the right of such Person to include
securities held by them in any such Registration to the priority of the
Purchaser to include the securities held by them in such Registration as set
forth in Section 7.01(e) and Section 7.02(b).
6.12. Existing Subordinated Indebtedness. (a) Defease or make any payments
the effect of which is to defease, or make any voluntary or optional payment or
prepayment on, or redemption of, the Existing Subordinated Indebtedness in whole
or in part, or (b) amend, supplement or otherwise change (or agree to any
amendment or other change of) the terms of the Existing Subordinated
Indebtedness, if the effect of such amendment, supplement or change is to
increase the interest rate on the Existing Subordinated Indebtedness, advance
the dates upon which payment of principal or interest are due on the Existing
Subordinated Indebtedness (including any change that adds or modifies mandatory
prepayments), change, in a manner adverse to the Company or which confers
additional rights on the holders thereof, any event of default or covenant (or
any definition relating thereto) with respect to the Existing Subordinated
Indebtedness, change the redemption or repurchase provisions with respect to the
Existing Subordinated Indebtedness in a manner materially adverse to the Company
or which confers additional rights on the holders thereof or otherwise increase
the obligations of the Company or confer additional rights on the holders of the
Existing Subordinated Indebtedness without, in each case, obtaining the prior
written consent of the Holders of at least a majority of the then outstanding
shares of Series B Preferred Stock to such amendment or change.
6.13. Existing Preferred Stock. (a) Amend, supplement or otherwise change
(or agree to any amendment or other change to) the terms of the Series A
Preferred Stock, the Special Preferred Stock (Northern California Division) or
the Interim Series B Preferred Stock, if the effect of any such amendment,
supplement or change is adverse to the Holders of Series B Preferred Stock or
which confers any additional rights on the Series A Holders, the Special
Preferred Holders or the Interim Series B Holders, including, without
limitation, changes in the conversion rate, default, covenant, redemption, or
repurchase provisions with respect to the Series A Preferred Stock, the Special
Preferred Stock (Northern California Division) or the Interim Series B Preferred
Stock, without, in each case, obtaining the prior written consent of the Holders
of at least a majority of the then outstanding shares of the Series B Preferred
Stock or (b) issue any shares of Interim Series B Preferred Stock.
23
7. REGISTRATION RIGHTS
The Purchasers shall have the right to register their Registrable
Securities in accordance with the following provisions:
7.01. Demand Registrations.
(a) At any time and from time to time commencing on the earlier of (i) the
fifth anniversary of the Funding Date, and (ii) the date which is six months
after the Initial Public Offering, upon the written request of the Holders of at
least 50% of the Registrable Securities (the "Initiating Holders") that the
Company effect the Registration under the Securities Act (such a written request
being hereinafter referred to as a "Demand Registration") of any of the
Registrable Securities, the Company will promptly give written notice to all
other Holders of Registrable Securities that a Demand Registration has been
received. For a period of 20 days following delivery of such notice, the other
Holders of Registrable Securities may request that the Company also register
their Registrable Securities and after the expiration of such 20 day period, the
Company shall notify all Holders of Registrable Securities of the number of
Registrable Securities to be registered. Thereupon, the Company will use its
reasonable best efforts to cause the prompt Registration under the Securities
Act, subject to the provisions of this Section 7, of all Registrable Securities
which the Holders thereof have requested the Company to register, and in
connection therewith, prepare and file on such appropriate form as the Company,
in its reasonable discretion, shall determine, a Registration Statement under
the Securities Act to effect such Registration.
With respect to any Registration Statement filed, or to be filed, pursuant
to this Section 7.01(a) or Section 7.03 below, if the Company shall furnish to
the Holders of Registrable Securities a certified resolution of the Board of
Directors stating that in the Board of Directors' good faith judgment it would
(because of the existence of, or in anticipation of, any acquisition or
financing, merger, sale of assets, recapitalization or other similar corporate
activity, or the unavailability for reasons beyond the Company's control of any
required audited financial statements, or any other event or condition of
similar significance to the Company) be materially disadvantageous (a
"Disadvantageous Condition") to the Company or its stockholders for such a
Registration Statement to be maintained Effective, or to be filed and become
Effective, and setting forth the general reasons for such judgment, the Company
shall be entitled to cause such Registration Statement to be withdrawn and the
effectiveness of such Registration Statement terminated, or, in the event no
Registration Statement has yet been filed, shall be entitled not to file any
such Registration Statement, until such Disadvantageous Condition no longer
exists (notice of which the Company shall promptly deliver to all Holders of
Registrable Securities); provided that the Company shall be entitled to withdraw
or delay the filing of a Registration Statement in connection with a
Disadvantageous Condition only once during any twelve month period. Upon receipt
of any such notice of a Disadvantageous Condition, such Holders of Registrable
Securities will forthwith
24
discontinue use of the disclosure document contained in such Registration
Statement and, if so directed by the Company, each such Holder will deliver to
the Company all copies, other than permanent file copies then in such Holder's
possession, of the disclosure document then covering such Registrable Securities
current at the time of receipt of such notice, and, in the event no Registration
Statement has yet been filed, all drafts of the disclosure document covering
such Registrable Securities. In the event that the Company shall give any notice
of a Disadvantageous Condition, the Company shall at such time as it in good
▇▇▇▇▇ ▇▇▇▇▇ appropriate file a new Registration Statement covering the
Registrable Securities that were covered by such withdrawn Registration
Statement, and shall use its reasonable best efforts to file such new
Registration Statement within 90 days of receipt of the resolution by the
Holders of Registrable Securities, and such Registration Statement shall be
maintained Effective for such time as may be necessary so that the period of
effectiveness of such new Registration Statement, when aggregated with the
period during which such initial Registration Statement was Effective, shall be
such time as may be otherwise required by Section 7.01(c).
The Holders of a majority of the Registrable Securities requested to be
registered may, at any time prior to the Effective Date of the Registration
Statement relating to such Registration, revoke such request, without liability
to any of the other Holders of Registrable Securities, by providing a written
notice to the Company revoking such request.
(b) Number of Registrations: Expenses. The Company shall not be obligated
to effect more than two Registrations of Registrable Securities pursuant to
requests from the Holders of Registrable Securities under this Section 7.01
during the term of this Agreement. The Company shall pay all Registration
Expenses in connection with the two Registrations which the Holders of
Registrable Securities are entitled to request pursuant to this Section 7.01.
However, each Holder of Registrable Securities shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to this Section
7.01. Notwithstanding any other provisions contained in this Section 7.01, the
Company shall not be required to register any Registrable Securities pursuant to
an Effective Registration Statement in connection with a request for such
Registration made in accordance with this Section 7.01 if any previous
Registration Statement became Effective less than 180 days prior to such
request.
(c) Effective Registration Statement. A Registration requested pursuant to
this Section 7.01 shall not be deemed to have been effected unless the
Registration Statement relating thereto (i) has become Effective under the
Securities Act and all of the Registrable Securities of the Holders thereof
included in such Registration have actually been sold thereunder, and (ii) has
remained Effective for a period of at least 180 days (or such shorter period in
which all Registrable Securities included in such Registration have actually
been sold thereunder); provided, however, that if any Effective Registration
Statement requested pursuant to this Section 7.01
25
is discontinued in connection with a Disadvantageous Condition, such
Registration Statement shall not be included as one of the Registrations which
may be requested pursuant to this Section 7.01; provided further, that if after
any Registration Statement requested pursuant to this Section 7.01 becomes
Effective (x) such Registration Statement is subject to any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court solely due to the actions or omissions to act of the Company or
(y) less than 100% of all of the Registrable Securities included in such
Registration have been sold thereunder, such Registration Statement shall not be
included as one of the Registrations which such Holders of Registrable
Securities are entitled to request pursuant to Section 7.01(b).
(d) Selection of Underwriters. If any requested Registration pursuant to
this Section 7.01 is in the form of an underwritten offering, the Company shall
have the right to select the investment banker and manager or co-managers that
will administer the offering, subject to the approval of the Holders holding a
majority of the Registrable Securities in respect of which Registration has been
requested.
(e) Priority in Requested Registrations. If a requested Registration
pursuant to this Section 7.01 involves an underwritten offering and the managing
underwriter shall advise the Company that, in its view, the number of equity
securities requested to be included in such Registration exceeds the largest
number of securities which can be sold without having an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such Registration (i) first, Registrable Securities proposed to
be registered by Holders thereof, pro rata based on the number of securities
proposed to be registered by each such Holder and (ii) second, securities that
the Company proposes to issue and sell for its own account and all other
securities proposed to be registered by the Holders thereof, pro rata based on
the number of securities proposed to be registered by each such Person;
provided, however, that if in any such underwritten offering the Company
includes in such Registration Statement less than 100% of the Registrable
Securities requested to be included therein by any Holder thereof, then such
Registration Statement shall not be included as one of the Registrations which
the Holders of Registrable Securities are entitled to request pursuant to
Section 7.01(b).
7.02. Incidental Registration.
(a) If the Company at any time proposes to register any of its equity
securities under the Securities Act (other than a Registration (i) relating to
shares of Common Stock issuable upon exercise of employee stock options or in
connection with any employee benefit or similar plan of the Company, (ii) in
connection with an acquisition by the Company of another company, or (iii)
pursuant to Section 7.01) in a manner which would permit Registration of
Registrable Securities for sale to the public under the Securities Act, it shall
each such time, subject to the provisions of Section 7.02(b), give prompt
written notice to all Holders of record of Registrable Securities of its
intention to do so and of such Holders' rights under this Section 7.02, at least
20 days prior to the anticipated filing date of the Registration Statement
26
relating to such Registration. Such notice shall offer all such Holders the
opportunity to include in such Registration Statement such number of Registrable
Securities as each such Holder may request. Upon the written request of any such
Holder made within 10 days after the receipt of the Company's notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such Holder and the intended method of disposition thereof), the
Company will use its reasonable best efforts to effect the Registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by the Holders thereof; provided, that (x) if such
Registration involves an underwritten offering, all Holders of Registrable
Securities requesting to be included in the Company's Registration must sell
their Registrable Securities to the underwriters selected by the Company on the
same terms and conditions as apply to the Company; and (y) if, at any time after
giving written notice of its intention to register any securities pursuant to
this Section 7.02(a) and prior to the Effective Date of the Registration
Statement filed in connection with such Registration, the Company shall
determine for any reason not to register such securities, the Company shall give
written notice to all Holders of Registrable Securities and shall thereupon be
relieved of its obligation to register any Registrable Securities in connection
with such Registration (without prejudice, however, to rights of the Holders of
Registrable Securities under Section 7.01). If a Registration pursuant to this
Section 7.02(a) involves an underwritten public offering, any Holder of
Registrable Securities requesting to be included in such Registration may elect,
in writing prior to the Effective Date of the Registration Statement filed in
connection with such Registration, not to register such Registrable Securities
in connection with such Registration. No Registration effected under this
Section 7.02 shall relieve the Company of its obligations to effect
Registrations upon request under Section 7.01 or Section 7.03. The Company shall
pay all Registration Expenses in connection with each Registration of
Registrable Securities requested pursuant to this Section 7.02. However, each
Holder of Registrable Securities shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder's Registrable Securities pursuant to a Registration Statement
effected pursuant to this Section 7.02.
(b) Priority in Incidental Registrations. If a Registration pursuant to
this Section 7.02 involves an underwritten offering and the managing underwriter
advises the Company that, in its good faith view, the number of equity
securities (including all Registrable Securities) which the Company, the Holders
of Registrable Securities and any other persons intend to include in such
Registration exceeds the largest number of securities which can be sold without
having an adverse effect on such offering, including the price at which such
Registrable Securities can be sold, the Company will include in such
Registration (i) first, securities that the Company proposes to issue and sell
for its own account, (ii) second, Registrable Securities proposed to be
registered by the Holders thereof and the Special Preferred Holders, pro rata
based on the number of securities proposed to be registered by each such Person
and (iii) third, all other securities proposed to be registered by the Holders
thereof, pro rata based on the number of securities proposed to be registered by
each such Person.
27
7.03. Registrations on Form S-3. In addition to the rights provided the
Holders of Registrable Securities in Section 7.01 and Section 7.02, if the
registration of Registrable Securities under the Securities Act can be effected
on Form S-3 (or any similar form promulgated by the Commission), then upon the
written request of the Initiating Holders, the Company will so notify each
Holder of Registrable Securities, including each Holder who has a right to
acquire Registrable Securities, and then will, as expeditiously as possible, use
its reasonable best efforts to effect qualification and registration under the
Securities Act on Form S-3 of all or such portion of the Registrable Securities
as the Holder or Holders shall specify; provided, however, the Company shall not
be required to effect a registration pursuant to this Section 7.03 unless the
market value of the Registrable Securities to be sold in any such Registration
shall be estimated to be at least $5,000,000 at the time of filing such
Registration Statement; and further provided that the Company shall not be
required to effect more than one Registration under this Section 7.03 during any
twelve (12) month period. The Company shall pay all Registration Expenses in
connection with each Registration of Registrable Securities requested pursuant
to this Section 7.03. However, each Holder of Registrable Securities shall pay
all underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of such Holder's Registrable Securities pursuant to a
Registration Statement effected pursuant to this Section 7.03.
7.04. Holdback Agreements.
(a) If any Registration of Registrable Securities shall be in connection
with an underwritten public offering, each Holder of Registrable Securities
agrees not to effect any sale or distribution, including any private placement
or any sale pursuant to Rule 144 or any successor provision, under the
Securities Act, of any Registrable Securities, and not to effect any such sale
or distribution of any other equity security of the Company or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (in each case, other than as part of such underwritten public offering)
during the seven days prior to, and during the 90 day period which begins on the
Effective Date of such Registration Statement (except as part of such
Registration) provided that each Holder of Registrable Securities has received
written notice of such Registration at least two Business Days prior to the
anticipated beginning of the seven day period referred to above.
(b) If any Registration of Registrable Securities shall be in connection
with an underwritten public offering, the Company agrees (i) not to effect any
sale or distribution of any of its equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than any such sale or distribution of such securities in
connection with any merger or consolidation by the Company or any Affiliate or
the acquisition by the Company or an Affiliate of the Company of the capital
stock or substantially all the assets of any other Person or in connection with
an employee stock ownership or other benefit plan) during the seven days prior
to, and during the 90 day period which begins on, the Effective Date of such
Registration Statement (except as part of such Registration)
28
and (ii) that any agreement entered into after the date hereof pursuant to which
the Company issues or agrees to issue any privately placed equity securities
shall contain a provision under which the Holders of such securities agree not
to effect any sale or distribution of any such securities during the period
referred to in the foregoing clause (i), including any sale pursuant to Rule
144, or any successor provision, under the Securities Act (except as part of
such Registration, if permitted).
7.05. Registration Procedures. In connection with any offering of
Registrable Securities registered pursuant to this Section 7, the Company shall:
(a) Prepare and file with the Commission within 90 days after receipt of a
request for Registration, a Registration Statement on any form for which the
Company then qualifies and which counsel for the Company shall deem appropriate,
and which form shall be available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof, and use its
reasonable best efforts to cause such Registration Statement to become and
remain Effective as provided herein, provided that before filing with the
Commission a Registration Statement or disclosure document constituting part of
a Registration Statement or any amendments or supplements thereto, the Company
will (x) furnish to one counsel selected by the Holders of a majority of the
Registrable Securities covered by such Registration Statement copies of all such
documents proposed to be filed for said counsel's review and comment and (y)
notify each Holder of Registrable Securities covered by such Registration
Statement of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(b) Prepare and file with the Commission such amendments and supplements to
such Registration Statement and any disclosure document constituting part of
such Registration Statement used in connection therewith as may be necessary to
keep Effective such Registration Statement for a period of not less than nine
months (or one year in the case of a Registration pursuant to Section 7.03) or
such shorter period which will terminate when all Registrable Securities covered
by such Registration Statement have been sold (but not before the expiration of
the 90 day period, if applicable, referred to in Section 4(3) of the Securities
Act and Rule 174 under the Securities Act, or any successor thereto, if
applicable), and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement.
(c) Furnish to each Holder and each underwriter, if any, of Registrable
Securities covered by such Registration Statement such number of copies of such
Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), and the disclosure document included in such
Registration Statement (including each preliminary disclosure document), in
conformity with the requirements of the Securities Act, and such other documents
as any Holder
29
of Registrable Securities may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder.
(d) Use its best efforts to register or qualify such Registrable Securities
under such other state securities or "blue sky" laws of such jurisdictions as
any Holder, and underwriter, if any, of Registrable Securities covered by such
Registration Statement reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such Holder and
each underwriter, if any, to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such Holder; provided that the Company will
not be required to (x) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
7.05(d), (y) subject itself to taxation in any such jurisdiction or (z) consent
to general service of process in any such jurisdiction.
(e) Use its best efforts to cause the Registrable Securities covered by
such Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Holder or Holders thereof
to consummate the disposition of such Registrable Securities.
(f) Immediately notify each Holder of such Registrable Securities at any
time when a disclosure document relating thereto is required to be delivered
under the Securities Act of the happening of any event which comes to the
Company's attention if as a result of such event the disclosure document
included in such Registration Statement contains 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, and promptly prepare
and furnish to such Holder a supplement or amendment to such disclosure document
so that, as thereafter delivered to the offerees of such Registrable Securities,
such disclosure document will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(g) Use its reasonable best efforts to cause all such Registrable
Securities to be listed on a national securities exchange (including NASDAQ) and
on each securities exchange on which similar securities issued by the Company
may then be listed, and enter into such customary agreements including a listing
application and indemnification agreement in customary form, and to provide a
transfer agent and registrar for such Registrable Securities covered by such
Registration Statement no later than the Effective Date of such Registration
Statement.
(h) Enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as the Holders of a
majority of the Registrable Securities being covered by such Registration
Statement or the underwriters retained by such Holders, if any, reasonably
request in order to
30
expedite or facilitate the disposition of such Registrable Securities, including
customary representations, warranties, indemnities and agreements.
(i) Make available for inspection by any Holder of Registrable Securities
covered by such Registration Statement, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, "Records"), if
any, as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's and its Affiliates' officers,
directors and employees to supply all information and respond to all inquiries
reasonably requested by any such Inspector in connection with such Registration
Statement.
(j) Use its reasonable best efforts to obtain a "cold comfort" letter from
the Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as the Holders
of a majority in interest of the Registrable Securities being sold reasonably
request.
(k) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to the Holders of Registrable
Securities, as soon as reasonably practicable, an earnings statement covering a
period of at least twelve months, beginning with the first month after the
Effective Date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
It shall be a condition precedent to the obligation of the Company to take
any action with respect to securities of a Holder of Registrable Securities that
such Holder shall furnish to the Company such information regarding the
securities held by such Holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required in connection with
the action taken by the Company.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 7.05(f), such Holder will forthwith discontinue disposition of
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended disclosure document contemplated by Section 7.05(f) and,
if so directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies (including, without limitation, any and all
drafts), other than permanent file copies, then in such Holder's possession, of
the disclosure document covering such Registrable Securities current at the time
of receipt of such notice. In the event the Company shall give any such notice,
the period mentioned in Section 7.05(b) shall be extended by the greater of (x)
three months or (y) the number of days during the period from and including the
date of the giving of such notice pursuant to Section 7.05(f) to and including
the date when each Holder of Registrable Securities covered
31
by such Registration Statement shall have received the copies of the
supplemented or amended disclosure document contemplated by Section 7.05(f).
7.06. Indemnification.
(a) Indemnification by the Company. In the event of any Registration of any
securities of the Company under the Securities Act pursuant to this Agreement,
the Company will indemnify and hold harmless, to the full extent permitted by
law, each of the Holders of any Registrable Securities covered by such
Registration Statement, their respective directors and officers, general
partners, limited partners and managing directors, each other person who
participates as an underwriter in the offering or sale of such securities and
each other person, if any, who controls, is controlled by or is under common
control with any such Holder or any such underwriter within the meaning of the
Securities Act (and directors, officers, controlling persons, partners and
managing directors of any of the foregoing), against any and all losses, claims,
damages or liabilities, joint or several, and expenses (including any amounts
paid in any settlement effected with the Company's consent, which consent will
not be unreasonably withheld) to which such Holder, any such director, officer,
general or limited partner, managing director, any such underwriter or
controlling person may become subject under the Securities Act, state securities
or "blue sky" laws, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) or
expenses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained, on the Effective Date thereof,
in any Registration Statement under which such securities were registered under
the Securities Act, any preliminary, final or summary disclosure document
contained therein, or any amendment or supplement thereto, (ii) any omission or
alleged omission to state in such Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of any
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with any
such Registration. The Company shall reimburse each such Holder and each such
director, officer, general partner, limited partner, managing director or
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending such
loss, claim, liability, action or proceeding, provided, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or amendment or supplement
thereto or in any such preliminary, final or summary disclosure document in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Holder in its capacity as a
Holder of Registrable Securities in the Company or any such director, officer,
general or limited partner, managing director or underwriter specifically
stating that it is for use in the preparation thereof; and,
32
provided further, that the Company shall not be liable to any Holder of
Registrable Securities, any person who participates as an underwriter in the
offering or sale of Registrable Securities, if any, or any other person, if any,
who controls such underwriter within the meaning of the Securities Act, pursuant
to this Section with respect to any preliminary disclosure document or the final
disclosure document or the final disclosure document as amended or supplemented
as the case may be, to the extent that any such loss, claim, damage or liability
of such underwriter or controlling person results from the fact that such
underwriter sold Registrable Securities to a person to whom there was not sent
or given, at or prior to the written confirmation of such sale, a copy of the
final disclosure document or of the final disclosure document as then amended or
supplemented, whichever is most recent, if the Company has previously furnished
copies thereof to such underwriter and such final disclosure document, as then
amended or supplemented, had corrected any such misstatement or omission. The
indemnity provided for herein shall remain in full force and effect regardless
of any investigation made by or on behalf of such Holder or any such director,
officer, general partner, limited partner, managing director, underwriter or
controlling person and shall survive the transfer of such securities by such
Holder.
(b) Indemnification by the Holders of Registrable Securities and
Underwriters. The Company may require, as a condition to including any
Registrable Securities in any Registration Statement filed in accordance with
the provisions hereof, that the Company shall have received an undertaking
reasonably satisfactory to it from the Holders of such Registrable Securities or
any underwriter, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in paragraph (a) above) the Company and its directors,
officers, controlling persons and all other prospective sellers and their
respective directors, officers, general and limited partners, managing
directors, and their respective controlling persons with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
such Registration Statement, any preliminary, final or summary disclosure
document contained therein, or any amendment or supplement, if such untrue
statement or untrue alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company or its representatives through an instrument duly executed by or on
behalf of such Holder or underwriter specifically stating that it is for use in
the preparation of such Registration Statement, preliminary, final or summary
disclosure document or amendment or supplement, or a document incorporated by
reference into any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any of the Holders of Registrable Securities, underwriters or any of their
respective directors, officers, general or limited partners, managing directors
or controlling persons and shall survive the transfer of such securities by such
Holder, provided, however, that no such Holder shall be liable in the aggregate
for any amounts exceeding the product of the sale price per Registrable Security
and the number of Registrable Securities being sold pursuant to such
Registration Statement or disclosure document by such Holder.
33
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 7.06, such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, promptly give written notice to the
indemnifying party of the commencement of such action, provided that the failure
of any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subsections of this
Section, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties exists in
respect of such claim, the indemnifying party will be entitled to participate in
and, jointly with any other indemnifying party similarly notified, to assume the
defense thereof, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defense thereof, and the
indemnifying party will not be subject to any liability for any settlement made
without its consent (which consent shall not be unreasonably withheld). No
indemnifying party will 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. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel in any single
jurisdiction for all parties indemnified by such indemnifying party with respect
to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels as may be reasonably necessary. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party will have the right to retain, at
its own expense, counsel with respect to the defense of a claim.
(d) Other Indemnification. Indemnification similar to that specified in the
preceding subsections of this Section 7.06 (with appropriate modifications)
shall be given by the Company and each Holder of Registrable Securities with
respect to any required Registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
(e) Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in this Section
is for any reason held to be unenforceable although applicable in accordance
with its terms,
34
the Company, the Holders of Registrable Securities and the underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement incurred by the Company, the
Holders of Registrable Securities and the underwriters, in such proportions that
the underwriters are responsible for that portion represented by the percentage
that the underwriting discount appearing in the disclosure document bears to the
initial public offering price appearing therein and the Company and the Holders
of Registrable Securities are responsible for the balance; provided, however,
that no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. As between the
Company and the Holders of Registrable Securities, such parties shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect (x) the relative benefits received by the Company, on the
one hand, and the Holders of the Registrable Securities included in the offering
on the other hand, from the offering of the Registrable Securities and any other
securities included in such offering, and (y) the relative fault of the Company,
on the one hand, and the Holders of the Registrable Securities included in the
offering, on the other, with respect to the statements or omissions which
resulted in such loss, liability, claim, damage or expense, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Holders of the
Registrable Securities on the other, with respect to such offering shall be
deemed to be in the same proportion as the sum of the total purchase price paid
to the Company in respect of the Registrable Securities plus the total net
proceeds from the offering of any other securities included in such offering
(before deducting expenses) received by the Company bears to the amount by which
the total net proceeds from the offering of Registrable Securities (before
deducting expenses) received by the Holders of the Registrable Securities with
respect to such offering exceeds the purchase price paid to the Company in
respect of the Registrable Securities, and in each case the net proceeds
received from such offering shall be determined as set forth in the disclosure
document. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders of the Registrable Securities, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section were to be determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to herein. Notwithstanding
anything to the contrary contained herein, the Company and the Holders of
Registrable Securities agree that any contribution required to be made by any
Holder pursuant to this Section 7.06(e) shall not exceed the net proceeds from
the offering of Registrable Securities (before deducting expenses) received by
such Holder with respect to such offering. For purposes of this Section, each
Person, if any, who controls a Holder of Registrable Securities or an
underwriter within the
35
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as such Holder or underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as the Company.
7.07. Rule 144. At all times after a public offering of any of the
Company's securities, the Company agrees that it will file in a timely manner
all reports required to be filed by it pursuant to the Exchange Act, and, if at
any time the Company is not required to file such reports, it will make
available to the public, to the extent required to permit the sale of Shares by
any Holder of Registrable Securities pursuant to Rule 144 under the Securities
Act, current information about itself and its activities as contemplated by Rule
144 under the Securities Act, as such Rule may be amended from time to time.
Notwithstanding the foregoing, the Company may deregister any class of its
equity securities under Section 12 of the Exchange Act or suspend its duty to
file reports with respect to any class of its securities pursuant to Section
15(d) of the Exchange Act if it is then permitted to do so pursuant to the
Exchange Act and the rules and regulations thereunder.
8. RIGHT OF FIRST OFFER
8.01. Right of First Offer. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (a) shares of Common Stock, (b) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (c) any convertible debt security of the Company including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (d) any security of the
Company that is a combination of debt and equity, or (e) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any such equity
security or any such debt security of the Company, the Company shall, in each
case, first offer to sell such securities (the "Offered Securities") to those
Purchasers then holding capital stock of the Company (the "Offerees") as
follows: the Company shall offer to sell to each Offeree (x) an amount of the
Offered Securities (the "Basic Amount") sufficient to allow each Offeree to
maintain a proportional interest in the Company equal to a fraction, (i) the
numerator of which is the number of shares of Common Stock (including for the
purposes of such calculation the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock or upon conversion or exercise of
other securities or options of the Company) then held by such Offeree and (ii)
the denominator of which is the total number of shares of Common Stock issued
and outstanding and the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock or upon the conversion or exercise of
other securities or options of the Company, determined immediately prior to the
issue, sale or exchange of the Offered Securities, and (y) such additional
portion of the Offered Securities as such Offeree shall indicate it will
purchase should the other Offerees subscribe for less than their Basic Amounts
(the "Undersubscription Amount"), at a price and on such other terms
36
as applicable to such issuance, sale or exchange of Offered Securities. Such
terms and price, and the Offerees' respective Basic Amounts, shall be specified
by the Company in writing delivered to the Offerees (the "Offer"), which Offer
by its terms shall remain open and irrevocable for a period of 30 days from
receipt of the Offer
8.02. Notice of Acceptance. Notice of each Offeree's intention to accept,
in whole or in part, any Offer made pursuant to Section 8.01 shall be evidenced
by a writing signed by such Offeree and delivered to the Company prior to the
end of the 30-day period of such offer, setting forth such of the Offeree's
Basic Amount as such Offeree elects to purchase and, if such Offeree shall elect
to purchase all of its Basic Amount, such Undersubscription Amount as such
Offeree shall elect to purchase (the "Notice of Acceptance"). If the Basic
Amounts subscribed for by all Offerees are less than the total Offered
Securities, then each Offeree who has set forth Undersubscription Amounts in its
Notice of Acceptance shall be entitled to purchase, in addition to the Basic
Amounts subscribed for, all Undersubscription Amounts it has subscribed for;
provided, however, that should the Undersubscription Amounts subscribed for
exceed the difference between the Offered Securities and the Basic Amounts
subscribed for (the "Available Undersubscription Amount"), each Offeree who has
subscribed for any Undersubscription Amount shall purchase only that portion of
the Available Undersubscription Amount as the Undersubscription Amount
subscribed for by such Offeree bears to the total Undersubscription Amounts
subscribed for by all Offerees, subject to rounding by the Board of Directors to
the extent it reasonably deems necessary.
8.03. Conditions to Acceptances and Purchase.
(a) Permitted Sales of Refused Securities. In the event that Notices of
Acceptance are not given by the Offerees in respect of all the Offered
Securities, the Company shall have 90 days from the expiration of the 30-day
period set forth in Section 8.01 to sell all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Offerees
(the "Refused Securities") to any Person or Persons, but only for cash and
otherwise in all respects upon terms and conditions, including, without
limitation, unit price and interest rates, which are no more favorable, in the
aggregate, to such other Person or Persons or less favorable to the Company than
those set forth in the Offer.
(b) Reduction in Amount of Offered Securities. In the event the Company
shall propose to sell less than all the Offered Securities (any such sale to be
in the manner and on the terms specified in Section 8.03(a) above), then each
Offeree shall have the right, but not the obligation, to reduce the number of
shares or other units of the Offered Securities specified in its respective
Notice of Acceptance to an amount which shall be not less than the amount of the
Offered Securities which such Offeree elected to purchase pursuant to Section
8.02 multiplied by a fraction, (i) the numerator of which shall be the amount of
Offered Securities which the Company actually proposes to sell, and (ii) the
denominator of which shall be the amount of all Offered Securities. In the event
that any Offeree so elects to reduce the number or
37
amount of Offered Securities specified in its respective Notice of Acceptance,
the Company may not sell or otherwise dispose of more than the reduced amount of
the Offered Securities until such securities have again been offered to the
Offerees in accordance with Section 8.01.
(c) Closing. Upon the closing, which shall include full payment to the
Company, of the sale to such other Person or Persons of all or less than all the
Refused Securities, the Offerees shall purchase from the Company, and the
Company shall sell to the Offerees, the number of Offered Securities specified
in the Notices of Acceptance, as reduced pursuant to Section 8.03(b) if the
Offerees have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Offerees of any Offered Securities is subject in all cases
to the preparation, execution and delivery by the Company and the Offerees of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Offerees and their respective counsel.
8.04. Further Sale. In each case, any Offered Securities not purchased by
the Offerees or other Person or Persons in accordance with Section 8.03 may not
be sold or otherwise issued until they are again offered to the Offerees under
the procedures specified in Sections 8.01, 8.02 and 8.03.
8.05. Offer Participation Requirement. The rights of each Offeree under
this Section 8 shall not be afforded to such Offeree with respect to any Offer
occurring subsequent to any Offer in which such Offeree has failed to purchase
its Basic Amount so long as such Offeree shall have been afforded the right to
participate in such prior Offer to the extent of its Basic Amount and shall have
not waived its right to participate at the request of the Company.
8.06. Termination and Waiver of Right of First Offer. The rights of the
Offerees under this Section 8 shall terminate immediately prior to the
effectiveness of the Registration Statement with respect to a Qualified Public
Offering, but expressly conditioned on the consummation of a Qualified Public
Offering.
8.07. Exception. The rights of the Offerees under this Section 8 shall not
apply to the following: (a) Common Stock issued as a stock dividend to holders
of Common Stock or upon any subdivision or combination of shares of Common
Stock; (b) Series A Preferred Stock issued upon any subdivision or combination
of shares of Series A Preferred Stock; (c) Special Preferred Stock (Northern
California Division) issued upon any subdivision or combination of shares of
Special Preferred Stock (Northern California Division); (d) Series B Preferred
Stock issued as a dividend to Holders of Series B Preferred Stock or upon any
subdivision or combination of Series B Preferred Stock; (e) the Conversion
Shares or shares of Common Stock issuable upon conversion of the Special
Preferred Stock (Northern California Division); (f) 350,000 shares of Common
Stock, or options exercisable therefor, issued or to be issued under the Stock
Option Plan and any additional shares required to be issued thereunder to adjust
for any stock split, stock dividend or combination of Common Stock; (g)
38
252,500 shares of Common Stock issuable upon the exercise of the warrants held
by the former 14% Subordinated Debenture Holders and any additional shares
required to be issued thereunder to adjust for any stock split, stock dividend
or combination of Common Stock; (h) 500,000 shares of Common Stock issuable upon
the exercise of the warrants held or which may be obtained by Superior Bank FSB
and any additional shares required to be issued thereunder to adjust for any
stock split, stock dividend or combination of Common Stock; (i) 33,333 shares of
Common Stock issuable upon the conversion of the 12% Subordinated Debentures and
any additional shares required to be issued thereunder to adjust for any stock
split, stock dividend or combination of Common Stock; (j) 25,000 shares of
Common Stock issuable upon the exercise of the Buscema Options and any
additional shares required to be issued thereunder to adjust for any stock
split, stock dividend or combination of Common Stock; (k) 109,728 shares of
Common Stock issuable upon exercise of the warrants held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(other than as a former 14% Subordinated Debenture Holder) and any additional
shares required to be issued thereunder to adjust for any stock split, stock
dividend or combination of Common Stock; (l) 25,000 shares of Common Stock
issuable upon the exercise of the ▇▇▇▇▇▇▇▇▇ Options any additional shares
required to be issued thereunder to adjust for any stock split, stock dividend
or combination of Common Stock; (m) 28,242 shares of Common Stock issuable upon
the exercise of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Warrants and any additional shares required to
be issued thereunder to adjust for any stock split, stock dividend or
combination of Common Stock; and (n) 22,727 shares of Common Stock issuable to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as compensation for services performed pursuant to the Letter
Agreement, dated November 16, 1995 between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the Company.
9. DEFINITIONS AND ACCOUNTING TERMS
9.01. Certain Defined Terms. As used in this Agreement, the following
terms Shall have the following meanings:
"12% Subordinated Debenture Holders" shall mean any holder of the 12%
Subordinated Debentures.
"12% Subordinated Debentures" shall mean the 12% Convertible
Subordinated Debentures issued by the Company, maturing on May 1, 1999.
"14% Subordinated Debenture Holders" shall mean any holder of the 14%
Subordinated Debentures.
"14% Subordinated Debentures" shall mean the 14% Subordinated
Debentures, issued by the Company maturing on September 30, 1997.
"Affiliate" shall mean any employee, consultant, officer or director of
the Company or any Subsidiary or Holder of five percent (5%) or more of any
class of capital stock of the Company or any Subsidiary, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly controlled
39
by one or more of such employees, consultants, officers, directors or 5%
stockholders or members of their immediate families.
"Agreement" shall mean this Series B Preferred Stock Purchase Agreement,
including all amendments, modifications or supplements thereto.
"Applicable Conversion Value" shall have the meaning assigned to such term
in the Articles of Amendment.
"Articles of Amendment" shall have the meaning assigned to such term in
Section 4.07.
"Articles of Incorporation" shall mean the Articles of Incorporation of the
Company, including all amendments, modifications or supplements thereto.
"Available Undersubscription Amount" shall have the meaning assigned to
such term in Section 8.02.
"Basic Amount" shall have the meaning assigned to such term in Section
8.01.
"Board of Directors" shall mean the board of directors of the Company as
constituted from time to time.
"Buscema Options" shall have the meaning assigned to such term in Section
2.03.
"Business Day" shall mean any day except a Saturday, Sunday or other day on
which commercial banks in the States of New York and Florida are authorized by
law or executive order to close.
"Business Plan" shall mean, collectively, the Investment Memorandum dated
February, 1996 and the Three Year Forecast for FY1996, 1997 and 1998 dated
February 16, 1996.
"Bylaws" shall have the meaning assigned to such term in Section 4.08.
"Canaan Funds" shall mean each of Canaan Capital Limited Partnership, a
Delaware limited partnership, and Canaan Capital Offshore Limited Partnership,
C.V., a Netherlands Antilles limited partnership, or their successors and
assigns.
"CFR" shall mean the United States Code of Federal Regulations.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act or Exchange Act.
40
"Common Stock" shall mean (a) the Company's Common Stock, $.01 par value,
as authorized on the date of this Agreement, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or after the
date hereof, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies or in the absence of any provision to the contrary in
the Articles of Incorporation, be entitled to vote for the election of a
majority of directors of the Company (even though the right so to vote has been
suspended by the happening of such a contingency or provision), and (c) any
other securities into which or for which any of the securities described in (a)
or (b) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Company" shall have the meaning assigned to such term in the introductory
sentence hereof.
"Controlled Business Arrangement" shall mean any joint venture or similar
agreement or arrangement between the Company and any other Person pursuant to
which the Company provides technical support, financing or other assistance to
such arrangement.
"Conversion Shares" shall have the meaning assigned to such term in Section
1.02.
"Demand Registration" shall have the meaning assigned to such term in
Section 7.01(a).
"Disadvantageous Condition" shall have the meaning assigned to such term in
Section 7.01(a).
"Dominion" shall mean Dominion Fund III, a California limited partnership,
or their successors and assigns.
"Effective" shall mean that all requirements under the Securities Act with
respect to a Registration Statement have been satisfied and that the Commission
has officially approved the public distribution or circulation of the
Registration Statement in connection with a public offering of Registrable
Securities.
"Effective Date" shall mean the date on which a Registration Statement is
declared to be Effective.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
41
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated pursuant thereto.
"Existing Subordinated Indebtedness" shall mean the Indebtedness of the
Company identified as such on Schedule 2.08 and as in effect on the Funding
Date.
"Form S-3" shall mean such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the Commission that similarly permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
"Founders" shall mean ▇▇▇▇▇▇ Capital Corporation, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ Van Wijk, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Birdman, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Funding" shall have the meaning assigned to such term in Section 1.03.
"Funding Date" shall have the meaning assigned to such term in Section
1.03.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 2.06 (except for changes concurred in by the independent public
accountants to the Company and the Subsidiaries).
"Holder" shall mean any Purchaser owning Registrable Securities to whom
rights of a Holder under Section 7 of this Agreement have been transferred in
accordance with Section 11.05.
"Indebtedness" shall mean (a) any liability for borrowed money or evidenced
by a note or similar obligation given in connection with the acquisition of any
property or other assets (other than trade accounts payable incurred in the
ordinary course of business); (b) all guaranties, endorsements and other
contingent obligations, in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business, and
(c) the present value of any lease payments due under leases required to be
capitalized in accordance with GAAP.
"Indemnified party" shall have the meaning given such term in Section
10.02.
"Independent Division" shall mean any division of the Company or any
Subsidiary which is organized or operated pursuant to an agreement with any
other
42
Person or Persons which grants such Person or Persons an ownership interest in
or other claim to the assets, revenue or value of such Division.
"Initial Public Offering" shall mean the first offering for sale of Common
Stock for the account of the Company or for the account of any holder of
securities that has Registration Rights pursuant to an Effective Registration
Statement.
"Initiating Holders" shall have the meaning given such term in Section
7.01(a).
"Inspectors" shall have the meaning given such term in Section 7.05(i).
"Interim Series B Holder" shall mean any holder of then outstanding shares
of Interim Series B Preferred Stock.
"Interim Series B Preferred Stock" shall mean the Shares of Preferred Stock
designated Interim Series B Preferred Stock.
"Key Employee" shall mean and includes the Chairman, President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, any
executive officer of the Company or any Subsidiary with policy-making functions
including, without limitation, the head of each Subsidiary, or any other
individual so designated by the Board of Directors, and in any event shall be
deemed to include ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇.
"Margin Stock" means "margin stock" within the meaning of any regulation,
interpretation or ruling of the Board of Governors of the Federal Reserve
System, all as from time to time in effect.
"▇▇▇▇▇-▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Real Estate, Inc., a California
corporation.
"▇▇▇▇▇-▇▇▇▇▇▇▇▇ Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of March 15, 1996 between the Company and
▇▇▇▇▇-▇▇▇▇▇▇▇▇.
"Material Adverse Effect" shall mean any material adverse effect on (a) the
business, profits, properties or condition of the Company and the Subsidiaries,
taken as a whole, (b) the ability of the Company to perform its obligations
under the Agreement or any Related Agreement and (c) the binding nature,
validity or enforceability of this Agreement or any Related Agreement, which, in
each case, arises from, or reasonably could be expected to arise from, any
action or omission of action on the part of the Company or any Subsidiary or the
occurrence of any event or the existence of any fact or condition in respect of
the Company or any Subsidiary or any of their respective properties.
43
"Merger" shall mean the merger of WAM with and into the Company
pursuant to the terms of the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger dated as
of March 15, 1996 among the Company, WAM and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, including all
schedules, exhibits, annexes and amendments thereto, all waivers relating
thereto and all other side letter agreements affecting the terms thereof.
"Merger Documents" shall mean, collectively, (a) the Merger Agreement,
(b) the Articles of Amendment creating the Special Preferred Stock (Northern
California Division), (c) the Unsecured Indemnity Agreement dated as of March
15, 1996 between the Company and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, (d) the Trademark License
Agreement dated as of March 15, 1996 between the Company and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, (e)
the Rental and Services Agreement dated as of March 15, 1996 between the Company
and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, (f) the ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Registration Rights Agreement, (g)
the Articles of Merger of the Company and (h) each of the other agreements and
instruments to be executed pursuant to the terms of each such Merger Document.
"Multiemployer Plan" shall have the meaning given such term is Section
2.13.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations System.
"Noncompetition Agreement" shall have the meaning assigned to such term
in Section 4.12.
"Notice of Acceptance" shall have the meaning assigned to that term in
Section 8.02.
"Offer" shall have the meaning assigned to such term in Section 8.01.
"Offered Securities" shall have the meaning assigned to such term in
Section 8.01.
"Offerees" shall have the meaning assigned to such term in Section
8.01.
"Person" shall mean an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Plans" shall have the meaning assigned to such term in Section 2.13.
"PORTAL" shall have the meaning assigned to such term in Section 5.13.
44
"Preferred Shares" shall have the meaning assigned to such term in Section
1.01.
"Preferred Stock" shall have the meaning assigned to such term in Section
1.01.
"Proprietary Rights" means all of the following along with all income,
royalties, damages and payments thereon (including damages and payments for past
or future infringements or misappropriations thereof), the rights to ▇▇▇ and
recover for past infringements and misappropriations thereof and any and all
corresponding rights that, now or hereafter, may be secured throughout the
world: (i) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice) and any
reissues, continuations, continuations-in-part, revisions, extensions or
reexaminations thereof; (ii) trademarks, service marks, trade dress, trade names
and corporate names and registrations, renewals and applications for
registration thereof, together with the goodwill associated therewith; (iii)
copyrights and copyrightable works and registrations, renewals and applications
for registration thereof; (iv) mask works and registrations and applications for
registration thereof; (v) computer software (including all databases, data and
documentation); (vi) trade secrets and other confidential information (including
ideas, formulas, compositions, inventions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial and marketing plans and customer and supplier
lists and information), (vii) other intellectual property rights; and (viii)
copies and tangible embodiments thereof (in whatever form or medium).
"Purchaser" shall have the meaning assigned to such term in Section 1.01
and shall include the original Purchaser and any Holder of the Shares.
"Qualified Public Offering" shall mean a fully underwritten, firm
commitment public offering pursuant to an Effective Registration Statement filed
under the Securities Act of 1933, as amended, covering the offer and sale by the
Company of shares of its Common Stock in which the aggregate price paid by the
public for such shares shall equal or exceed $20,000,000 and in which the price
per share of Common Stock to the public equals or exceeds 300% of the then
Applicable Conversion Value applicable to the Series B Preferred Stock.
"▇▇▇▇▇▇▇ ▇▇▇▇▇ Warrants" shall have the meaning assigned to that term in
Section 2.03.
"Records" shall have the meaning assigned to that term in Section 7.05(i).
"Refused Securities" shall have the meaning assigned to that term in
Section 8.03(a).
45
"Stock Option Plan" shall mean any qualified or non-qualified incentive
stock option plan of the Company which is adopted by the Board of Directors,
including all amendments, supplements or modifications thereto.
"Subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries.
"Superior Bank Purchase and Sale Agreement" shall mean that certain
Purchase and Sale Agreement dated as of April 28, 1995 between the Company and
Superior Bank FSB, including all schedules, exhibits, annexes and amendments
thereto, all waivers relating thereto and all other side letter agreements
affecting the terms thereof.
"Undersubscription Amount" shall have the meaning assigned to such term in
Section 8.01.
"Voting Agreement" shall have the meaning assigned to such term in Section
4.11.
"WAM" shall mean Western America Mortgage, a California corporation.
"Warehouse Lines of Credit" shall mean collectively the lines of credit of
the Company with (i) Residential Funding Corporation pursuant to that certain
Warehousing Credit and Security Agreement dated as of April 8, 1994, as amended
by that certain First Amendment to Warehousing Credit and Security Agreement and
as further amended by that certain Second Amendment to Warehousing Credit and
Security Agreement dated as of October 26, 1995, and (ii) Superior Bank FSB
pursuant to that certain Master Purchase Agreement dated as of August 14, 1995.
9.02. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistently applied, and all
financial data submitted pursuant to this Agreement, unless otherwise specified,
shall be prepared in accordance with GAAP.
10. INDEMNIFICATION
10.01. General Indemnity. The Company agrees to indemnify and save harmless
the Purchasers and their respective directors, officers, affiliates, successors
and assigns from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation, reasonable
attorneys' fees, charges and disbursements) incurred by the Purchasers as a
result of any inaccuracy in or breach of the representations, warranties or
covenants made by the Company herein or in any of the Related Agreements. Each
Purchaser severally but not jointly
48
agrees to indemnify and save harmless the Company and its directors, officers,
affiliates, successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements) incurred by
any such Person as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Purchasers herein.
10.02. Indemnification Procedure. Any party entitled to indemnification
under this Section 10 (an "indemnified party") will give written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
promptly after the discovery by such party of any matters giving rise to a claim
for indemnification; provided that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Section 10 except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In any action, proceeding or claim which is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party exists in respect of such action, proceeding or
claim, to assume the defense thereof, with counsel reasonable satisfactory to
the indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim(or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action, proceeding or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the indemnified party which relates to such action,
proceeding or claim. The indemnifying party shall keep the indemnified party
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action, proceeding or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of its choice at its sole
cost and expense. The indemnifying party shall not be liable for any settlement
of any action, claim or proceeding effected without its written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. Anything in the Section 10 to the contrary
notwithstanding, the indemnifying party shall not, without the indemnified
party's prior written consent, settle or compromise any claim or consent to
entry of any judgement in respect thereof which imposes any future obligation on
the indemnified party or which does not include, as an
49
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party, a release from all liability in respect of such claim. The
indemnification required by this Section 10 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar right of the indemnified party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.
11. MISCELLANEOUS
11.01. No Waiver: Cumulative Remedies. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
11.02. Amendments. Waivers and Consents. Any provision in the Agreement to
the contrary notwithstanding, and except as hereinafter provided, changes in,
termination or amendments of or additions to this Agreement or any Related
Agreement may be made, and compliance with any covenant or provision set forth
herein may be omitted or waived, if the Company (a) shall obtain consent thereto
in writing from the Holders of at least a majority of the then outstanding
Shares determined on an "as if converted" basis), and (b) shall deliver copies
of such consent in writing to any Holders who did not execute such consent;
provided, that no consents shall be effective to reduce the percentage in
interest of the Shares the consent of the Holders of which is required under
this Section 11.02. Any waiver or consent may be given subject to satisfaction
of conditions stated therein and any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
11.03. Addresses for Notices. Any notice, demand, request, waiver or other
communication under this Agreement or any Related Agreement shall be in writing
and shall be deemed to have been duly given on the date of service if personally
served or on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered, return receipt requested,
postage prepaid and addressed as follows:
To the Company: First Mortgage Network, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
50
With a copy to: ▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
To any Purchaser: At its address specified on Schedule
1.01 hereto
With a copy to: LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
A party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change will
be deemed to have been given until it is actually received by the party sought
to be charged with its contents.
11.04. Costs, Expenses, and Taxes. As a condition precedent to the
Funding, the Company agrees to pay at the Funding in connection with the
preparation, execution and delivery of the Agreement and the Related Agreements
and the issuance of the Preferred Shares at the Closing, the reasonable fees and
other out-of-pocket expenses of Messrs. LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.,
which shall not exceed $40,000.00 and the reasonable fees and out-of-pocket
expenses of Messrs. Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, which shall not exceed
$10,000. In addition, the Company shall pay the reasonable fees and
out-of-pocket expenses of legal counsel, independent public accountants,
consultants and other outside experts retained by the Purchasers in connection
with any amendment or waiver to this Agreement or any Related Agreement or the
successful enforcement of this Agreement or any Related Agreement by the
Purchasers. In addition, the Company shall pay any and all stamp, or other
similar taxes payable or determined to be payable in connection with the
execution and delivery of the Agreement, the issuance of the Shares and the
other instruments and documents to be delivered hereunder or thereunder, and
agrees to save the Purchasers harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes.
11.05. Binding Effect; Assignment. This Agreement and each Related
Agreement to which it is a party shall be binding upon and inure to the benefit
of each of the Company and the Purchasers and their respective heirs, successors
and assigns, except that the Company shall not have the right to delegate its
obligations hereunder or to assign its rights hereunder or any interest herein
without the prior written consent of the Holders of at least a majority of the
then outstanding Shares (determined on an "as if converted" basis.)
51
11.06. Survival of Representations and Warranties. All representations and
warranties made in this Agreement, each Related Agreement, the Shares, or any
other instrument or document delivered in connection herewith or therewith,
shall survive the execution and delivery hereof or thereof.
1 1.07. Prior Agreements. This Agreement, each Related Agreement, the terms
of the Series B Preferred Stock, and the other agreements executed and delivered
herewith constitute the entire agreement between the parties and supersede any
prior understandings or agreements concerning the subject matter hereof.
11.08. Severability. The provisions of this Agreement, each Related
Agreement and the terms of the Series B Preferred Stock are severable and, in
the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of a provision contained in this Agreement,
any Related Agreement or the terms of the Series B Preferred Stock shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement, any Related Agreement or the terms of
the Series B Preferred Stock; but this Agreement, each Related Agreement and the
terms of the Series B Preferred Stock shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision, had never
been contained herein, and such provisions or part reformed so that it would be
valid, legal and enforceable to the maximum extent possible.
11.09. Confidentiality. Each Purchaser agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Purchaser may obtain from the Company pursuant to
financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or until
such information becomes known, to the public; provided, however, that a
Purchaser may disclose such information (a) on a confidential basis to its
attorneys, accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (b) to any prospective purchaser of any Preferred Shares or Conversion
Shares from such Purchaser as long as such prospective purchaser agrees in
writing to be bound by the provisions of this Section 11.09, (c) to any entity
controlling, controlled by or under common control with such Purchaser, or to
any partner or stockholder of a Purchaser which is a partnership or corporation,
or (d) as required by applicable law.
11.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF FLORIDA, AND WITHOUT GIVING
EFFECT TO CHOICE OF LAW PROVISIONS.
52
11.11. Headings. Article, section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
11.12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.13. Further Assurances. From and after the date of this Agreement, upon
the request of any Purchaser or the Company, each of the Company and the
Purchasers shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement, each Related
Agreement and the Shares.
11.14. Waiver. At any time prior to the Funding Date, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
granting such waiver but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or future failure.
11.15. Specific Enforcement. Each of the Purchasers and the Company
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement and each Related Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement, each
Related Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, this
being in addition to any other remedy to which they may be entitled at law or
equity.
53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
FIRST MORTGAGE NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & CEO
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
PURCHASERS:
CANAAN CAPITAL LIMITED PARTNERSHIP
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/
-------------------------------
General Partner
CANAAN CAPITAL OFFSHORE LIMITED
PARTNERSHIP C.V.
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/
-------------------------------
General Partner
DOMINION VENTURES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Managing General Partner
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
PURSUANT TO THE PROVISIONS OF SUBSECTION 517.061(11)(A)(5) OF THE FLORIDA
SECURITIES AND INVESTOR PROTECTION ACT, WHEN PURCHASES ARE MADE BY FIVE OR MORE
PERSONS IN THE STATE OF FLORIDA, THE PURCHASE OF A SECURITY BY A FLORIDA
RESIDENT IS VOIDABLE AT THE PURCHASER'S OPTION FOR A PERIOD OF THREE DAYS AFTER
THE FIRST TENDER (PAYMENT) OR CONSIDERATION IS MADE BY THE PURCHASER TO THE
ISSUER AND THE PURCHASER MAY EXERCISE THIS RIGHT TO REVOKE AND RESCIND HIS OR
HER PURCHASE OF SHARES BY GIVING WRITTEN NOTICE OF REVOCATION TO THE COMPANY
DURING SUCH PERIOD.
-----------------------------------
▇▇▇▇▇▇ Birdman
-----------------------------------
▇▇▇▇▇ Birdman
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
CITYSCAPE FINANCIAL CORP.
By:
-------------------------------
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇ PROFIT SHARING TRUST
DATED DECEMBER 9, 1983
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
PURSUANT TO THE PROVISIONS OF SUBSECTION 517.061(11)(A)(5) OF THE FLORIDA
SECURITIES AND INVESTOR PROTECTION ACT, WHEN PURCHASES ARE MADE BY FIVE OR MORE
PERSONS IN THE STATE OF FLORIDA, THE PURCHASE OF A SECURITY BY A FLORIDA
RESIDENT IS VOIDABLE AT THE PURCHASER'S OPTION FOR A PERIOD OF THREE DAYS AFTER
THE FIRST TENDER (PAYMENT) OR CONSIDERATION IS MADE BY THE PURCHASER TO THE
ISSUER AND THE PURCHASER MAY EXERCISE THIS RIGHT TO REVOKE AND RESCIND HIS OR
HER PURCHASE OF SHARES BY GIVING WRITTEN NOTICE OF REVOCATION TO THE COMPANY
DURING SUCH PERIOD.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ c
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▇▇▇▇▇ FAMILY PARTNERS, LTD.
By:
-------------------------------
Name:
Title:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
MEGO FINANCIAL CORP.
By:
-------------------------------
Name:
Title:
THE ▇▇▇▇▇▇▇▇ COMPANIES, LLC
By: /s/
-------------------------------
Name:
Title: Manager
PURSUANT TO THE PROVISIONS OF SUBSECTION 517.061(11)(A)(5) OF THE FLORIDA
SECURITIES AND INVESTOR PROTECTION ACT, WHEN PURCHASES ARE MADE BY FIVE OR MORE
PERSONS IN THE STATE OF FLORIDA, THE PURCHASE OF A SECURITY BY A FLORIDA
RESIDENT IS VOIDABLE AT THE PURCHASER'S OPTION FOR A PERIOD OF THREE DAYS AFTER
THE FIRST TENDER (PAYMENT) OR CONSIDERATION IS MADE BY THE PURCHASER TO THE
ISSUER AND THE PURCHASER MAY EXERCISE THIS RIGHT TO REVOKE AND RESCIND HIS OR
HER PURCHASE OF SHARES BY GIVING WRITTEN NOTICE OF REVOCATION TO THE COMPANY
DURING SUCH PERIOD.
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
Ex-4.7(a)
FIRST AMENDMENT TO SERIES B PURCHASE AGREEMENT (this "Amendment"), dated
as of August 31, 1997, by and among First Mortgage Network, Inc., a Florida
corporation (the "Company"); each of the persons listed as "Original Purchasers"
on the signature pages to this Agreement (individually an "Original Purchaser"
and collectively the "Original Purchasers"); and Canaan Ventures II Limited
Partnership, Canaan Ventures II Offshore C.V. and Canaan Equity L.P. (the "New
Purchasers")
WHEREAS, the Company, and each of the Original Purchasers are parties to
that certain Series B Preferred Stock Purchase Agreement, dated as of March 29,
1996 (the "Series B Purchase Agreement"); and
WHEREAS, pursuant to the Series B Purchase Agreement, the Original
Purchasers (as parties thereto) are granted certain rights, including, without
limitation, (a) the right to require the Company to register certain securities
of the Company held by them under the Securities Act, and (b) certain preemptive
rights to purchase a sufficient number of shares in certain equity issuances by
the Company to maintain their proportionate share in the Company; and
WHEREAS, (a) the New Purchasers have acquired shares of Series C
Preferred Stock, $.01 par value of the Company (the "Series C Preferred Stock"),
pursuant to those certain Agreements for Purchase and Sale effective as of
December 24, 1996, December 31, 1996 and June 30, 1997, respectively, and (b)
pursuant to that certain $1,500,000 Note Purchase Agreement, dated as of August
31, 1997, by and among the Company and the purchasers named therein, certain of
the New Purchasers will be acquiring (i) 12% Senior Subordinated Convertible
Notes of the Company which are convertible into shares of Series C Preferred
Stock and (ii) Warrants to purchase shares of Common Stock, of the Company; and
WHEREAS, the New Purchasers are affiliates of certain of the Original
Purchasers; and
WHEREAS, the parties desire to amend the Series B Purchase Agreement in
order to grant the New Purchasers the same rights under the Series B Purchase
Agreement with respect to the securities of the Company owned or acquired by
them as they would have had if they were original parties to such Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree with each other as
follows:
1. Amendment. The Series B Purchase Agreement is hereby amended as follows:
(a) Canaan Equity L.P., Canaan Ventures II Limited Partnership and Canaan
Venture II Offshore C.V. are hereby added as parties to the Agreement.
(b) The definition of the term "Purchaser" under the Series B Purchase
Agreement is hereby amended to also include any affiliate of a Purchaser which
acquires any shares of capital stock of the Company, including shares of Common
Stock issuable upon the conversion of other securities or the exercise of
options or warrants acquired by such Person.
2. Defined Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Series B Purchase
Agreement.
3. Severability. If any provisions of this Amendment shall be determined to
be illegal or unenforceable by any court of law, the remaining provisions shall
be severable and this Amendment shall be reformed and construed to the maximum
extent possible in accordance with the essential purposes and intent of this
Amendment.
4. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF FLORIDA, AND WITHOUT GIVING
EFFECT TO CHOICE OF LAW PROVISIONS.
5. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment by signing
any such counterpart.
6. Continuance of Terms of Series B Purchase Agreement. Except as provided
herein, the Series B Purchase Agreement, and each and every term thereof, shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date and year first above written.
FIRST MORTGAGE NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and CEO
ORIGINAL PURCHASERS:
CANAAN CAPITAL LIMITED PARTNERSHIP
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/
---------------------------------------
General Partner
CANAAN CAPITAL OFFSHORE LIMITED PARTNERSHIP C.V.
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/
---------------------------------------
General Partner
[SIGNATURE PAGE TO FIRST AMENDMENT
TO SERIES B PURCHASE AGREEMENT]
DOMINION FUND III
By: Dominion Partners III, Its General Partner
By: /s/
---------------------------------------
General Partner
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ FAMILY PARTNERS, LTD.
By:
---------------------------------------
Name:
Title:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO FIRST AMENDMENT
TO SERIES B PURCHASE AGREEMENT]
--------------------------------------------------
▇▇▇▇▇▇ Birdman
--------------------------------------------------
▇▇▇▇▇ Birdman
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
NEW PURCHASERS:
CANAAN EQUITY L.P.
By: Canaan Equity Partners L.L.C.
By: /s/
----------------------------------------------
Manager/Member
CANAAN VENTURES II LIMITED PARTNERSHIP
By: Canaan Venture Partners II L.P.
By: /s/
----------------------------------------------
General Partner
[SIGNATURE PAGE TO FIRST AMENDMENT
TO SERIES B PURCHASE AGREEMENT]
CANAAN VENTURES II OFFSHORE C.V.
By: Canaan Venture Partners II L.P.
By: /s/
---------------------------------------------
General Partner
[SIGNATURE PAGE TO FIRST AMENDMENT
TO SERIES B PURCHASE AGREEMENT]
Ex-4.7(b)
SECOND AMENDMENT TO SERIES B PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO SERIES B STOCK PURCHASE AGREEMENT (this
"Amendment") is dated as of January 28, 1998, by and among First Mortgage
Network, Inc., a Florida corporation (the "Corporation"), and each of the
persons listed as "Purchasers" on the signature pages to this Amendment
(individually a "Purchaser" and collectively the "Purchasers ").
WHEREAS, the Corporation and certain of the Purchasers are parties to that
Series B Preferred Stock Purchase Agreement, dated as of March 29, 1996, as
amended by the First Amendment to Series B Purchase Agreement dated as of August
31, 1997 (the "Series B Agreement"); and
WHEREAS, the corporation is negotiating the terms of a proposed merger (the
"Merger") with RM Holdings, Inc. ("RMH"), pursuant to which ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, as shareholders of RMH, will receive shares of the
Corporation's common stock; and
WHEREAS, the parties hereto desire to amend the Series B Agreement,
effective upon consummation of the Merger, to add as additional parties to the
Series B Agreement, solely for purposes of providing ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ registration rights with respect to shares of the
Company held by them;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree with each other as
follows:
1. Amendment. Upon consummation of the Merger, the Series B Agreement is
hereby amended as follows:
a. ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ are added as
parries to the Series B Agreement as "Purchasers" and "Holders," but solely
for purposes of Article 7 of the Series B Agreement, including, but not
limited to, terms defined elsewhere that are used in Article 7;
b. Section 11.03 of the Series B Agreement is amended by adding the
following names to the end thereof:
To: ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
1
To: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
To: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
2. Defined Terms. Capitalized terms used herein not otherwise defined
herein shall have the meanings assigned to such terms in the Series B Agreement.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Florida, without giving effect
to choice of law provisions.
4. Continuance of Terms of Series B Agreement. Except as provided herein,
the Series B Agreement, and each and every term thereof, shall continue in full
force and effect.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
FIRST MORTGAGE NETWORK, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
PURCHASERS:
CANAAN CAPITAL LIMITED PARTNERSHIP
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/
---------------------------------------
General Partner
CANAAN CAPITAL OFFSHORE LIMITED PARTNERSHIP C.V.
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/
---------------------------------------
General Partner
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C.
By: /s/
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Member/Manager
------------------------------------
3
DOMINION FUND III
By: Dominion Partners III, Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
Title: Managing General Partner
------------------------------------
-------------------------------------------
▇▇▇▇▇▇ BIRDMAN
-------------------------------------------
▇▇▇▇▇ BIRDMAN
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. POTAMPKIN
▇▇▇▇▇ FAMILY PARTNERS, LTD.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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DTD 12/30/76 MB FOR ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:
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Title:
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇ (for purposes of Article 7, the
definitions of terms referred to therein, and
Section 11.03 only)
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (for purposes of Article 7, the
definitions of terms referred to therein, and
Section 11.03 only)
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇ (for purposes of Article 7, the
definitions of terms referred to therein, and
Section 11.03 only)
5
Ex- 4.7(c)
THIRD AMENDMENT TO SERIES B PURCHASE AGREEMENT
THIS THIRD AMENDMENT TO SERIES B STOCK PURCHASE AGREEMENT (this
"Amendment") is dated as of May 29, 1998, by and among First Mortgage Network,
Inc., a Florida corporation (the "Corporation"), and each of the persons listed
as "Purchasers" on the signature pages to this Amendment (individually a
"Purchaser" and collectively the "Purchasers").
WHEREAS, the Corporation and certain of the Purchasers are parties to that
Series B Preferred Stock Purchase Agreement, dated as of March 29, 1996, as
amended by the First Amendment to Series B Purchase Agreement dated as of August
31, 1997 and the Second Amendment to Series B Purchase Agreement dated as of
January 28, 1998 (the "Series B Agreement"); and
WHEREAS, the Corporation is negotiating the terms of a proposed Series D
Preferred Stock Purchase Agreement ("Series D Agreement"), pursuant to which
certain Purchasers will purchase shares of the Corporation's newly established
Series D Preferred Stock ("Series D Preferred Stock"), whether for cash or in
conversion of or in exchange for the Corporation's 12% Senior Subordinated
Convertible Notes due January 31, 2003 and the Corporation's 12% Convertible
Subordinated Debentures due May 1, 1999; and
WHEREAS, the parties hereto desire to amend the Series B Agreement upon
issuance of Series D Preferred Stock ("Closing") to add the Purchasers acquiring
Series D Preferred Stock as additional parties to the Series B Agreement solely
for purposes of providing them with registration rights with respect to shares
of the Company held by them and rights of first offer on subsequent issuances of
securities by the Corporation;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree with each other as
follows:
1. Amendment. Effective upon the Closing, the Series B Agreement is hereby
amended as follows:
(a) Purchasers acquiring Series D Preferred Stock are added as parties
to the Series B Agreement as "Purchasers" and as "Holders," but solely for
purposes of Article 7, Article 8 and Section 11.05 of the Series B
Agreement, including, but not limited to, terms defined elsewhere that are
used in Article 7, Article 8 and Section 11.05; and
(b) Section 11.03 of the Series B Agreement is amended by adding the
following names to the end thereof:
To: Intuit Inc.
Attention: Mr. Nand ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 650/▇▇▇-▇▇▇▇
Facsimile: 650/944-3500
With a copy to:
▇▇▇▇▇▇ V.W. ▇▇▇▇, Esquire
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 650/▇▇▇-▇▇▇▇
Facsimile: 650/233-8386
To:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Canaan Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 203/▇▇▇-▇▇▇▇
Facsimile: 203/854-9117
▇▇▇▇▇▇ ▇▇▇▇▇
Canaan Partners
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 650/▇▇▇-▇▇▇▇
Facsimile: 650/854-8127
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Canaan Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 203/▇▇▇-▇▇▇▇
Facsimile: 203/854-9117
▇▇▇▇▇▇▇ ▇▇▇
Dominion Ventures, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 415/▇▇▇-▇▇▇▇
Facsimile: 415/394-5710
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Dominion Ventures, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 415/▇▇▇▇▇▇▇▇
Facsimile: 415/394-5710
-2-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Dominion Ventures, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 415/▇▇▇-▇▇▇▇
Facsimile: 415/394-5710
▇▇▇▇▇ ▇▇▇▇▇▇
Dominion Ventures, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 415/▇▇▇-▇▇▇▇
Facsimile: 415/394-5710
2. Defined Terms. Capitalized terms used herein not otherwise defined
herein shall have the meanings assigned to such terms in the Series B Agreement.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Florida, without giving effect
to choice of law provisions.
4. Continuance of Terms of Series B Agreement. Except as provided herein,
the Series B Agreement, and each and every term thereof, shall continue in full
force and effect.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
FIRST MORTGAGE NETWORK, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and
Chief Executive Officer
SERIES B AND C PURCHASERS:
CANAAN CAPITAL LIMITED PARTNERSHIP
By: Canaan Capital Management, L.P.
By: Canaan Capital Partners L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
General Partner
CANAAN CAPITAL OFFSHORE LIMITED PARTNERSHIP C.V.
By: Canaan Capital Management, L.P.
By: Canaan Capital Partners L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
General Partner
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Member/Manager
------------------------------------
[SIGNATURE PAGES TO:
THIRD AMENDMENT TO SERIES
B PURCHASE AGREEMENT]
-4-
CANAAN VENTURES II LIMITED PARTNERSHIP
By: Canaan Venture Partners II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: General Partner
------------------------------------
CANAAN VENTURES II OFFSHORE C.V.
By: Canaan Venture Partners, II L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: General Partner
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DOMINION FUND III
By: Dominion Partners III, Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
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Title: Managing General Partner
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▇▇▇▇▇▇ BIRDMAN
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[SIGNATURE PAGES TO:
THIRD AMENDMENT TO SERIES
B PURCHASE AGREEMENT]
-5-
▇▇▇▇▇ FAMILY PARTNERS, LTD.
By:
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Name:
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Title:
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By:
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Name:
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Title:
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SERIES D PURCHASERS (for purposes
of Article 7, Article 8, and Section 11.05
and the definitions of terms referred to
therein, and Section 11.03 of the Series B
Agreement only):
INTUIT INC.
By /s/
--------------------------------------------
Its SVP
-------------------
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C., its
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Member/Manager
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[SIGNATURE PAGES TO:
THIRD AMENDMENT TO SERIES
B PURCHASE AGREEMENT]
-6-
DOMINION FUND III
By: Dominion Partners III, its
General Partner,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------
Title: Managing General Partner
----------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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SUBORDINATED DEBENTURE HOLDERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇, AS CUSTODIAN FOR ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ ROLLOVER ▇▇▇
By /s/
-----------------------------------
Its Fiancial Consultant
----------------------------
Vice President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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[SIGNATURE PAGES TO:
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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[SIGNATURE PAGES TO:
THIRD AMENDMENT TO SERIES]
Ex-4.7(d)
FOURTH AMENDMENT TO SERIES B PURCHASE AGREEMENT
THIS FOURTH AMENDMENT TO SERIES B STOCK PURCHASE AGREEMENT (this
"Amendment") is dated as of August 31, 1998, by and among FIRST MORTGAGE
NETWORK, INC., a Florida corporation (the "Corporation"), and each of the
persons listed as "Purchasers" on the signature pages to this Amendment
(individually a "Purchaser" and collectively the "Purchasers).
WHEREAS, the Corporation and certain of the Purchasers are parties to that
Series B Preferred Stock Purchase Agreement, dated as of March 29, 1996, as
amended by the First Amendment to Series B Purchase Agreement dated as of August
31, 1997, the Second Amendment to Series B Purchase Agreement dated as of
January 28, 1998 and the Third Amendment to Series B Purchase Agreement dated as
of May 29, 1998 (the "Series B Agreement); and
WHEREAS, the Corporation desires to sell and certain Purchasers (the
"Additional Series D Purchasers") desire to purchase, for cash, shares of the
Corporation's Series D Preferred Stock ("Series D Preferred Stock); and
WHEREAS, the parties hereto desire to amend the Series B Agreement upon
issuance of additional Series D Preferred Stock ("Closing") to add the
Purchasers acquiring Series D Preferred Stock as additional parties to the
Series B Agreement for purposes of providing them with registration rights with
respect to shares of the Company held by them and rights of first offer on
subsequent issuances of securities by the Corporation;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree with each other as
follows:
1. Amendment. Effective upon the Closing, the Series B Agreement is hereby
amended as follows:
(a) Purchasers acquiring Series D Preferred Stock at the Closing (to the
extent they are not already "Purchasers" and "Holders") are added as parties to
the Series B Agreement as "Purchasers" and as "Holders," but solely for purposes
of Article 7, Article 8 and Section 11.05 of the Series B Agreement, including,
but not limited to, terms defined elsewhere that are used in Article 7, Article
8 and Section 11.05;
(b) Subsection (a) of Section 7.04 of the Series B Agreement is hereby
amended to delete the period at the end thereof, and to append the following:
"provided further that this Section 7.04(a) shall not apply to any
security purchased in such offering, or after such offering, on any
national securities exchange, through NASDAQ, or on or through any
comparable quotation system; and provided further that the hold back
obligations in this Section 7.04(a) shall apply only to the first such
Registration."
(c) Section 11.03 of the Series B Agreement is amended by adding the
following names to the end thereof
To: TCV II,, V.O.F.
Technology Crossover Ventures II, L.P.
TCV II (Q), L.P.
TCV II Strategic Partners, L.P.
Technology Crossover Ventures II, C.V
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇
and
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To: ▇▇▇▇ ▇▇▇▇▇
MSDW Business Center
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
2. Defined Terms. Capitalized terms used herein not otherwise defined
herein shall have the meanings assigned to such terms in the Series B Agreement.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Florida, without giving effect
to choice of law provisions.
4. Continuance of Terms of Series B Agreement. Except as provided herein,
the Series B Agreement, and each and every term thereof, shall continue in full
force and effect.
5. Amendments. Neither this Agreement, nor the rights provided to the
Additional Series D Purchasers hereunder, shall be amended as to such Additional
Series D Purchasers without the consent of the holders of a majority of the
shares of Series D Preferred Stock held by such Additional Series D Purchasers.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
FIRST MORTGAGE NETWORK, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and
Chief Executive Officer
SERIES B, C AND D PURCHASERS:
CANAAN CAPITAL LIMITED PARTNERSHIP
By: Canaan Capital Management, L.P.
By: Canaan Capital Partners L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
General Partner
CANAAN CAPITAL OFFSHORE LIMITED PARTNERSHIP C.V.
By: Canaan Capital Management, L.P.
By: Canaan Capital Partners L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
General Partner
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: Member/Manager
------------------------------------------
[Fourth Amendment to Series
B Purchase Agreement]
3
CANAAN VENTURES II LIMITED PARTNERSHIP
By: Canaan Venture Partners II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: General Partner
------------------------------------------
CANAAN VENTURES II OFFSHORE C.V.
By: Canaan Venture Partners II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: General Partner
------------------------------------------
DOMINION FUND III
By: Dominion Partners III, its General Partner
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------------
Title: Mg GP
------------------------------------------
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▇▇▇▇▇▇ BIRDMAN
-------------------------------------------------
▇▇▇▇▇ BIRDMAN
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Fourth Amendment to Series
B Purchase Agreement]
4
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ FAMILY PARTNERS, LTD.
By:
---------------------------------------------
Name:
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Title:
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ TRUSTEE UA
DTD 12/30/76 MB FOR ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:
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Name:
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Title:
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INTUIT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: VP of Business Development
------------------------------------------
[Fourth Amendment to Series
B Purchase Agreement]
5
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C., its
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: Member/Manager
------------------------------------------
DOMINION FUND III
By: Dominion Partners III, its General Partner,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------------
Title: GP
------------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
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[Fourth Amendment to Series
B Purchase Agreement]
6
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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[Fourth Amendment to Series
B Purchase Agreement]
7
-------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADDITIONAL SERIES D PURCHASERS (for
purposes of Article 7, Article 8, and Section
11.05 and the definitions of terms referred to therein,
and Section 11.03 of the Series B Agreement only):
TCV II, V.O.F., a Netherlands
Antilles general partnership
By: Technology Crossover Management II, L.L.C.,
its Investment General Partner
By: RBS
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.,
a Delaware limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: RBS
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer
[Fourth Amendment to Series
B Purchase Agreement]
8
TCV II (Q), L.P., a Delaware limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: RBS
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer
TCV II STRATEGIC PARTNERS, L.P.,
a Delaware limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: RBS
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, C.V.,
a Netherlands Antilles limited partnership
By: Technology Crossover Management II, L.L.C.,
its Investment General Partner
By: RBS
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer
-------------------------------------------------
▇▇▇▇ ▇▇▇▇▇
[Fourth Amendment to Series
B Purchase Agreement]
9
Ex-4.7(e)
FIFTH AMENDMENT TO SERIES B PURCHASE AGREEMENT
THIS FIFTH AMENDMENT TO SERIES B STOCK PURCHASE AGREEMENT (this
"Amendment") dated as of February 9, 1999, is by and among Mortgage. Com, Inc.
(formerly known as First Mortgage Network, Inc.), a Florida corporation (the
"Corporation"), and each of the persons listed as "Purchasers* on the signature
pages to this Amendment (individually a "Purchaser" and collectively, the
"Purchasers").
WHEREAS, the Corporation and the Purchasers are parties to a Series B
Preferred Stock Purchase Agreement, dated as of March 29, 1996, as amended by
the First Amendment to Series B Purchase Agreement dated as of August 31, 1997,
the Second Amendment to Series B Purchase Agreement dated as of January 28,
1998, the Third Amendment to Series B Purchase Agreement dated as of May
29, 1998, the Fourth Amendment to Series B Purchase Agreement dated as of August
31, 1998 (the "Series B Agreement"); and
WHEREAS, the parties hereto desire to amend the Series B Agreement to add
Dominion Fund IV, L.P. ("Dominion Fund IV") as an additional party to the Series
B Agreement, for purposes of providing Dominion Fund IV registration rights with
respect to shares of the Company issuable to Dominion Fund IV pursuant to
warrants dated February 9, 1999;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree with each other as
follows:
1. Amendment. The Series B Agreement is hereby amended as follows:
a. Dominion Fund IV, L.P. is added as a party to the Series B
Agreement as a "Purchaser" and as a "Holder,* solely for purposes of
Article 7 of the Series B Agreement, including, but not limited to, terms
defined elsewhere that are used in Article 7;
b. Section 11.03 of the Series B Agreement is amended by adding the
following name to the end thereof.
To: Dominion Fund IV
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. Defined Terms. Capitalized terms used herein not otherwise defined
herein shall have the meanings assigned to such terms in the Series B Agreement.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Florida, without giving effect
to choice of law provisions.
4. Continuance of Terms of Series B Agreement Except as provided herein,
the Series B Agreement, and each and every term thereof, shall continue in
full force and effect
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President - Technology Svcs. Grp.
DOMINION FUND IV, L.P.
By: Dominion Management IV, L.L.C., its
general partner
By:
-------------------------------
Managing Member
"Purchasers":
CANAAN CAPITAL LIMITED
PARTNERSHIP
By: Canaan Capital Management L.P.
By: Canaan Capital L.P.
By:
-------------------------------
General Partner
2
CANAAN CAPITAL OFFSHORE LIMITED
PARTNERSHIP, C.V.
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By:
-------------------------------
General Partner
CANAAN EQUITY L.P.
By: Canaan Equity Partners L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Member/Manager
CANAAN VENTURES II LIMITED
PARTNERSHIP
By: Canaan Venture Partners II, L.P.
By:
-------------------------------
General Partner
CANAAN VENTURES II OFFSHORE C.V.
By: Canaan Venture Partners II, L.P.
By:
-------------------------------
General Partner
3
DOMINION FUND III
By: Dominion Partners III, its General Partner
By:
------------------------------------------
Name:
Title:
INTUIT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Business Development Intuit Inc.
TCV II V.O.F., a Netherlands Antilles
general partnership
By: Technology Crossover Management II, L.L.C.,
its Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.,
a Delaware limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
4
TCV II (Q), L.P., a Delaware limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
TCV II STRATEGIC PARTNERS, L.P., a Delaware
limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, C.V.,
a Netherlands Antilles limited partnership
By: Technology Crossover Management II, L.L.C.,
its Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
5
Ex-4.7(f)
SIXTH AMENDMENT TO SERIES B PURCHASE AGREEMENT
THIS SIXTH AMENDMENT TO SERIES B STOCK PURCHASE AGREEMENT (this
"Amendment"), dated as of April 5, 1999, is by and among Mortgage. Com, Inc.
(formerly known as First Mortgage Network, Inc.), a Florida corporation (the
"Corporation"), and each of the persons listed as "Purchasers" on the signature
pages to this Amendment (individually a "Purchaser" and collectively, the
"Purchasers").
WHEREAS, the Corporation and the Purchasers are parties to a Series B
Preferred Stock Purchase Agreement, dated as of March 29, 1996, as amended by
the First Amendment to Series B Purchase Agreement dated as of August 31, 1997,
the Second Amendment to Series B Purchase Agreement dated as of January 28,
1998, the Third Amendment to Series B Purchase Agreement dated as of May 29,
1998, the Fourth Amendment to Series B Purchase Agreement dated as of August 31,
1998 and the Fifth Amendment to Series B Purchase Agreement dated as of
February 9, 1999 (the "Series B Agreement"); and
WHEREAS, the parties hereto desire to amend the Series B Agreement to add
Telebanc Capital Markets, Inc. ("Telebanc") as an additional party to the Series
B Agreement, for purposes of providing Telebanc registration rights with respect
to shares of the Company issuable to Telebanc pursuant to warrants dated on or
about April 5, 1999;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree with each other as
follows:
1. Amendment. The Series B Agreement is hereby amended as follows:
a. Telebanc Capital Markets, Inc. is added as a party to the Series B
Agreement as a "Purchaser" and as a " Holder," solely for purposes of
Article 7 of the Series B Agreement, including, but not limited to, terms
defined elsewhere that are used in Article 7;
b. Section 11.03 of the Series B Agreement is amended by adding the
following name to the end thereof
To: Telebanc Capital Markets, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
2. Defined Terms. Capitalized terms used herein not otherwise defined
herein shall have the meanings assigned to such terms in the Series B Agreement.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Florida, without giving effect
to choice of law provisions.
4. Continuance of Terms of Series B Agreement. Except as provided herein,
the Series B Agreement, and each and every term thereof, shall continue in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive Officer
TELEBANC CAPITAL MARKETS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Title: CEO-TCM
----------------------------
"Purchasers":
DOMINION FUND IV, L.P.
By: Dominion Management IV, L.L.C., its
general partner
By: /s/
-------------------------------
Managing Member
CANAAN CAPITAL LIMITED
PARTNERSHIP
By: Canaan Capital Management L.P.
By: Canaan Capital L.P.
By: /s/
-------------------------------
General Partner
2
CANAAN CAPITAL OFFSHORE LIMITED
PARTNERSHIP, C.V.
By: Canaan Capital Management L.P.
By: Canaan Capital Partners L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
General Partner
CANAAN EQUITY L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Member/Manager
CANAAN VENTURES II LIMITED
PARTNERSHIP
By: Canaan Venture Partners II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
General Partner
CANAAN VENTURES II OFFSHORE C.V.
By: Canaan Venture Partners II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
General Partner
3
DOMINION FUND III
By: Dominion Partners III, its General Partner
By:
------------------------------------------
Name:
Title:
INTUIT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: V.P., Business Development Intuit, Inc.
TCV II V.O.F., a Netherlands Antilles
general partnership
By: Technology Crossover Management II, L.L.C.,
its Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.,
a Delaware limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
4
TCV II (Q), L.P., a Delaware limited
partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
TCV II STRATEGIC PARTNERS, L.P., a Delaware
limited partnership
By: Technology Crossover Management II, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II C.V.,
a Netherlands Antilles limited partnership
By: Technology Crossover Management II, L.L.C.,
its Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
5