EXHIBIT 10.22
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of __________, 2003 (the "Closing Date"), by and between ACCREDITED HOME
LENDERS HOLDING CO., a Delaware corporation (the "Company") and FBR ASSET
INVESTMENT CORP., a Virginia corporation (the "Investor").
RECITALS
WHEREAS, the Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-1 (No.
333-91644) and a related preliminary prospectus for the registration of
9,650,000 shares of the Company's common stock, par value $0.01 per share
("Common Stock") under the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations thereunder (the "Securities Act
Regulations") for sale in an underwritten initial public offering (the "Public
Offering").
WHEREAS, the Company desires to issue and sell to the Investor, and the
Investor desires to purchase from the Company, in a private transaction that is
exempt from registration under Section 4(2) of the Securities Act and Regulation
D thereunder, 510,697 shares of Common Stock on the terms and conditions set
forth in this Agreement.
WHEREAS, the Company has delivered to the Investor the preliminary
prospectus used in the Public Offering. The preliminary prospectus is
hereinafter referred to as the "Information Statement."
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
The following defined terms used herein and not otherwise defined shall
have the meaning set forth below:
California Corporation shall have the meaning set forth in Section 4.1.
CERCLA shall have the meaning set forth in Section 4.27.
Closing shall have the meaning set forth in Article 3 hereof.
Closing Date shall mean the date on which the Closing occurs.
Code shall have the meaning set forth in Section 4.24.
Commission shall mean the Securities and Exchange Commission.
Company Disclosure Schedule shall mean the Disclosure Schedule
delivered by the Company to the Investor on the date of this Agreement. Such
Company Disclosure Schedule is deemed to be a part of this Agreement and is
incorporated by reference herein.
DTC shall mean The Depository Trust Company.
Environmental Statute shall have the meaning set forth in Section 4.27.
ERISA shall have the meaning set forth in Section 4.24.
Exchange Act shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission, thereunder, or any
similar successor statute.
GAAP shall mean generally accepted accounting principles.
Governmental Authority shall have the meaning set forth in Section
4.27.
Hazardous Material shall have the meaning set forth in Section 4.27.
Intangibles shall have the meaning set forth in Section 4.19.
Investor Indemnities shall have the meaning set forth in Section 8.13.
Material Adverse Change or Material Adverse Effect shall have the
meaning set forth in Section 4.3 hereof.
NASD shall mean the National Association of Securities Dealers, Inc.
Nasdaq shall mean the Nasdaq Stock Market Inc.
Properties shall mean the real properties owned by the Company or any
Subsidiary, including those real properties acquired upon foreclosure.
Reorganization shall have the meaning set forth in Section 4.32.
Reorganization Agreement shall have the meaning set forth in Section
4.32.
Rule 144 shall have the meaning set forth in Section 5.6.
Xxxxxxxx-Xxxxx Act shall have the meaning set forth in Section 7.3
hereof.
Securities Act shall have the meaning set forth in the recitals.
Shares shall have the meaning set forth in Article 2 hereof.
State Acts shall have the meaning set forth in Section 7.2.
Subsidiary shall have the meaning set forth in Section 4.1 hereof.
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ARTICLE 2
AGREEMENT TO PURCHASE AND SELL STOCK
Upon the basis of the warranties and representations and subject to the
other terms and conditions set forth herein, the Company agrees to sell to the
Investor at the Closing, and the Investor agrees to purchase from the Company at
the Closing, 510,697 shares of Common Stock, at the purchase price per
share of $____ (the "Shares").
ARTICLE 3
PAYMENT AND DELIVERY; ClOSING
The purchase and sale of the Shares shall take place at the offices of
Xxxx Xxxx Xxxx & Freidenrich LLP ("Xxxx Xxxx"), 0000 Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxx Xxxxx, XX 00000-0000, immediately after the closing of the Company's
initial public offering (the "Closing"). At the Closing, the Company shall
deliver to the Investor a certificate representing the Shares and the Investor
shall deliver the purchase price of _______, less the amount of any reimbursable
expenses pursuant to Section 8.1 hereof, in immediately available funds.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as listed on the Company Disclosure Schedule attached hereto,
the Company hereby represents and warrants to the Investor that the statements
in the following paragraphs of this Article 4 are all true and correct as of the
date hereof and as of the Closing:
4.1. the Company has an authorized capitalization as set forth in the
Information Statement; the outstanding shares of capital stock of the Company
and each subsidiary of the Company identified in Exhibit A (each, a
"Subsidiary") have been duly and validly authorized and issued and are fully
paid and non-assessable and were issued in compliance with all applicable state
and federal laws concerning the issuance of securities; immediately after the
Reorganization, as hereinafter defined, all of the outstanding shares of capital
stock of the Subsidiaries are directly or indirectly owned of record and
beneficially by the Company; except as otherwise disclosed in the Information
Statement and except for options issued pursuant to the 1998 Stock Option Plan,
1995 Stock Option Plan and 1995 Executive Stock Option Plan of Accredited Home
Lenders, Inc., a California corporation (the "California Corporation"), there
are no outstanding (i) securities or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such Subsidiary, (ii) warrants, rights or options to subscribe
for or purchase from the Company or any such Subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such Subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options;
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4.2. each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full corporate power
and authority to own its respective properties and to conduct its respective
businesses as described in the Information Statement and, in the case of the
Company, to execute and deliver this Agreement and to consummate the
transactions contemplated herein;
4.3. the Company and all of the Subsidiaries are duly qualified or
licensed and are in good standing in each jurisdiction in which they conduct
their respective businesses or in which they own or lease real property or
otherwise maintain an office and in which the failure, individually or in the
aggregate, to be so qualified or licensed could reasonably be expected to have a
material adverse effect on the assets, business, results of operation or
condition (financial or otherwise), present or prospective, of the Company and
the Subsidiaries taken as a whole (a "Material Adverse Effect" or "Material
Adverse Change"); except as otherwise disclosed in the Information Statement, no
Subsidiary is prohibited or restricted, directly or indirectly, from paying
dividends to the Company, or from making any other distribution with respect to
such Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary any amounts which may from time to time become due under any loans or
advances to such Subsidiary from the Company or such other Subsidiary, or from
transferring any such Subsidiary's property or assets to the Company or to any
other Subsidiary; other than as disclosed in the Information Statement, the
Company does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
4.4. the Company and the Subsidiaries are in compliance in all
material respects with all applicable laws, rules, regulations, orders, decrees
and judgments, including those relating to transactions with affiliates and
regulatory matters;
4.5. neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under), its respective
organizational documents, or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties is bound, except for such breaches or defaults which could
not reasonably be expected to have a Material Adverse Effect;
4.6. the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the organizational documents of the Company
or any Subsidiary, or (ii) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any Subsidiary, except in the case of this clause
(ii) for such breaches or defaults which could not reasonably be expected to
have a Material Adverse Effect; or (B) result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or asset of the Company
or any Subsidiary;
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4.7. this Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable principles and
except to the extent that the indemnification provisions of Section 8.13 hereof
may be limited by Federal or state securities laws and public policy
considerations in respect thereof;
4.8. no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the
Reorganization and the other transactions contemplated herein, and its sale and
delivery of the Shares, other than such as have been obtained, or will have been
obtained at the Closing Time or the relevant Date of Delivery;
4.9. each of the Company and the Subsidiaries has all necessary
licenses, authorizations, permits, accreditations, certifications, consents and
approvals, and has made all necessary filings, required under any federal, state
or local law, regulation or rule, and has obtained all necessary authorizations,
permits, accreditations, certifications, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Information Statement, except to the extent that any failure to have any
such licenses, authorizations, consents or approvals, to make any such filings
or to obtain any such authorizations, consents or approvals could not,
individually or in the aggregate, have a Material Adverse Effect; neither the
Company nor any of the Subsidiaries is in violation of, in default under, or has
received any notice regarding a possible violation, default or revocation of any
such license, authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company or any of the Subsidiaries the effect of which could reasonably be
expected to result in a Material Adverse Change; and no such license,
authorization, consent or approval contains a materially burdensome restriction
that is not adequately disclosed in the Information Statement;
4.10. each of the consolidated balance sheets of the Company included
in the Information Statement (i) were prepared in all material respects in
accordance with GAAP, and (ii) fairly presented in all material respects the
consolidated financial position of the Company and its wholly-owned subsidiaries
as of its date in conformity with GAAP. Each of the consolidated statements of
income, retained earnings and cash flows of the Company included in the
Information Statement (i) were prepared in accordance with GAAP, and (ii) fairly
presented the results of operations, retained earnings or cash flows, as the
case may be, of the Company and its subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments that would not be material in amount or effect) in conformity with
GAAP.
4.11. except as otherwise disclosed in the Information Statement, there
are no actions, suits, proceedings, inquiries or investigations pending or, to
the knowledge of the Company, threatened against the Company or any Subsidiary
or any of their respective officers and directors or to which the properties,
assets or rights of any such entity are subject, at law or in equity, before or
by any federal, state, local or foreign governmental or regulatory commission,
board, body, authority, arbitral panel or agency which could result in a
judgment, decree, award or order having a Material Adverse Effect;
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4.12. subsequent to the date as of which information is given in the
Information Statement, and except as may be otherwise stated in the Information
Statement, there has not been (i) any Material Adverse Change or any development
that could reasonably be expected to result in a Material Adverse Change,
whether or not arising in the ordinary course of business, (ii) any transaction
that is material to the Company and the Subsidiaries taken as a whole,
contemplated or entered into by the Company or any of the Subsidiaries, (iii)
any obligation, contingent or otherwise, directly or indirectly incurred by the
Company or any Subsidiary that is material to the Company and Subsidiaries taken
as a whole or (iv) any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock;
4.13. the Shares conform in all material respects to the description
thereof contained in the Information Statement relating to the Shares sold in
the concurrent private placement described therein;
4.14. the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise;
4.15. any certificate signed by any officer of the Company or any
Subsidiary delivered to the Investor or to counsel for the Investor pursuant to
or in connection with this Agreement shall be deemed a representation and
warranty by the Company to the Investor as to the matters covered thereby;
4.16. the form of certificate used to evidence the Shares complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the organizational documents of the Company;
4.17. the Company and the Subsidiaries have good and marketable title
in fee simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Information Statement or such as do not materially and
adversely affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company and the
Subsidiaries; and any real property and buildings held under lease by the
Company or any Subsidiary are held under valid, existing and enforceable leases,
with such exceptions as are disclosed in the Information Statement or are not
material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company or such Subsidiary;
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4.18. the descriptions in the Information Statement of the legal or
governmental proceedings, contracts, leases and other legal documents therein
described present fairly the information required to be shown, and there are no
legal or governmental proceedings, contracts, leases, or other documents of a
character required to be described in the Information Statement which are not
described; all agreements between the Company or any of the Subsidiaries and
third parties expressly referenced in the Information Statement are legal, valid
and binding obligations of the Company or one or more of the Subsidiaries,
enforceable in accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles;
4.19. the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in the Information Statement, and neither the Company
nor any Subsidiary has received notice of infringement of or conflict with (and
the Company knows of no such infringement of or conflict with) asserted rights
of others with respect to any Intangibles which could have a Material Adverse
Effect;
4.20. the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
4.21. each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
4.22. neither the Company nor any of the Subsidiaries is in violation,
or has received notice of any violation with respect to, any applicable
environmental, safety or similar law applicable to the business of the Company
or any of the Subsidiaries; the Company and the Subsidiaries have received all
permits, licenses or other approvals required of them under applicable federal
and state occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company and the Subsidiaries are
in compliance with all terms and conditions of any such permit, license or
approval, except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals which could not,
individually or in the aggregate, result in a Material Adverse Change;
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4.23. either the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor any
applicable federal or state wages and hours law, nor any state law precluding
the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which could have a Material Adverse Effect;
4.24. the Company and each of the Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of the Subsidiaries would have any
liability; the Company and each of the Subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and each "pension plan" for
which the Company and each of its Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification;
4.25. except as otherwise disclosed in the Information Statement, there
are no material outstanding loans or advances or material guarantees of
indebtedness by the Company or any of the Subsidiaries to or for the benefit of
any of the officers or directors of the Company or any of the Subsidiaries or
any of the members of the families of any of them;
4.26. neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company, any employee or agent of the Company or any of the
Subsidiaries, has made any payment of funds of the Company or of any Subsidiary
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Information Statement that was
not disclosed in the Information Statement;
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4.27. except as otherwise disclosed in the Information Statement, (i) none
of the Company, any of the Subsidiaries nor, to the knowledge of the Company,
any other owners of the Properties at any time or any other party has at any
time, handled, stored, treated, transported, manufactured, spilled, leaked, or
discharged, dumped, transferred or otherwise disposed of or dealt with,
Hazardous Materials (as hereinafter defined) on, to or from the Properties,
other than by any such action taken in compliance with all applicable
Environmental Statutes (as hereinafter defined) or by the Company, any of the
Subsidiaries or any other party in connection with the ordinary use of
residential, retail or commercial properties owned by the Company or any
Subsidiary; (ii) the Company does not know of any intention to use the
Properties or any subsequently acquired properties for the purpose of handling,
storing, treating, transporting, manufacturing, spilling, leaking, discharging,
dumping, transferring or otherwise disposing of or dealing with Hazardous
Materials other than by any such action taken in compliance with all applicable
Environmental Statutes or by the Company, any of the Subsidiaries or any other
party in connection with the ordinary use of residential, retail or commercial
properties owned by the Company or any Subsidiary; (iii) neither the Company nor
any of the Subsidiaries knows of any seepage, leak, discharge, release,
emission, spill, or dumping of Hazardous Materials into waters on or adjacent to
the Properties or any other real property owned or occupied by any such party,
or onto lands from which Hazardous Materials might seep, flow or drain into such
waters; (iv) neither the Company nor any of the Subsidiaries has received any
notice of, or has any knowledge of any occurrence or circumstance which, with
notice or passage of time or both, would give rise to a claim under or pursuant
to any federal, state or local environmental statute or regulation or under
common law, pertaining to Hazardous Materials on or originating from any of the
Properties or any assets described in the Information Statement or any other
real property owned or occupied by any such party or arising out of the conduct
of any such party, including without limitation a claim under or pursuant to any
Environmental Statute (hereinafter defined); (v) neither the Properties nor any
other real estate owned by the Company or any of the Subsidiaries is included
or, to the best of the Company's knowledge, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA (as hereinafter defined) by
the United States Environmental Protection Agency or, to the Company's
knowledge, proposed for inclusion on any similar list or inventory issued
pursuant to any other Environmental Statute or issued by any other Governmental
Authority (as hereinafter defined);
As used herein, "Hazardous Material" shall include, without limitation any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, toxic substances, or related materials, asbestos or any hazardous
material as defined by any federal, state or local environmental law, ordinance,
rule or regulation including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Sections 9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sections 1801-1819, the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. Sections 2601-2671, the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42
U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C.
Sections 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C.
Sections 651-678, as any of the above statutes may be amended from time to time,
and in the regulations promulgated pursuant to each of the foregoing
(individually, an "Environmental Statute") or by any federal,
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state or local governmental authority having or claiming jurisdiction over the
properties and assets described in the Prospectus (a "Governmental Authority");
4.28. the Company has complied and will comply with all the provisions of
Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); and neither
the Company nor any of the Subsidiaries or affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba;
4.29. the Company has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated;
4.30. neither the Company nor any of the Subsidiaries is and, after giving
effect to the offering and sale of the Shares, will be an "investment company"
or an entity "controlled" by an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended;
4.31. there are no existing or, to the knowledge of the Company, threatened
labor disputes with the employees of the Company or any of the Subsidiaries
which are reasonably anticipated to have individually or in the aggregate a
Material Adverse Effect;
4.32. the execution and delivery of the Agreement and Plan of Merger
effective as of ________ __, 2003 (the "Reorganization Agreement") among AHL
Merger Sub, a California corporation, the California Corporation and the
Company, pursuant to which the California Corporation became a wholly-owned
subsidiary of the Company and the Company became a Delaware holding company (the
"Reorganization"), were duly authorized by all necessary corporate action on the
part of each of the California Corporation and the Company; and each of the
California Corporation and the Company had all corporate power and authority to
execute and deliver the Reorganization Agreement and the exhibits, certificates
and other documents related thereto to which they are a party, to file such
Reorganization Agreement and other documents with the Secretary of State of the
State of Delaware and the Secretary of State of the State of California and to
consummate the Reorganization contemplated by the Reorganization Agreement, and
the Reorganization Agreement at the time of execution and immediately prior to
the effectiveness of the Reorganization constituted a valid and binding
obligation of each of the California Corporation and the Company, subject to the
effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar federal or state laws affecting the rights of creditors and (ii)
general principles of equity.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor hereby represents and warrants as of the date hereof and as of
the Closing to the Company that:
5.1. Authorization.
The Investor has full power and authority to enter into this Agreement and
such agreement constitutes a valid and legally binding obligation, enforceable
in accordance with its respective terms except (i) as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of
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creditors' rights generally, and (ii) as may be limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
5.2. Purchase Entirely for Own Account.
This Agreement is made with such Investor in reliance upon such Investor's
representation to the Company, which by such Investor's execution of this
Agreement such Investor hereby confirms, that the Shares to be received by such
Investor will be acquired for investment for such Investor's own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of the Shares.
5.3. Disclosure of Information.
Such Investor has received all the information it considers necessary or
appropriate for deciding whether to purchase the Shares. Such Investor further
represents that it has had an opportunity to ask questions of and receive
answers from the Company regarding the terms and conditions of the offering of
Shares and the business, properties, prospects and financial condition of the
Company.
5.4. Investment Experience.
The Investor understands that the purchase of the Shares involves
substantial risk. The Investor: (i) has experience as an investor in securities
and acknowledges that the Investor is able to fend for itself, can bear the
economic risk of the Investor's investment in the Shares and has such knowledge
and experience in financial or business matters that the Investor is capable of
evaluating the merits and risks of this investment in the Shares and protecting
its own interests in connection with this investment and/or (ii) has a
preexisting personal or business relationship with the Company and certain of
its officers, directors or controlling persons of a nature and duration that
enables the Investor to be aware of the character, business acumen and financial
circumstances of such persons.
5.5. QIB Status.
The Investor is a "Qualified Institutional Buyer" within the meaning of
Rule 144A promulgated under the Securities Act. The Investor has received a copy
of the Company's Articles of Incorporation and Bylaws, the Information Statement
and this Agreement and has read and understands the respective contents thereof.
The Investor has had the opportunity to ask questions of the Company and has
received answers to such questions from the Company. The Investor has carefully
reviewed and evaluated these documents and understands the risks and other
considerations relating to the investment.
5.6. Restricted Securities.
The Investor understands that the Shares are characterized as "restricted
securities" under the Securities Act inasmuch as they are being acquired from
the Company in a transaction not
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involving a public offering and that under the Securities Act and applicable
rules and regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, the Investor represents that it is familiar with Rule 144
promulgated under the Securities Act ("Rule 144"), as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
5.7. Finder's Fee.
The Investor has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated.
ARTICLE 6
CONDITIONS TO CLOSING
6.1. The obligation of the Investor to close the transaction contemplated
by this Agreement is subject to the satisfaction on or prior to the Closing Date
of the following conditions:
(a) The Company shall have executed this Agreement and delivered
the same to the Investor.
(b) Investor shall have received copies of all documents and
information which it may have reasonably requested in connection with the
purchase and sale of the Shares.
(c) The Company shall have delivered to the Investor a certificate
of its (1) Chairman of the Board and Chief Executive Officer and (2) Chief
Financial Officer, dated as of the Closing Date, to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct, as if made on and
as of the Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) subsequent to the respective dates as of which
information is given in the Information Statement, there
has not been (1) any Material Adverse Change, (2) any
transaction that is material to the Company and the
Subsidiaries considered as one enterprise, except
transactions entered into in the ordinary course of
business, (3) any obligation, direct or contingent, that
is material to the Company and the Subsidiaries
considered as one enterprise, incurred by the Company or
the Subsidiaries, except obligations incurred in the
ordinary course of business, (4) any change in the
capital stock or outstanding indebtedness of the Company
or any Subsidiary that is material to the Company and
the Subsidiaries considered as one enterprise, (5) any
dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or any
Subsidiary, or (6) any loss or damage (whether or not
insured) to the property of the Company or any
subsidiary which has been
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sustained or will have been sustained which has a
Material Adverse Effect.
(d) The Company shall have executed a registration rights agreement
substantially in the form attached hereto as Exhibit A and delivered the same to
the Investor.
(e) The Company shall have caused its legal counsel to deliver to
Investor a legal opinion, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit B.
6.2. The obligation of the Company to close the transaction contemplated
by this Agreement is subject to the satisfaction on or prior to the Closing Date
of the following conditions:
(a) The Investor shall have executed this Agreement and delivered
the same to the Company.
(b) The Investor shall have delivered to the Company a certificate
of its President, dated as of the Closing Date, to the effect that the
representations and warranties of the Investor in this Agreement are true and
correct, as if made on and as of the Closing Date, and the Investor has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(c) The Investor shall have executed a registration rights
agreement substantially in the form attached hereto as Exhibit A and delivered
the same to the Company.
(d) The Investor shall have delivered the Purchase Price as
specified in Article 3.
ARTICLE 7
COVENANTS OF THE PARTIES
7.1. Legends.
It is understood that the certificates evidencing the shares of the Common
Stock will bear the legends set forth below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
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(b) Any legend required by the laws of the State of Delaware or any
other state securities laws.
The legend set forth in (a) above shall be removed by the Company from any
certificate evidencing the Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Securities Act is at that time in effect with respect to the legended
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to
which the Company issued the Shares.
7.2. Restrictions on Transfer; Registration Rights.
(a) Investor acknowledges that it is acquiring the Shares for its
own account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act, and any
applicable state or other securities laws ("State Acts"). Investor further
agrees that it will not sell, assign, transfer or otherwise dispose of any of
the Shares in violation of the Securities Act or State Acts and acknowledges
that, in taking unregistered common stock, it must continue to bear economic
risk in regard to its investment for an indefinite period of time because of the
fact that the Shares have not been registered under the Securities Act or State
Acts and further realizes that the Shares cannot be sold unless subsequently
registered under the Securities Act and State Acts or an exemption from such
registration is available. Investor further recognizes that the Company is not
assuming any obligation to register such the Shares except as expressly set
forth herein. Investor also acknowledges that appropriate legends reflecting the
status of the Shares under the Securities Act and State Acts may be placed on
the face of the certificates for the Shares at the time of their transfer and
delivery to the holder thereof. This Agreement is made with Investor, subject
to, and in reliance upon Investor's above representations.
(b) The Shares issued pursuant to this Agreement may not be
transferred except in a transaction, which is in compliance with the Securities
Act and State Acts. Except as provided hereafter with respect to registration of
the Shares or sale under Rule 144 as contemplated in Exhibit A, it shall be a
condition to any such transfer that the Company shall be furnished with an
opinion of counsel, which counsel and opinion shall be reasonably satisfactory
to the Company, to the effect that the proposed transfer would be in compliance
with the Securities Act and State Acts. Notwithstanding the foregoing,
furnishing such opinion of counsel shall not be a condition to any transfer of
the Shares to an affiliate of Investor, including for this purpose if Investor
is an investment company, any fund or account advised by Investor's investment
adviser or any affiliate thereof.
ARTICLE 8
MISCELLANEOUS
8.1. Payment of Expense.
The Company will reimburse the costs and expenses of the Investor,
including without limitation fees and disbursements of the Investor's legal
counsel, in connection with this Agreement and the transactions contemplated
hereby; provided, however, that in no event shall the Company be obligated to
reimburse such costs and expenses in an aggregate amount greater
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than $50,000, it being expressly understood that expenses incurred by the
Investor or any of its affiliates relating to having the transaction
contemplated by this Agreement approved or reviewed by the NASD are expenses of
the Investor and are, therefore, subject to the aggregate $50,000 limitation.
8.2. Survival of Warranties.
The representation, warranties and covenants of the Company and the
Investor contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor, its counsel or the Company or its counsel, as the case may be.
8.3. Successors and Assigns.
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties. This
Agreement may not be assigned by either party without the prior written consent
of the other party.
8.4. Governing Law.
This Agreement shall be governed by and construed under the internal laws
of the State of Delaware as applied to agreements among residents of such state
entered into and to be performed entirely within such state, without reference
to principles of conflict of laws or choice of laws.
8.5. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
8.6. Headings.
The headings and captions used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
All references in this Agreement to sections, paragraphs, exhibits and schedules
shall, unless otherwise provided, refer to sections and paragraphs hereof and
exhibits and schedules attached hereto, all of which exhibits and schedules are
incorporated herein by this reference.
8.7. Notices.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified or upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed, or by facsimile, as follows:
if to the Company, to: Accredited Home Lenders Holding Co.
00000 Xxxxxx xx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
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Fax: 000-000-0000
With a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
if to the Investor, to: FBR Asset Investment Corporation
0000 00/xx/ Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, President
Fax: 000-000-0000
With a copy to: Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxx, Esq.
Fax: 000-000-0000
or at such other address as the Investor or the Company may designate by
giving ten (10) days advance written notice to the other parties.
8.8. Attorneys' Fees.
If any action at law or in equity, proceeding or counterclaim is necessary
to enforce or interpret the terms of this Agreement or to recover damages, costs
and expenses in connection with any breach of the Agreement, the prevailing
party shall be entitled to be reimbursed by the opposing party for all of the
prevailing party's reasonable attorneys' fees, costs and other reasonable
out-of-pocket expenses incurred in connection with such action, proceeding or
counterclaim in addition to any other relief to which such party may be
entitled.
8.9. Amendments and Waivers.
Any term of this Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of the
Company and the Investor. Any amendment or waiver effected in accordance with
this Section shall be binding upon each holder of any Common Stock at the time
outstanding, each future holder of such securities, and the Company.
8.10. Severability.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision(s) shall be excluded from this Agreement
and the balance of the Agreement shall be interpreted as if such provision(s)
were so excluded and shall be enforceable in accordance with its terms.
8.11. Entire Agreement.
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This Agreement, together with all exhibits and schedules hereto,
constitutes the entire agreement and understanding of the parties with respect
to the subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties with respect to the subject matter hereof. The Exhibits hereto shall be
deemed a part of this Agreement for all purposes.
8.12. Further Assurances.
From and after the date of this Agreement, upon the request of the Investor
or the Company, the Company and the Investor shall execute and deliver such
instruments, documents or 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.
8.13. Indemnity.
The Company shall indemnify, defend and hold harmless Investor and each of
its agents, partners, members, officers, directors, representatives and
affiliates (each an "Investor Indemnitee" and collectively, the "Investor
Indemnitees") from and against any and all losses, liabilities, claims and
expenses, including reasonable attorneys' fees, sustained by any Investor
Indemnitee resulting from, arising out of, or connected with any material
inaccuracy in, breach of, or non-fulfillment of any representation, warranty,
covenant or agreement made by or other obligation of the Company contained in
this Agreement (including the exhibits and schedules hereto) or in any document
delivered in connection herewith.
8.14. Press Release.
Except as set forth in the Company's Registration Statement on Form S-1, as
amended (File No. 333-91644), the Company shall not issue any public statement
or press release, or otherwise disclose in any manner the identity of the
Investor or that Investor has purchased the Common Stock, without the prior
written consent of the Investor, except as may be required by applicable law;
provided, however, that the Company may disclose such information in any
registration statement filed with the Commission pursuant to the registration
rights agreement to be executed and delivered by the parties on the Closing Date
pursuant to Sections 6.1(d) and 6.2 (c) hereof.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY: ACCREDITED HOME LENDERS HOLDING CO., a Delaware
corporation
_________________________________
Name:
Title:
INVESTOR: FBR ASSET INVESTMENT CORPORATION, a Virginia
corporation
_________________________________
Name:
Title:
Exhibit A
Subsidiaries of the Company
1. Accredited Home Lenders Holding Co., a Delaware corporation (the "Company")
2. Accredited Home Lenders, Inc., a California corporation ("AHL") = wholly
owned subsidiary of the Company.
3. Accredited Home Capital, Inc., a Delaware corporation = wholly owned
subsidiary of AHL
4. Accredited Home Acceptance, Inc., a Delaware corporation = wholly owned
subsidiary of AHL
Exhibit B
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of __________________, 2003, by and between ACCREDITED HOME LENDERS
HOLDING CO., a Delaware corporation (the "Company"), and FBR ASSET INVESTMENT
CORPORATION, a Virginia corporation (the "Investor").
RECITALS
WHEREAS, the Company desires to issue and sell to the Investor, and the
Investor desires to purchase from the Company, _________ shares of common stock,
par value $0.001 per share, of the Company (the "Common Stock"), pursuant to a
Stock Purchase Agreement dated as of ______________, 2003 between the Company
and the Investor (the "Purchase Agreement").
WHEREAS, it is a condition precedent to the obligation of the Investor to
close the transactions contemplated by the Purchase Agreement that the Company
execute and deliver to the Investor this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
meanings:
(i) "Affiliate," of any specified Person means any other Person who
directly, or indirectly through one or more intermediaries, is in control
of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether by contract, securities
ownership or otherwise; and the terms "controlling" and "controlled" have
the respective meanings correlative to the foregoing.
(ii) "Agreement" means this Registration Rights Agreement, as the
same may be amended, supplemented or modified from time to time in
accordance with the terms hereof.
(iii) "Commission" means the Securities and Exchange Commission.
(iv) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
(v) "Investors" means the Investor and any permitted transferee or
assignee of Registrable Securities who agrees to become bound by all of the
terms and provisions of this Agreement and the Purchase Agreement.
(vi) "Person" means any individual, partnership, corporation,
limited liability company, joint stock company, association, trust,
unincorporated organization, or a government agency or political
subdivision thereof.
(vii) "Prospectus" means the prospectus (including any preliminary
prospectus and/or any final prospectus filed pursuant to Rule 424(b) under
the Securities Act and any prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance on Rule 430A under the Securities Act) included in
the Registration Statements, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statements and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after
the date of such prospectus by the Company under the Exchange Act and
incorporated by reference therein.
(viii) "Public Offering" means an offer registered with the Commission
and the appropriate state securities commissions by the Company of its
Common Stock and made pursuant to the Securities Act.
(ix) "Registrable Securities" means the shares of Common Stock
purchased pursuant to the Purchase Agreement; provided, however, a share of
Common Stock shall cease to be a Registrable Security for purposes of this
Agreement when it no longer is a Restricted Security.
(x) "Registration Expenses" means any and all expenses incident to
performance of or compliance with this Agreement, including without
limitation: (i) all Commission, stock exchange, NASD registration, listing
and filing fees, (ii) all fees and expenses incurred in connection with
compliance with federal or state securities or blue sky laws (including any
registration, listing and filing fees and reasonable fees and disbursements
of counsel in connection with blue sky qualification of any of the
Registrable Shares and the preparation of a Blue Sky Memorandum and
compliance with the rules of the NASD), (iii) all expenses of printing,
delivering and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any certificates and other documents
relating to the performance of and compliance with this Agreement, (iv) all
fees and expenses incurred in connection with the listing of any of the
Registrable Securities on any securities exchange or The Nasdaq Stock
Market pursuant to Section 2 hereof, (v) the fees and disbursements of
counsel for the Company and of the independent public accountants
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance) of the
Company and (vi) any fees and disbursements customarily paid by issuers or
sellers of securities (including the fees and expenses of any experts
retained by the Company in connection with any Registration Statement),
provided, however, that Registration Expenses shall exclude brokers'
commissions and transfer taxes,
2
if any, relating to the sale or disposition of Registrable Securities by an
Investor and the fees and expenses of any counsel to the Investor.
(xi) "Registration Statement" means any registration statement of
the Company, which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference, if
any, in such registration statement.
(xii) "Registration Statements" means the S-1 Registration Statement
and the S-3 Registration Statement.
(xiii) "Restricted Security" means any share of Common Stock except
any that (i) have been registered pursuant to an effective registration
statement under the Securities Act and sold in a manner contemplated by the
prospectus included in such registration statement, (ii) have been
transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable
pursuant to paragraph (k) of Rule 144 under the Securities Act (or any
successor provision thereto), or (iii) otherwise has been transferred and a
new share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company.
(xiv) "S-1 Registration Statement" means a registration statement of
the Company filed on Form S-1 under the Securities Act providing for the
registration, and the sale of all of the Registrable Securities, including
the Prospectus contained therein and forming a part thereof, any amendments
to such registration statement and supplements to such Prospectus, and all
exhibits and other material incorporated by reference in such registration
statement and Prospectus. In the event that Form S-1 is unavailable for
such a registration, the Company shall use such other form as is available
for such a registration.
(xv) "S-3 Registration Statement" means a registration statement of
the Company filed on Form S-3 under the Securities Act providing for the
registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Securities pursuant to Rule 415 under
the Securities Act, including the Prospectus contained therein and forming
a part thereof, any amendments to such registration statement and
supplements to such Prospectus, and all exhibits and other material
incorporated by reference in such registration statement and Prospectus. In
the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration.
(xvi) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, or any similar
successor statute.
(b) All capitalized terms used and not defined herein have the respective
meaning assigned to them in the Purchase Agreement.
2. Registration.
(a) Filing and Effectiveness of Registration Statement.
3
(i) Within 30 days after the Company's filing of a Form 10-K or Form
10-Q whichever occurs first, following the 360-day anniversary of the
effective date of the Company's initial public offering (the "IPO"), the
Company shall prepare and file with the Commission (the "Filing Deadline")
a Registration Statement relating to the offer and sale of the Registrable
Securities by the Investor and will promptly take all actions that are
necessary or advisable in connection with such registration, including
without limitation providing written responses to any comments made by the
Commission regarding such registration statement and filing any necessary
pre-effective amendments and all necessary exhibits thereto, and will use
commercially reasonable efforts to cause such S-1 Registration Statement to
be declared effective by the Commission as soon as possible after the
initial filing and in any event within 85 days after the date of the
initial filing. The Company will, subject to customary blackout periods as
necessary, use its best efforts to keep such registration effective until
the one-year anniversary of the effective date of the IPO. As soon as
reasonably practicable following the one-year anniversary of the effective
date of the IPO, and in no event later than 30 days following such one-year
anniversary, the Company will file a registration statement on Form S-3
under the Securities Act of 1933, as amended, registering for resale any
Registrable Securities that the Investor owns at that time. The Company
will promptly take all actions that are necessary or advisable in
connection with such registration, including without limitation providing
written responses to any comments made by the Commission regarding such
registration statement and filing any necessary pre-effective amendments
and all necessary exhibits thereto, and will use commercially reasonable
efforts to cause such registration statement to be declared effective by
the Commission as soon as possible after the initial filing and in any
event within 85 days after the date of the initial filing. The Company will
use commercially reasonable efforts, subject to customary blackout periods
as necessary, to keep such S-3 Registration Statement effective for a
period of one-year after its effective date.
(ii) [If the Company shall furnish to the Investor a certificate
signed by the Chief Executive Officer or the President of the Company
stating that in the good faith judgment of the Board of Directors it would
be seriously detrimental to the Company or its stockholders for a
registration statement to be filed at such time, then the Company's
obligation to use its commercially reasonable efforts to register, qualify
or comply under this Section 2(a) shall be deferred for a period not to
exceed 90 days from the date of the Filing Deadline, provided, however,
that the Company may not utilize this right more than once.]
(b) Piggyback Registration Rights.
(i) At any time after the 360/th/ day anniversary of the IPO, if the
Company proposes to register any of its Common Stock or any other shares of
common stock of the Company under the Securities Act (other than a
registration on Form S-8 or S-4 or any successor or similar forms), whether
or not for sale for its own account, it will each such time, give prompt
written notice at least 20 calendar days prior to the anticipated filing
date of the registration statement relating to such registration to the
Investor, which notice shall set forth such Investor's rights under this
Section 2(b) and shall offer the Investor the opportunity to include in
such registration statement such number of Registrable Securities as the
Investor may request. Upon the written request of the Investor made within
15
4
calendar days after the receipt of notice from the Company (which request
shall specify the number of Registrable Securities intended to be
disposed of by such Investor), the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable
Securities that the Company has been so requested to register by the
Investor, to the extent requisite to permit the disposition of the
Registrable Securities to be so registered; provided, however, that (A)
if such registration involves a Public Offering, the Investors must sell
their Registrable Securities to the underwriters on the same terms and
conditions as apply to the Company and (B) if, at any time after giving
written notice of its intention to register any Registrable Securities
pursuant to this Section 2(b) 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 Registrable
Securities, the Company shall give written notice to the Investor and,
thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration.
(ii) If a registration pursuant to this Section 2(b) involves a
Public Offering and the managing underwriter thereof advises the Company
that, in its view, the number of shares of Common Stock, if any, or other
shares of Common Stock that the Company and the Investor intend to
include in such registration exceeds the largest number of shares of
Common Stock (including any other shares of Common Stock or warrants of
the Company) that can be sold without having an adverse effect on such
Public Offering (the "Maximum Offering Size"), the Company will include
in such registration only that number of shares of Common Stock which
does not exceed the Maximum Offering Size, in the following order of
priorities: (1) first, all securities the Company proposes to sell for
its own account, (2) second, up to the full number of securities proposed
to be registered for the account of the holders of securities entitled to
inclusion of their securities in the Registration Statement by reason of
demand registration rights, and (3) third, the securities requested to be
registered by other holders of securities entitled to participate in the
registration, drawn from them pro-rata based on the number of shares each
has requested to be included in such registration and the Investor.
(iii) If as a result of the proration provisions of this Section
2(b), the Investor is not entitled to include all such Registrable
Securities in such registration, such Investor may elect to withdraw its
request to include any Registrable Securities in such registration.
(iv) If the Investor decides not to include all of its
Registrable Securities in any Registration Statement thereafter filed by
the Company, the Investor shall nevertheless continue to have the right
to include any Registrable Securities in any subsequent Registration
Statement or Registration Statements as may be filed by the Company with
respect to offerings of its securities.
(v) Notwithstanding the foregoing, the Company shall have no
obligations under this Section 2(b) hereof at any time that such
Registrable Securities are the subject of an effective registration
statement.
(vi) As between the Company and the Investor, the Company shall
pay all Registration Expenses in connection with the registration of the
Registrable Securities pursuant to this Agreement.
5
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall use commercially reasonable efforts
to:
(a) Prepare and file with the SEC a Registration Statement, within the
relevant time period specified in Section 2, on the appropriate form under the
1933 Act (as shall be selected by the Company), which Registration Statement (i)
shall be available for the sale of the Registrable Securities by the Investor,
(ii) shall comply as to form in all material respects with the requirements of
the applicable form and include or incorporate by reference all financial
statements required by the SEC to be filed therewith or incorporated by
reference therein, and (iii) shall comply in all respects with the requirements
of Regulation S-T under the 1933 Act, and use commercially reasonable efforts to
cause such Registration Statement to become effective and remain effective in
accordance with Section 2 of this Agreement.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period; and
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or an similar provision
then in force) under the 1933 Act and comply with the provisions of the 1933
Act, the 1934 Act and the rules and regulations thereunder applicable to them
with respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the Investor thereof (including sales by any
broker-dealer);
(c) During such time as a Registration Statement is effective or such
shorter period that will terminate when all the Registrable Securities have been
sold (the "Registration Period"), comply with the provisions of the Securities
Act with respect to the Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the Investor as set forth in the Prospectus forming part of the Registration
Statement;
(d)
(i) Notify the Investor at least twenty (20) calendar days prior to
filing, that a Registration Statement with respect to the Registrable
Securities is being filed and advising the Investor that the distribution
of Registrable Securities shall be made in accordance with the method
stated in the Agreement;
(ii) Prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or
delivery of any Prospectus (including any supplements thereto), provide
draft copies thereof (including a copy of the accountant's consent letter
to be included in the filing) to the Investor and reflect in such documents
all such comments as the Investor reasonably may propose; and
(iii) Furnish to the Investor (A) promptly after the same is prepared
and publicly distributed, filed with the Commission, or received by the
Company, one copy of the Registration Statement, each Prospectus, and each
amendment or supplement thereto, and (B) such number of copies of the
Prospectus and all amendments and supplements thereto
6
and such other documents, as the Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by the
Investor;
(e)
(i) Register or qualify the Registrable Securities covered by a
Registration Statement under such securities or "blue sky" laws of all
jurisdictions requiring blue sky registration or qualification,
(ii) Prepare and file in such jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations
and qualifications as may be necessary to maintain the effectiveness
thereof at all times during the Registration Period,
(iii) Take all such other lawful actions as may be necessary to
maintain such registrations and qualifications in effect at all times
during the Registration Period, and
(iv) Take all such other lawful actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection with any of its obligations under this Section 3(e) to (A)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(e), (B) subject itself to
general taxation in any such jurisdiction or (C) file a general consent to
service of process in any such jurisdiction;
(f) As promptly as practicable after becoming aware of such event, notify
the Investor of the occurrence of any event, as a result of which the Prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly prepare
an amendment to a Registration Statement and supplement to the Prospectus to
correct such untrue statement or omission, and deliver a number of copies of
such supplement and amendment to the Investor as the Investor may reasonably
request;
(g) Notify the Investor (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the Commission of any stop order or
other suspension of the effectiveness of a Registration Statement on the date of
receipt of any such stop order or other suspension, and take all lawful action
to effect the withdrawal, recession or removal of such stop order or other
suspension;
(h) Cause all the Registrable Securities covered by a Registration
Statement to be listed on a principal national securities exchange, or included
in an inter-dealer quotation system of a registered national securities
association, on or in which securities of the same class or series issued by the
Company are then listed or included;
(i) Maintain a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the first
Registration Statement;
(j) Cooperate with the Investor to facilitate the timely preparation and
delivery of certificates for the Registrable Securities to be offered pursuant
to a Registration Statement and
7
enable such certificates for the Registrable Securities to be in such
denominations or amounts, as the case may be, as the Investor reasonably may
request and registered in such names as the Investor may request; and, within
three business days after a registration statement which includes Registrable
Securities is declared effective by the Commission, deliver and cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Investor an appropriate instruction
and, to the extent necessary, an opinion of such counsel);
(k) Take all such other lawful actions reasonably necessary to expedite
and facilitate the disposition by the Investor of its Registrable Securities in
accordance with the intended methods therefor provided in the Prospectus which
are customary under the circumstances;
(l) In no event shall the Company be obligated to perform any of its
obligations pursuant to this Agreement if such action would cause the Company to
be in breach of its obligations under that certain Second Amended Investor's
Rights Agreement (the "Rights Agreement"), as amended to date, by and among the
Company, the investors listed on schedule A attached thereto, Xxx X. XxXxxxx and
Xxxxx X. Xxxxxxx. It being understood that all rights, privileges and preference
granted under the Rights Agreement are superior to the rights granted pursuant
to this Agreement.
4. Obligations of the Investor. In connection with the registration of the
Registrable Securities, the Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. At least ten business days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
the Investor and its counsel, whether in-house or otherwise ("Counsel") of the
information the Company requires from the Investor (the "Requested
Information"). If at least four business days prior to the anticipated filing
date the Company has not received the Requested Information from the Investor or
its Counsel, then the Company shall send the Investor and its Counsel a reminder
of such information request. If at least two business days prior to the
anticipated filing date the Company still has not received the Requested
Information from the Investor or its Counsel, then the Company may file the
Registration Statement without including Registrable Securities of the Investor.
However, promptly upon receipt of the Requested Information, and at the
Investor's expense, the Company shall file such amendment(s) to the Registration
Statement as may be necessary to include therein the Registrable Securities.
(b) The Investor by its acceptance of the Registrable Securities agrees to
cooperate with the Company in connection with the preparation and filing of such
Registration Statement hereunder, unless the Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from
such Registration Statement; the Company shall, on its part, ensure that Item
507 of Regulation S-K of the Securities Act (regarding information on the
selling security holders) be complied with in connection with its preparation
and filing of such Registration Statement hereunder;
8
(c) As promptly as practicable after becoming aware of such event, notify
the Company of the occurrence of any event, as a result of which the Prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(d) The Investor agrees that, upon receipt of any notice from the Company
of the occurrence of any event of the kind described in Section 3(f) or 3(g), it
shall immediately discontinue its disposition of Registrable Securities pursuant
to a Registration Statement covering such Registrable Securities until the
Investor's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(f) and, if so directed by the Company, the Investor
shall deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in the
Investor's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
5. Expenses of Registration. All Registration Expenses shall be paid by the
Company.
6. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the Investor, which
facilitates the disposition of Registrable Securities, and each of their
respective officers and directors and each person who controls such Investor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Person") from and against any losses, claims, damages or
liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstance in which they were made,
not misleading, or arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Prospectus or an omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company hereby
agrees to reimburse such Indemnified Person for all reasonable legal and other
expenses incurred by them in connection with investigating or defending any such
action or claim as and when such expenses are incurred; provided, however, that
the Company shall not be liable to any such Indemnified Person in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the occurrence of an event of the type specified in Section 3(f), the use by
the Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person written notice that such Prospectus is
outdated or defective.
(b) Indemnification by the Investor. The Investor agrees, as a consequence
of the inclusion of any of its Registrable Securities in a Registration
Statement, which facilitates the disposition of Registrable Securities shall
agree, as a consequence of facilitating such disposition of
9
Registrable Securities, to (i) indemnify and hold harmless the Company, its
directors (including any person who, with his or her consent, is named in the
Registration Statement as a director nominee of the Company), its officers and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities to which the Company or such other
persons may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in such Registration Statement or Prospectus or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein (in light of the circumstances under which they were made, in
the case of the Prospectus), not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Investor expressly for use
therein; provided, however, that Investor shall not be liable under this Section
6(b) for any amount in excess of the gross proceeds paid to such Investor or
underwriter in respect of shares sold by it, and (ii) reimburse the Company for
any legal or other expenses incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Notice of Claims, etc. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section 6 is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially prejudiced and
forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (i) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (ii) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (iii) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (i), (ii) or (iii) above, the fees, costs and expenses of
such legal counsel shall be borne exclusively by the Indemnified Party. Except
as provided above, the Indemnifying Party shall not, in connection with any
Claim in the same jurisdiction, be liable for the fees and expenses of more than
one firm of counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnified Party shall not, without the prior written consent of
the Indemnifying Party (which consent shall not
10
unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnifying Party from all liabilities with respect to such Claim or judgment.
(d) Contribution. If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an Indemnified Person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party 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
such Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 6(d). The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. 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. The obligations of the Investor in this Section 6(d) to
contribute shall be several in proportions to the percentage of Registrable
Securities registered or underwritten, as the case may be, by them and not
joint.
(e) Notwithstanding any other provision of this Section 6, in no event
shall the Investor be required to undertake liability to any person under this
Section 6 for any amounts in excess of the dollar amount of the gross proceeds
to be received by the Investor from the sale of its Registrable Securities
pursuant to any Registration Statement under which such Registrable Securities
are to be registered under the Securities Act.
(f) The obligations of the Company under this Section 6 shall be in
addition to any liability, which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability, which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies, which may otherwise be
available to an indemnified party at law or in equity.
7. Rule 144. With a view to making available to the Investor the benefits of
Rule 144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investor to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
11
(a) Comply with the provisions of paragraph (c) of Rule 144; and
(b) File with the Commission in a timely manner all reports and other
documents required to be filed by the Company pursuant to Section 13 or 15(d)
under the Exchange Act; and, if at any time it is not required to file such
reports but in the past had been required to or did file such reports, it will,
upon the request of the Investor, make available other information as required
by, and so long as necessary to permit sales of, its Registrable Securities
pursuant to Rule 144.
8. Assignment. The rights to have the Company register Registrable Securities
pursuant to this Agreement may be assigned or transferred only with the prior
written consent of the Company, and any such assignment or transfer without such
consent shall be void and of no effect. Notwithstanding the foregoing, such
consent of the Company shall not be required with respect to any assignment or
transfer of Registrable Securities to an Affiliate of Investor, including for
this purpose if Investor is an investment company, any fund or account advised
by Investor's investment adviser or any Affiliate thereof. In the event of any
such permitted assignment or transfer by the Investor to any permitted
transferee of all or any portion of such Registrable Securities such transfer
will be allowed only if: (a) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment,
the securities so transferred or assigned to the transferee or assignee
constitute Restricted Securities, (d) at or before the time the Company received
the written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein, and (e) the Company is furnished with an opinion of counsel,
which counsel and opinion shall be reasonably satisfactory to the Company, to
the effect that the permitted assignment would be in compliance with the
Securities Act and State Acts.
9. Amendment and Waiver. Any provision of this Agreement may be amended and
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investor. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon the Investor and the
Company.
10. Miscellaneous.
(a) If the Company (i) fails to file any of the Registration Statements
pursuant to Section 2(a) within the agreed time frame, (ii) fails to cause any
of the Registration Statements pursuant to Section 2(a) to become effective
within the agreed timeframe, (iii) fails to keep any of the Registration
Statements pursuant to Section 2(a) current and effective for the agreed period
of time, or (iv) fails to provide the agreed piggy-back rights pursuant to
Section 2(b), then the Investor will be entitled as a remedy for any and all
concurrent breaches of this Agreement related to one or more concurrent such
failures, to liquidated and agreed upon damages payable on each Registrable
Share for each day of any such delay or failure, as the case may be. Such
liquidated damages shall be payable quarterly in arrears, provided that multiple
penalties shall not accrue for multiple defaults that overlap, in arrears within
ten (10) days of the end of each fiscal quarter and shall accrue at a
12
daily rate of (i) 10% of the initial purchase price per Registrable Share per
annum during the first 90 days of the delay or failure and (ii) the rate will
escalate by an additional 5% of the initial purchase price per Registrable Share
per annum for each successive three month period after the first 90 days of the
delay or failure.
(b) A person or entity shall be deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(c) If after the date hereof and prior to the Commission declaring a
Registration Statement to be filed pursuant to Section 2(a) effective under the
Securities Act, the Company grants to any Person any registration rights with
respect to any Company securities which are more favorable to such other Person
than those provided in this Agreement, then the Company forthwith shall grant
(by means of an amendment to this Agreement or otherwise) identical registration
rights to the Investor hereunder.
(d) Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally recognized overnight courier service as follows, and shall be
deemed given when actually received.
if to the Company, to: Accredited Home Lenders Holding Co.
00000 Xxxxxx xx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
With a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
if to the Investor, to: FBR Asset Investment Corporation
0000 00/xx/ Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
With a copy to: Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxx, Esq.
The Company or the Investor may change the foregoing address by notice
given pursuant to this Section 10(d).
13
(e) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(f) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware.
(g) The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(h) The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. Other than the rights referred to in Section 3(l) under the
Rights Agreement, the Company is not currently a party to any agreement granting
any registration rights with respect to any of its securities to any person
which conflicts with the Company's obligations hereunder or gives any other
party the right to include any securities in any Registration Statement filed
pursuant hereto, except for such rights and conflicts as have been irrevocably
waived. Without limiting the generality of the foregoing, without the written
consent of the holders of a 66 2/3% interest of the Registrable Securities, the
Company shall not grant to any person after the date hereof the right to request
it to register any of its securities under the Securities Act unless the rights
so granted are pari passu to the prior rights of the holders of Registrable
Securities set forth herein, and are not otherwise in conflict or inconsistent
with the provisions of this Agreement. The restrictions on the Company's rights
to grant registration rights under this paragraph shall terminate on the date
all Registrable Securities have been registered pursuant to a Registration
Statement that has been declared effective by the Commission.
(i) This Agreement and the Purchase Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement and the Purchase Agreement
supersede all prior agreements and undertakings among the parties hereto with
respect to the subject matter hereof.
(j) Subject to the requirements of Section 8 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
(k) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
14
(l) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning thereof.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY: ACCREDITED HOME LENDERS HOLDING CO., a Delaware
corporation
________________________________________________
Name:
Title:
INVESTOR: FBR ASSET INVESTMENT CORPORATION, a Virginia
corporation
________________________________________________
Name:
Title:
16
SCHEDULE 3(F)
Plan of Distribution
The selling stockholders and any of their donees, transferees, pledgees,
assignees and successors-in-interest may sell, from time to time, any or all of
their shares of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholder may use any one or more of
the following methods when selling shares:
. ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
. block trades in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
. purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
. over-the-counter distribution in accordance with the rules of the
Nasdaq National Market;
. privately negotiated transactions;
. short sales;
. broker-dealers may agree with the selling stockholder to sell a
specified number of such shares at a stipulated price per share;
. a combination of any such methods of sale; and
. any other method permitted pursuant to applicable law.
Under applicable rules and regulations under the Securities Exchange Act,
any person engaged in a distribution of the shares of common stock covered by
this prospectus may be limited in its ability to engage in market activities
with respect to such shares. A selling stockholder, for example, will be subject
to applicable provisions of the Securities Exchange Act and the rules and
regulations under it, including, without limitation, Regulation M, which
provisions may restrict certain activities of the selling stockholder and limit
the timing of purchases and sales of any shares of common stock by the selling
stockholder. Furthermore, under Regulation M, persons engaged in a distribution
of securities are prohibited from simultaneously engaging in market making and
certain other activities with respect to such securities for a specified period
of time prior to the commencement of such distributions, subject to specified
exceptions or exemptions. The foregoing may affect the marketability of the
shares offered by this prospectus.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In connection with
distributions of the shares or
17
otherwise, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of our common stock in the course of hedging the positions they assume
with selling stockholders. The selling stockholders may also sell our securities
short and redeliver the shares to close out such short positions. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions that require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares the broker-dealer or other financial institution may
resell pursuant to this prospectus, as supplemented or amended to reflect such
transaction.
The selling stockholder may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling stockholder may pledge its shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may offer and sell, from time to time, the pledged shares.
The selling stockholder may sell shares directly to market makers acting as
principals and/or broker-dealers acting as agents for itself or its customers.
Broker-dealers engaged by the selling stockholder may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions,
concessions or discounts from the selling stockholder (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholder does not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
Market makers and block purchasers that purchase the shares will do so for their
own account and at their own risk. It is possible that a selling stockholder
will attempt to sell shares in block transactions to market makers or other
purchasers at a price per share that may be below the then-current market price.
We cannot make assurances that all or any of the shares of common stock will be
issued to, or sold by, the selling stockholder.
In addition, any shares that qualify for sale pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, may be sold under Rule
144 rather than pursuant to this prospectus.
The selling stockholder and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
In certain states, the applicable state securities laws will require a
holder of shares desiring to sell its shares to sell its shares only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We are required to pay all fees and expenses incident to the registration
of the shares, including our fees and disbursements of counsel, to the selling
stockholders. We have agreed to
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indemnify the selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
In addition, we will make copies of this prospectus available to the
selling stockholders for the purpose of satisfying the prospectus delivery
requirements of the Securities Act. The selling stockholders may indemnify any
broker-dealer that participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
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