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EXHIBIT 10.3
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT ("Standstill Agreement") is made and entered
into effective as of November 21, 1996 by and among SEARCH CAPITAL GROUP, INC.,
a Delaware corporation ("Search"), XXXXX XXXX ("Xxxx"), XXXXX XXXXX ("Xxxxx"),
XXXX FINANCIAL GROUP, INC. ("HFG"), a Delaware corporation, PHOENIX/INWOOD
CORPORATION ("PIC"), a Texas corporation, and HALL PHOENIX/INWOOD, LTD.
("HPI"), a Texas limited partnership. (Hall, Levey, HFG, PIC, and HPI are
sometimes collectively referred to as the "Stockholders" and individually as a
"Stockholder").
RECITALS
WHEREAS, the Stockholders own, either jointly or severally, some or
all of the "Stockholder Search Securities" (as defined below)
WHEREAS, certain disputes have arisen between Search and the
Stockholders and certain lawsuits have been filed regarding such disputes in
both Delaware and Texas.
WHEREAS, Search and the Stockholders have agreed to resolve such
disputes and lawsuits as more fully set forth in that certain Compromise and
Settlement Agreement dated November ___, 1996 ("Settlement Agreement") by and
among Search and the Stockholders.
WHEREAS, pursuant to the Settlement Agreement, Search and the
Stockholders have agreed to enter into this Standstill Agreement on the terms
and conditions below.
NOW, THEREFORE, in consideration of the foregoing recitals, and the
covenants, payments of money or other consideration, and agreements set forth
below, the receipt and sufficiency of which is hereby acknowledged and agreed
to, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used in this Standstill Agreement
shall have the meaning set forth in the Settlement Agreement except for the
capitalized terms specifically set forth below:
a. "Effective Date" means the date upon which this Agreement has
been fully signed by all of the parties hereto as noted below under
the parties' respective signatures.
b. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all rules promulgated thereunder as in effect on the
Effective Date.
c. "Group" has the same meaning as the term "group" set forth in
Section 13(d)(3) of the Exchange Act.
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d. "Person" means any individual, firm, corporation, partnership
or other entity, including without limitation, any "person" or "group"
within the meaning of Section 13(d) under the Exchange Act.
e. "Search Affiliate" means each "affiliate" or "associate" of
Search (as such terms are defined in Rule 12b-2 under the Exchange Act
as of the Effective Date), whether or not such Person is such an
Affiliate as of the Effective Date, and each officer, director,
employee, shareholder, consultant, agent, representative, successor
and assign, of either Search or any Search Affiliate; excluding,
however, the Stockholders and any Stockholder Affiliate.
f. "Search Securities" means all common stock, preferred stock,
options, warrants, notes, and debentures (whether senior or
subordinated, secured or unsecured, convertible or nonconvertible),
and any other securities, which have been issued prior to the
Effective Date and/or which are issued during the Standstill Period,
by Search or any member of the Search Group.
g. "Standstill Period" means the period of time beginning with
the Effective Date and ending on the earlier of (i) the fifth (5th)
anniversary of the Effective Date or (ii) an Event of Default on the
Subordinated Note.
h. "Stockholder Affiliate" means each "affiliate" or "associate"
of a Stockholder (as such terms are defined in Rule 12b-2 under the
Exchange Act as of the Effective Date), whether or not such Person is
such an Affiliate as of the Effective Date, and each officer,
director, employee, shareholder, consultant, agent, representative,
successor and assign, of either a Stockholder or any Stockholder
Affiliate; excluding, however, Search and any Search Affiliate.
i. "Stockholder Documents" means any and all agreements,
contracts or other arrangements to which a Stockholder and/or a
Stockholder Affiliate is a party along with Search and/or a Search
Affiliate.
j. "Stockholder Search Securities" means all Search Securities
owned, possessed, or acquired by all of the Stockholders and/or any
Stockholder Affiliate prior to the Effective Date.
2. STANDSTILL COVENANTS OF STOCKHOLDERS. During the Standstill Period,
the Stockholders jointly and severally covenant that the Stockholders shall
not, and the Stockholders shall cause each Stockholder Affiliate (and each such
Affiliate's own affiliates and associates), not to:
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a. No Acquisition of Securities: acquire, offer or propose to
acquire, or agree to acquire, directly or indirectly, alone or in
concert with any other Person, by purchase, exchange, gift or
otherwise, any Search Securities or direct or indirect rights,
warrants or options to acquire (through purchase, exchange, conversion
or otherwise) any Search Securities, or any securities issued in
connection with any merger, consolidation, sale of assets, combination
or otherwise to which Search or any Search Affiliate is a party.
b. No Proxy Solicitation: (i) make, or in any way participate
in, directly or indirectly, alone or in concert with others, any
"solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A under the Exchange Act, as in effect on the Effective
Date) or become a "participant" in any "election contest" (as such
terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to Search or any Search Affiliate; or (ii) seek to advise or
influence any Person with respect to the voting of any Search
Securities, or (iii) initiate, propose or otherwise solicit Search
Securities holders for the approval of one or more stockholders or
other securities holders proposals or induce or attempt to induce any
other Person to initiate any stockholder or other securities holder
proposal.
c. No Formation of a Group; No Influence: take any action, alone
or in concert with any other Person, to (i) form, join or in any way
participate in a Group with respect to any of the Search Securities;
(ii) acquire or affect the control of Search or any Search Affiliate;
(iii) control or influence the management, Board of Directors,
policies or affairs of Search or any Search Affiliate; or (iv)
participate in or encourage any Persons to take any action which is
prohibited to be taken by the Stockholders or any Stockholder
Affiliate pursuant to this Standstill Agreement.
d. No Statements: except (i) with respect to the letter approved
as part of the Settlement Agreement, and (ii) for Stockholder(s)
referring people to Search or the press release mentioned in the
Settlement Agreement, make any statement or proposal, whether written
or oral, alone or in concert with any other Person, to the Board of
Directors of Search or any Search Affiliate, to any director or
officer of Search or any Search Affiliate, to any shareholder,
noteholder, securities holder or creditor of Search or any Search
Affiliate, or otherwise make any public announcement or proposal
whatsoever with respect to Search or any Search Affiliate, including
but not limited to a merger or other business combination, sale or
transfer of assets, liquidation or other corporate transaction by
Search or any Search Affiliate.
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e. No Shopping: alone, or in concert with any other Person,
solicit, encourage, entertain or discuss with any Person, any proposal
with respect to Search or any Search Affiliate, including but not
limited to, a business combination or other transaction with, or a
change of control of, Search or any Search Affiliate.
f. No Tender Offers: make, solicit, encourage, discuss or
participate in, alone or in concert with any other Person, a tender
offer for or exchange for any Search Securities.
g. No Asset Acquisition Offers: acquire, offer to acquire or
agree to acquire, directly or indirectly, alone or in concert with
other Person, by purchase, exchange or otherwise (i) all or a
substantial portion of the assets, tangible and/or intangible, of
Search and/or any Search Affiliate, or (ii) direct or indirect rights,
warrants or options to acquire any assets of Search and/or any Search
Affiliate.
h. No Financing: arrange, or in any way participate in or
encourage, directly or indirectly, alone or in concert with any other
Person, any financing for the purchase, exchange, acquisition or
transfer of any assets of Search or any Search Affiliate or any of the
Search Securities.
i. No Call of Meeting: alone or in concert with any other Person
(i) call, or seek to call, any meeting of Search's shareholders,
noteholders, securities holders and/or other creditors, or (ii) in
connection with such meeting make any request to examine, copy or make
extracts from any of Search's books, records, or list of shareholders.
j. No Announcement: announce an intention to do, or enter into
any agreement, arrangement or understanding with any other Person to
do, any of the actions restricted or prohibited under this Section 2,
including but not limited to (i) announcing a change in their intent,
purpose, plans or proposals with respect to either Search, any Search
Affiliate or any of the Search Securities; or (ii) proposing any
amendment to or termination of any of the terms of the Settlement
Agreement or any of the terms of any agreement contemplated by the
Settlement Agreement, including but not limited to this Standstill
Agreement, except for final Exchange Act Section 13(d) filings
regarding the transfer of the Stockholder Search Securities by the
Stockholders to Search.
k. No Creditor Actions; Bankruptcy: alone, or in concert with
any other Person, (i) communicate with any of Search's creditors
regarding Search or any Search Affiliate; (ii) file, or initiate the
filing of any
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bankruptcy petition against Search or any Search Affiliate; or (iii)
take any other action which has a material negative effect on Search's
financial condition.
3. COVENANT NOT TO XXX. During the Standstill Period, the Stockholders
jointly and severally covenant that the Stockholders shall not, and the
Stockholders shall cause each Stockholder Affiliate (and each such Affiliate's
own affiliates and associates), not to, encourage, commence or participate in
any action, lawsuit, or any other legal proceeding against Search or any Search
Affiliates.
4. NO PUBLIC STATEMENTS.
a. By Stockholders. During the Standstill Period, the
Stockholders jointly and severally covenant that the Stockholders
shall not, and the Stockholders shall cause each Stockholder Affiliate
(and each such Affiliate's own affiliates and associates), not to,
make any public statements about Search or any Search Affiliate.
b. By Search. During the Standstill Period, Search covenants
that Search shall not, and Search shall cause each Search Affiliate
(and each such Affiliate's own affiliates and associates), not to,
make any public statements about the Stockholders or any Stockholder
Affiliate.
5. SPECIFIC PERFORMANCE. Search will be entitled to an injunction to
prevent a breach of the provisions of the Standstill Agreement and to specific
enforcement of its terms. The Stockholders consent, and shall cause the
Stockholder Affiliates to consent, to personal jurisdiction in any action
brought in the United States District Court for the Northern District of Texas
or in any court of the State of Texas having subject matter jurisdiction and to
service of process upon them.
6. NO ASSIGNMENT. The Stockholders represent and warrant that they have
not sold, gifted or transferred in any other manner any Search Securities.
7. CHOICE OF LAW. Search and Stockholders agree that this Standstill
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas.
8. PARTIAL INVALIDITY. Should any of the parts, terms, clauses or
provisions of this Standstill Agreement be declared or determined by any court
of competent jurisdiction to be illegal or invalid, the validity of the
remaining parts, terms, clauses and provisions shall not be affected thereby
and said invalid or illegal part, term, clause or provision shall be deemed not
to be a part of the Standstill Agreement.
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9. MERGER. This Standstill Agreement supersedes all previous
negotiations, representations and discussions by the parties hereto concerning
the subject matter hereof, and integrates the whole of all of their agreements
and understanding concerning the subject matter hereof. No oral
representations or undertakings concerning the subject matter hereof shall
operate to amend, supersede, or replace any of the terms or conditions set
forth in this Standstill Agreement.
10. AMENDMENT. This Standstill Agreement may only be amended in writing
signed by authorized representatives of all the parties hereto. This Agreement
cannot be changed or terminated orally.
11. BINDING ON SUCCESSORS. This Standstill Agreement shall be binding
upon and shall inure to the benefit of the parties and their representatives,
heirs, successors, and assigns.
12. ADDITIONAL REMEDIES. In addition to any other remedies available to
Search at law or equity if this Standstill Agreement is breached by a
Stockholder or Stockholder Affiliate, the parties hereto agree as follows:
a. Transfer of Securities. If, at any time or from time to time
during the Standstill Period, any Stockholder or Stockholder Affiliate
violates Section 2.a of this Standstill Agreement, Search shall have
the right to (i) purchase all Search Securities acquired and still
held by any and all Stockholders and/or Stockholder Affiliates for the
price of One Dollar ($1.00) and (ii) direct the Search's securities
transfer agent to transfer all such Search Securities from the
Stockholders and Stockholder Affiliates to Search.
b. Disgorgement of Profits. If, at any time or from time to time
during the Standstill Period, any Stockholder or Stockholder Affiliate
violates Section 2.a of this Standstill Agreement and acquires and
then resells, exchanges or otherwise transfers such Search Securities,
Search shall have the right to force the Stockholders and/or
Stockholder Affiliates to promptly pay to Search in cash an amount of
money equal to the greater of (i) the amount of money or other
consideration received by the Stockholders and/or Stockholder
Affiliates upon any such resale, exchange or other transfer of such
Search Securities, and (ii) the market value of the Search Securities.
13. NOTICES. All notices given with regard to this Standstill Agreement
shall be given in accordance with the terms of Section 24 of the Settlement
Agreement.
14. PERMITTED COMMUNICATIONS. Notwithstanding any of the foregoing, the
Stockholders may (i) file any documents required by the Securities and Exchange
Commission, provided that the
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content of any document(s) so filed does not violate any of the other terms and
conditions of this Standstill Agreement; (ii) respond to any legal subpoena,
after notice to Search immediately following service of such subpoena; and
(iii) if so advised by counsel, the Stockholders may file the Settlement
Documents with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties have executed this Standstill
Agreement to be effective for all purposes as of the Effective Date.
Executed to be effective as of the date above written.
SEARCH CAPITAL GROUP, INC. ("Search")
By: /s/ XXXXXX X. XXXX
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Printed Name: Xxxxxx X. Xxxx
Title: Senior EVP & CFO
"STOCKHOLDERS"
/s/ XXXXX XXXX
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XXXXX XXXX
PHOENIX/INWOOD CORP.
By: /s/ XXXXX XXXXX
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Printed Name: Xxxxx Xxxxx
Title: Vice President
HALL PHOENIX/INWOOD, LTD.
By: PHOENIX/INWOOD CORP.,
GENERAL PARTNER
By: /s/ XXXXX XXXXX
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Printed Name: Xxxxx Xxxxx
Title: Vice President
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HALL FINANCIAL GROUP, INC.
By: /s/ XXXXX XXXXX
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Printed Name: Xxxxx Xxxxx
Title: Vice President
/s/ XXXXX XXXXX
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XXXXX XXXXX
