SUPERIOR BANK WARRANT REPURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of May __, 1999 and is between
SUPERIOR BANK FSB, a federally chartered savings bank, with its principal place
of business at Xxx Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 ("Superior")
and XXXXXXXX.XXX, INC. (formerly known as First Mortgage Network, Inc.), a
Florida corporation, with its principal place of business at 0000 Xxxxxxx
Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("Xxxxxxxx.xxx").
RECITALS
A. Superior is the owner of certain warrants to purchase common stock
of Xxxxxxxx.xxx described on Exhibit A hereto ("Warrants").
B. Xxxxxxxx.xxx and Superior are parties to an agreement dated as of
April 1, 1998 pursuant to which Xxxxxxxx.xxx is obligated, under certain
circumstances, to purchase the Warrants from Superior ("Warrant Put Option").
C. Xxxxxxxx.xxx is contemplating issuing $27,500,000 in aggregate
principal amount of 12% Senior Subordinated Convertible Notes (the "Bridge Note
Financing") and the potential investors desire that Xxxxxxxx.xxx provide for the
repurchase of the Warrants.
D. Because Superior holds a substantial warrant position in
Xxxxxxxx.xxx, it has an interest in facilitating the Bridge Note Financing to
enhance Xxxxxxxx.xxx's value.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
Section 1. Definitions. Capitalized terms used in this Agreement and
not otherwise defined herein have the meanings ascribed to them in the Warrant
Put Option, unless the context otherwise requires.
Section 2. Purchase and Sale of Warrants. Subject to Section 3 hereof,
the purchase and sale of the Warrants shall occur as follows:
(a) Stage 1. Upon the closing of the Bridge Note Financing,
Xxxxxxxx.xxx will purchase, and Superior will sell, a Warrant to
purchase 100,000 shares of Xxxxxxxx.xxx common stock having an exercise
price of $5.00 per share (the "First Stage Warrant"). The purchase
price for the First Stage Warrant shall be $6,000,000.
(b) Stage 2. Upon the closing of the Bridge Note Financing,
then on or before June 30, 1999, Xxxxxxxx.xxx will purchase, and
Superior will sell, a Warrant to purchase 100,000 shares of
Xxxxxxxx.xxx common stock having an exercise price of $5.00 per share
(the "Second Stage Warrant"). The purchase price for the Second Stage
Warrant shall be $6,000,000. Xxxxxxxx.xxx shall deliver to Superior a
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written notice setting forth the closing date (the "Second Stage
Closing Date") for the purchase of the Second Stage Warrant. The Second
Stage Closing Date shall be not later than June 30, 1999 and the notice
of closing date provided to Superior shall be delivered to Superior not
less than 5 business days prior to the Second Stage Closing Date.
(c) Stage 3. Xxxxxxxx.xxx shall have an option to purchase,
and upon exercise of the option Superior will sell, Warrants to
purchase 200,000 shares of Xxxxxxxx.xxx common stock having an exercise
price of $5.00 per share and a Warrant to purchase 100,000 shares of
Xxxxxxxx.xxx common stock having an exercise price of $7.50 per share
(the "Third Stage Warrants"). The aggregate purchase price for the
Third Stage Warrants shall be $13,000,000. To exercise its option to
purchase the Third Stage Warrants, Xxxxxxxx.xxx shall deliver to
Superior a written notice of exercise which includes the closing date
(the "Third Stage Closing Date") for the purchase of the Third Stage
Warrants. The Third Stage Closing Date shall be not later than
September 30, 1999, and the notice of exercise shall be delivered to
Superior not less than 5 business days prior to the Third Stage Closing
Date.
Section 3. Purchase of Warrants Upon IPO or Business Combination.
Notwithstanding the purchase schedule contained in Section 2, in the event of a
sale by Xxxxxxxx.xxx of common stock in a Qualified Initial Public Offering,
Superior agrees to sell, and Xxxxxxxx.xxx agrees to purchase, the Warrants at
the purchase prices described in Section 2. For purposes of this Agreement, a
Qualified Initial Public Offering shall mean a sale for cash by Xxxxxxxx.xxx of
Xxxxxxxx.xxx common stock in an underwritten public offering registered with the
Securities and Exchange Commission on Form S-1 in which the price of the common
stock is not less than $10 per share (as adjusted for stock splits or stock
consolidations after the date hereof), and which closes on or prior to September
30, 1999.
Notwithstanding the purchase schedule contained in Section 2, in the
event of a Qualified Business Combination, Superior agrees to sell, and
Xxxxxxxx.xxx agrees to purchase, the Warrants at the purchase prices described
in Section 2. For purposes of this Agreement, a Qualified Business Combination
shall mean a merger, reverse merger, consolidation or other business combination
which results in the issuance or acquisition of equity rights, or options,
warrants or other entitlements to equity interests, equal to, individually or
cumulatively, 25% or more of the outstanding equity interests of Xxxxxxxx.xxx or
any successor by merger, consolidation or otherwise (on a fully diluted basis),
at a price which values the then existing equity interests of Xxxxxxxx.xxx or
any successor by merger, consolidation or otherwise (on a fully diluted basis)
at $10.00 or more a share, and which closes or becomes effective on or prior to
September 30, 1999.
Section 4. Payment of Purchase Price for Warrants; Closing Dates. The
purchase price for the Warrants shall be paid by wire transfer of immediately
available funds to a bank account designated for that purpose by Superior and
Superior shall deliver to Xxxxxxxx.xxx the executed original agreements
evidencing the Warrants duly endorsed in blank by Superior. Xxxxxxxx.xxx's
payment of the purchase price, and Superior's delivery of the agreements, shall
occur (A) if the purchase occurs under Section 2: (i) as to the First Stage
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Warrants, not later than 5 business days following the closing of the Bridge
Note Financing, (ii) as to the Second Stage Warrants, not later than the Second
Stage Closing Date, and (iii) as to the Third Stage Warrants, not later than the
Third Stage Closing Date; and (B) if a purchase occurs under Section 3: not more
than 5 business days following the closing of the Qualified Initial Public
Offering or the closing or effective date of the Qualified Business Combination.
Section 5. Termination. This Agreement shall terminate and be of no
further force and effect at midnight on September 30, 1999, and neither party
hereto shall thereafter have any rights or obligations hereunder; provided,
however, that such termination shall not relieve any party of liability for
breach of the terms hereof.
Section 6. Effect on Other Agreements.
(a) So long as this Agreement is in effect, this Agreement
supersedes the Warrant Put Option with respect to the put and purchase
of the Warrants. Upon termination of this Agreement, the Warrant Put
Option shall be fully enforceable in accordance with its terms.
(b) Execution of this Agreement shall constitute a termination
of the Warrant Repurchase Agreement dated as of March 26, 1999 (the
"Repurchase Agreement"), and the Repurchase Agreement shall be of no
further force and effect following execution of this Agreement.
(c) This Agreement does not modify, amend or otherwise alter
the rights of the parties under the Sale and Marketing Agreement dated
as of April 28, 1995. Except as provided in Section 7, this Agreement
does not affect the Software Rights held by Superior.
Section 7. Waiver of Material Transaction Event; Purchase of Software
Rights. Superior agrees that the Bridge Note Financing shall not constitute a
"Material Transaction Event" under the Warrant Put Option, provided that
Xxxxxxxx.xxx uses $3.5 million of the proceeds from the Bridge Note Financing to
purchase the Software Rights, together with all enhancements thereof (other than
separable non-generic enhancements produced by or for Superior) and updates
thereto, which purchase shall be subject to the retention by Superior of the
Superior Retained Software Rights. The closing of the purchase of the Software
rights shall take place on the First Stage Closing Date. This waiver of a
Material Transaction Event shall apply solely to the Bridge Note Financing under
the circumstances described above, but shall not constitute a waiver of any
other Material Transaction Event.
For example, if prior to termination of this Agreement there is a
Material Transaction Event (other than the Bridge Note Financing to the extent
it is waived), such Material Transaction Event shall not trigger Superior's put
option under the Warrant Put Option, in accordance with the first sentence of
Section 6(a). However, if following the termination of this Agreement any
portion of the Warrants remain outstanding, Superior shall have all of its
rights under the Warrant put option, in accordance with the second sentence of
Section 6(a), and any Material Transaction Event (other than the Bridge Note
Financing to the extent it is waived) occurring prior to or after the
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termination of this Agreement shall trigger Superior's put option under the
Warrant Put Option in accordance with its terms.
Section 8. Notices. All demands, notices and communications concerning
this Agreement shall be in writing and shall be deemed to be duly given if
personally delivered at or mailed by certified mail or registered mail, postage
prepaid or sent by federal express or other comparable overnight courier service
to the intended party at the address set forth at the beginning of this
Agreement for such party or to such other address as may hereinafter be
furnished by either party to the other party in the manner herein provided. Any
such notice shall be deemed effective upon receipt or refusal of the intended
party to accept delivery thereof.
Section 9. Jurisdiction. THIS AGREEMENT IS DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAW OF THE STATE OF ILLINOIS. ANY LITIGATION BASED ON
THIS AGREEMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT OR IN
FURTHERANCE HEREOF, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) BETWEEN THE PARTIES SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT ILLINOIS. EACH OF THE PARTIES HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORM. EACH OF THE PARTIES
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR WITH RESPECT
TO THIS AGREEMENT AND THE TRANSACTIONS PROVIDED FOR AND CONTEMPLATED HEREIN. TO
THE EXTENT EITHER PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION FROM ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
OR NOTICE, ATTACHMENT PRIOR TO, IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT
TO ITSELF OR ITS PROPERTY, THEN TO THE EXTENT PERMITTED BY LAW, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND ANY OTHER DOCUMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT OR
IN FURTHERANCE OF THIS AGREEMENT.
Section 10. Counterparts. This Agreement may be executed by each of the
parties on separate counterparts which together shall constitute a single
binding Agreement with the same force and effect as if the signatures of both
parties appeared on the same counterpart signature page.
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Section 11. Remedies. The parties agree that in addition to any other
remedies available under applicable law in the event of a breach of this
Agreement, each party shall have the right to obtain appropriate injunctive
relief against the party in breach.
Section 12. Negotiation of Parties. This Agreement has been fully
negotiated by the parties and their respective counsel and has been jointly
drafted by Xxxxxxxx.xxx and Superior and shall be construed accordingly.
Section 13. Headings. The headings of the sections of this Agreement
are for ease of reference and shall not be deemed to be a part of this
Agreement.
Section 14. Successors. This Agreement shall be binding upon and shall
inure to the benefit of the respective successors and assigns of Xxxxxxxx.xxx
and Superior.
IN WITNESS WHEREOF, Superior and Xxxxxxxx.xxx have executed this
Agreement as of the date stated at the beginning of this Agreement.
XXXXXXXX.XXX, INC.
By:___________________________________________
Xxxx Xxxxxx, Chairman and CEO
SUPERIOR BANK FSB
By:___________________________________________
Xxxxxxx X. Xxxxxxx, Senior Vice President
and Chief Financial Officer
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EXHIBIT A
Schedule of common stock Warrants Owned By Superior
1. Amended and Restated common stock Warrant dated April 1, 1998
for 100,000 shares of First Mortgage Network, Inc. common
stock with an initial exercise price of $5.00 per share.
2. common stock Warrant dated April 1, 1998 for 300,000 shares of
First Mortgage Network, Inc. common stock with an initial
exercise price of $5.00 per share.
3. common stock Warrant dated April 1, 1998 for 100,000 shares of
First Mortgage Network, Inc. common stock with an initial
exercise price of $7.50 per share.
