REGISTRATION RIGHTS AGREEMENT
TIES REGISTRATION RIGHTS AGREEMENT is made as of this 15th day of March,
1996, by and between First Mortgage Network, Inc., a Florida corporation (the
"Company"), and Xxxxx-XxXxxxxx Real Estate, Inc., a California corporation
("Shareholder").
RECITALS
WHEREAS, the Company is a party to an Agreement and Plan of Merger of
even date herewith between the Company, the Shareholder and Western America
Mortgage ("WAM"), by which WAM will merge with and into the Company (the "Merger
Agreement") pursuant to the Florida Business Corporation Act, with the Company
surviving;
WHEREAS, pursuant to the Merger Agreement, the Company will issue 1,000
shares of its Special Preferred Stock (Northern California Division) (the
"Preferred Stock") to the Shareholder; and
WHEREAS, as an inducement to the Shareholder and the Company to enter
into the Merger Agreement, the Shareholder and the Company hereby agree that
this Registration Rights Agreement ("this Agreement") shall govern the rights of
the Shareholder to register shares of Common Stock issuable to the Shareholder
upon conversion of the Preferred Stock;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Definitions.
(a) The term "Abbreviated Registration Statement" means a registration
statement on Form S-3 or any similar or successor form in which financial
statements and other detailed information about the issuer are incorporated by
reference from the issuer's periodic reports filed under Securities Exchange Act
of 1934.
(b) The term "Act" means the Securities Act of 1933, as amended, or any
successor legislation thereto.
(c) The terms "register, registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(d) The term "Registrable Securities" means (1) the Common Stock issuable
or issued upon conversion of the Company's Preferred Stock, and (2) any Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Preferred Stock, excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which his rights under this Section 1 are
not assigned and any such securities as to which restrictive legends restricting
transfer under the Act
are lifted pursuant to Rule 144(k) under the Act (or any successor rule) or any
other exemption from registration under the Act in which the subsequent
disposition of such shares by the Shareholder does not require registration
under the Act.
2. Piggyback Registration.
2.1 Right to Include Registrable Stock. If the Company proposes to
register any of its shares of Common Stock under the Act for its own account for
sale for cash (other than a registration on Form S-4 or Form S8, or any
successor or similar forms) (the "Offering"), it will each such time promptly
give written notice to the Shareholder. Upon the written request of the
Shareholder made within 20 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Shareholder and the intended method of distribution thereof), the Company
will use its reasonable best efforts to effect the registration under the Act of
all Registrable Securities which the Company has been requested to register by
the Shareholder in accordance with the intended methods of distribution
specified in such request; provided that (i) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company determines for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to the Shareholder and, thereupon, will be relieved of its
obligation to register any Registrable Securities in connection with such
registration, and (ii) in case of a determination by the Company to delay
registration of its securities, the Company will be permitted to delay the
registration of Registrable Securities for the same period as the delay in
registering such other securities.
2.2 Priority in Piggyback Registrations. If the managing underwriter for
a piggyback registration involving an underwritten offering advises the Company
in writing that, in its opinion, the number of securities of the Company
(including Registrable Securities) requested to be included in such registration
by the holders thereof exceeds the number of securities of the Company (the
"Sale Number") which can be sold in an orderly manner in such offering within a
price range acceptable to the Company, the Company will include (i) first, all
securities of the Company that the Company proposes to register for its own
account and (ii) second, to the extent that the number of securities of the
Company to be included by the Company is less than the Sale Number, all
Registrable Securities requested to be included by the Shareholder and all other
securities of the Company requested to be included by the holders thereof, pro
rata based on the relative numbers of securities requested to be included by
each.
3. Obligations of the Company. Whenever required under this Agreement to effect
the registration of any Registrable Securities, the Company will, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such of the Registrable Securities as are set forth in the request, use its
reasonable best efforts to cause such registration statement to become effective
and use its reasonable best efforts to keep
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such registration statement effective for up to one year (nine months in the
case of a registration statement that is not an Abbreviated Registration
Statement) but not after such securities cease being Registrable Securities.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Shareholder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Registrable Securities owned by such Shareholder.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Shareholder, provided
that the Company shall not be required to qualify to do business, subject itself
to taxation or to file a general consent to service of process in any such
states or jurisdictions.
(e) In the event the registration statement is used in an underwritten
public offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering, provided that the Shareholder also has entered into and performed its
obligations under such an agreement.
(f) Notify the Shareholder, at any time when a prospectus relating
thereto is required to be delivered under the Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
4. Furnish Information. The Company's obligation to cause any registration
statement to become effective in connection with distribution of any Registrable
Securities pursuant to this Agreement is contingent upon the Shareholder, with
reasonable promptness, furnishing to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method of
disposition of such securities, as is required to effect the registration of the
Registrable Securities.
5. Indemnification. In the event of any registration under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Shareholder, any underwriter (as defined in the Act) for such
shareholder and each person, if any, who controls such shareholder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), against any losses, claims,
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damages, or liabilities (joint or several) to which they may become subject
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law, and the Company will pay to the Shareholder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection (a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor will the Company be liable in any such case for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon (1) a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Shareholder, underwriter or controlling person or
(2) a Violation which results from the fact that there was not sent or given to
a person who bought Registrable Securities, at or prior to the written
confirmation of the sale, a copy of the final prospectus, as then amended or
supplemented, if the Company had previously furnished copies of such prospectus
hereunder and such prospectus corrected the misstatement or omission forming the
basis of the Violation.
(b) To the extent permitted by law, the Shareholder will indemnify and
hold harmless, to the extent of the proceeds received by such Shareholder, the
Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Act, any underwriter and any controlling person of any such
underwriter or other shareholder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Act, or the 1934 Act or other federal or state law, insofar
as such losses, claims, damages, or liabilities (or action in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by the Shareholder expressly for
use in connection with such registration; and such Shareholder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection (b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection (b)
does not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Shareholder, which consent shall not be unreasonably withheld; provided, that,
in no event will any indemnity under this subsection (b) exceed the gross
proceeds from the Offering (excluding underwriting discounts and commissions)
received by the Shareholder.
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(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 5, deliver to the indemnifying party a
written notice of the commencement of such action and the indemnifying party
will have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
will have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of the indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between the indemnified party and any
other party represented by such counsel in the same proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, relieves such indemnifying party of any liability to the
indemnified party under this Section 5, but the omission so to deliver written
notice to the indemnifying party does not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 5. No
indemnifying party under this Agreement will enter into any settlement or
consent to any entry of judgment which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the indemnified party of a
release from all liability in respect of such claim or litigation.
(d) If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, will contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party will be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) The obligations of the Company and the Shareholder under this Section
5 will survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
6. Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Agreement, including,
without limitation, all registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel
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for the Company and expenses of any special audits incidental to or required by
such registration, qualification or compliance will be borne by the Company,
except that the Company will not be required to pay underwriters' discounts,
commissions, or stock transfer taxes relating to the Registrable Securities or
the fees and disbursements of counsel to the Shareholder.
7. Eligibility to Use Rule 144. With a view to making available to the
Shareholder the benefits of certain rules and regulations of the Securities and
Exchange Commission which may permit the sale of the Registrable Securities to
the public without registration, after such time as a public market exists for
the Common Stock of the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times after the date
that the Company becomes subject to the reporting requirements of the Securities
Exchange Act of 0000 (xxx "Xxxxxxxx Xxx");
(b) Use its best efforts to file with the Securities and Exchange
Commission in a timely manner all reports and other documents required of the
Company under the Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and
(c) So long as a Shareholder owns any Registrable Securities, furnish to
the Shareholder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company filed with the Securities and Exchange Commission, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as a Shareholder may reasonably request
in availing itself of any rule or regulation of the Securities and Exchange
Commission allowing a Shareholder to sell any such securities without
registration.
8. Holdback Agreement. If requested by the Company, the Shareholder agrees not
to effect any public sale or distribution, including any sale pursuant to Rule
144 under the Act, of any Registrable Securities (in each case, other than as
part of the offering to which such registration statement relates) within 7 days
before or 90 days after the effective date of a registration statement filed
pursuant to this Agreement for an underwritten offering.
9. Miscellaneous.
9.1 Successors and Assigns. The terms and conditions of this Agreement
inure to the benefit of and are binding upon the respective successors and
assigns of the parties; provided that the Shareholder may assign its rights
under this Agreement only as permitted under the Merger Agreement. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
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9.2 Governing Law. This Agreement will be governed by and construed under
the laws of the State of Florida.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
9.4 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.5 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement will be given in writing and will be deemed effectively
given (i) upon personal delivery to the party to be notified, (ii) on the
seventh business day after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, (iii) on the next business day
after dispatch via nationally recognized overnight courier or (iv) upon
confirmation of transmission by facsimile, all addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties. Notices should be provided in accordance
with this Section at the following addresses:
If to the Shareholder to:
Mr. A. Xxxxx Xxxx
Xxxxx-XxXxxxxx Real Estate, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx, Esquire
Donahue, Gallagher, Xxxxx and Wood
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Company, to:
Xx. Xxxx Xxxxxx
First Mortgage Network, Inc.
000 Xxxxx Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Xx., Esquire
Xxxxx & Xxxxxxx
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000 Xxxxx Xxxxx Xxxxxx
Post Xxxxxx Xxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
9.6 Expenses. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party will be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
9.7 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 holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph will be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.
9.8 Severability If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision will be excluded from
this Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
9.9 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FIRST MORTGAGE NETWORK, INC. XXXXX-XxXXXXXX REAL ESTATE
By: /s/ Xxxx X. Xxxxxx, President By: /s/ A. Xxxxx Xxxx, President
------------------------------- -----------------------------------
Xxxx X. Xxxxxx, President A. Xxxxx Xxxx, President
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