STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, is made and entered into this as of the 25th
day of July, 2000 (this "Agreement") by and between MATRIX BANCORP, INC., a
Colorado corporation (the "Issuer"), and SOUTHWEST SECURITIES GROUP, INC., a
Delaware corporation (the "Grantee").
WITNESSETH:
WHEREAS, Issuer and Grantee have entered into that certain Letter of
Intent dated July 13, 2000 (the "Letter of Intent") setting forth mutual
understandings and agreements with respect to a proposed business combination
between Issuer and Grantee; and
WHEREAS, the Letter of Intent provides that the Issuer and the Grantee
will negotiate in good faith to prepare and execute a definitive agreement (the
"Definitive Agreement") providing for, among other things, the acquisition of
all of the issued and outstanding capital stock of the Issuer by the Grantee
through a merger (the "Merger") of the Issuer with and into the Grantee (or a
wholly-owned subsidiary of the Grantee), with the Grantee as the surviving
corporation; and
WHEREAS, as a condition and inducement to Grantee's delivery and
acceptance of the Letter of Intent and subsequent execution of the Definitive
Agreement, Grantee has required that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Letter of Intent, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 1,345,188 shares (the "Option Shares") of common stock of Issuer, par
value $0.0001 per shares ("Issuer Common Stock"), at a purchase price per Option
Share (the "Purchase Price") equal to $16.23; provided, however, that in no
event shall the number of shares of Issuer Common Stock for which this Option is
exercisable exceed 19.9% of the Issuer's issued and outstanding shares of Common
Stock prior to the exercise of the Option. The number of shares of Issuer Common
Stock that may be received upon the exercise of the Option and the Purchase
Price are subject to adjustment as herein set forth.
2. EXERCISE OF OPTION.
(a) Provided that (i) Grantee shall not be in material breach of the
agreements or covenants contained in this Agreement or the Letter of Intent, and
(ii) no preliminary or permanent injunction or other order against the delivery
of the Option Shares issued by any court of competent jurisdiction in the United
States shall be in effect, Grantee may exercise the Option, in whole or in part,
at any time and from time to time, but only following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate and
be of no further force or effect upon the earlier to occur of (A) the execution
of the Definitive Agreement (at which time a new stock option agreement
containing substantially the same terms will be
executed by the parties thereto), (B) the termination of the Letter of Intent in
accordance with the terms thereof before the occurrence of a Purchase Event or a
Preliminary Purchase Event (other than a termination of the Letter of Intent by
Grantee because the Issuer has failed to comply with its covenants or agreements
contained the Letter of Intent, including, without limitation, the exclusivity
covenants in Section 17 of the Letter of Intent) (an "Issuer Termination")); (C)
the close of business on the 270th day after the occurrence of an Issuer
Termination; and (D) the close of business on the 270th day after termination of
the Letter of Intent (other than by Grantee pursuant to Section 1 of the Letter
of Intent) following the occurrence of a Purchase Event or a Preliminary
Purchase Event (hereinafter sometimes referred to as the "Termination Date");
provided that any purchase of Option Shares upon the exercise of the Option
shall be subject to compliance with applicable law, including, without
limitation, Home Owners' Loan Act, as amended ("HOLA") and any other required
consent of any regulatory authority. The rights set forth in Section 7 of this
Agreement shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as set forth
herein.
(b) Following the occurrence of a Preliminary Purchase Event and prior to
the earlier of (i) the execution of a Definitive Agreement, (ii) the occurrence
of a Purchase Event, or (iii) the Termination Date, Issuer may deliver to
Grantee a notice certifying that the events or circumstances giving rise to the
Preliminary Purchase Event no longer exist, and that no events or circumstances
constituting any other Preliminary Purchase Event then exist (an "Exclusivity
Certificate"). Notwithstanding any other provision of this Agreement, in the
event that an Exclusivity Certificate is delivered, the Option shall terminate
and be of no further force or effect upon the earlier to occur of (A) the
execution of a Definitive Agreement (at which time a new stock option agreement
containing substantially the same terms (except for this Section 2(b)) will be
executed by the parties thereto), and (B) the expiration of thirty (30) days
after the delivery of such Exclusivity Certificate if Issuer and Grantee,
despite good faith efforts by both parties, fail to execute a Definitive
Agreement prior to that time upon the terms and conditions stated in the Letter
of Intent (notwithstanding any prior termination thereof); provided, that no
Purchase Event or further Preliminary Purchase Event shall have occurred during
such thirty (30) day period, in which case the Option shall not be terminated in
accordance with this Section 2(b) and shall remain in effect pursuant to the
terms and conditions of this Agreement.
(c) As used herein, a "Purchase Event" means any of the following events:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
"Acquisition Transaction" shall mean (A) any tender offer for more than 25%
of the outstanding shares of Issuer, (B) any merger or consolidation of
Issuer with or into any entity other than Grantee or a subsidiary of
Grantee, (C) any sale of all or substantially all of the assets of Issuer,
(D) any reorganization of Issuer or other transaction that results or when
completed would result in a disposition of substantially all of the assets
of Issuer, or (E) the issuance, sale or other disposition of shares
representing more than 25% of the shares of Issuer.
(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have
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acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of, or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of more than 25% of the shares of Issuer.
(d) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such
person would own or control more than 25% of the then outstanding
shares of Issuer Common Stock (such an offer being referred to herein
as a "Tender Offer" or an "Exchange Offer", respectively); or
(ii) the Issuer has received either (A) an unsolicited
acquisition proposal that is superior to the proposed terms of the
Merger described in this Letter of Intent or (B) an inquiry reasonably
determined by the board of directors of Issuer to be likely to lead to
such a proposal, and the board of directors of Issuer has determined,
based upon advice of outside counsel, that the Issuer is not bound by
the exclusivity provisions of Section 17 of the Letter of Intent
because compliance with such provision is reasonably likely to
constitute a breach of its fiduciary duties to the Issuer's
shareholders under applicable law.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(e) Issuer shall notify Grantee promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event, it being understood that the
giving of such notice by Issuer shall not be a condition to the right of Grantee
to exercise the Option.
(f) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) subject to the next sentence, a
place and date not earlier than three (3) business days nor later than fifteen
(15) business days after the Notice Date for the closing (the "Closing") of such
purchase (the "Closing Date"). If prior notification to or consent of any
regulatory authority is required in connection with such purchase, then,
notwithstanding the prior occurrence of the Termination Date, the Closing Date
shall be extended for a reasonable period to enable such prior notification or
consent to occur or to be obtained (and the expiration of any mandatory waiting
period). Issuer shall cooperate with Grantee in the filing of any applications
or documents necessary to obtain any required consent or in connection with any
required prior notification and the Closing shall occur immediately following
receipt of such consent (or the filing of any such prior notification and the
expiration of any mandatory waiting periods).
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3. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Grantee shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this Agreement
to the Issuer at the address of the Issuer specified herein.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 3(a)
above, (i) Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever and subject to no pre-emptive rights, and (B) if the Option
is exercised in part only, a new Stock Option Agreement, executed by Issuer,
with the same terms as this Agreement evidencing the right to purchase the
balance of the shares of Issuer Common Stock purchasable hereunder, and (ii)
Grantee shall deliver to Issuer a letter agreeing that Grantee shall not offer
to sell or otherwise dispose of such Option Shares in violation of applicable
federal and state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
______________, 2000. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificates without such legend if Grantee shall have delivered
to Issuer an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
(d) Upon the giving by Grantee to Issuer of the written notice of exercise
of the Option provided for under Section 2(f) of this Agreement, the tender of
the applicable Purchase Price in immediately available funds and the tender of
this Agreement to Issuer, Grantee shall be deemed to be the holder of record of
the shares of Issuer Common Stock issuable upon such exercise, notwithstanding
that the stock transfer books of Issuer shall then be closed or that
certificates representing such shares of Issuer Common Stock shall not then be
actually delivered to Grantee. Issuer shall pay all expenses, and any and all
United States federal, state, and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section in the name of Grantee or its assignee,
transferee, or designee.
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(e) Issuer agrees (i) that it shall at all times maintain, free from
pre-emptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by amendment to its Articles of Incorporation or
Bylaws or through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by Issuer, (iii) promptly to take all action as may from
time to time be required (including (A) complying (if applicable) with all pre
merger notification, reporting and waiting period requirements specified in 15
U.S.C. ss. 18a and regulations promulgated thereunder and (B) in the event,
under any federal or state law, prior notice to or consent of any regulatory
authority is necessary before the Option may be exercised, cooperating fully
with Grantee in preparing any required application or notice and providing such
information to such regulatory authority as such regulatory authority may
require) in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Issuer Common Stock pursuant hereto, and (iv)
promptly to take all action provided herein to protect the rights of Grantee
against dilution.
4. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents and
warrants to Grantee as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Issuer. This Agreement has been duly executed and delivered by Issuer. Issuer
has fully complied with all of the terms of the Letter of Intent as of the date
of this Agreement and there has been no Purchase Event or Preliminary Purchase
Event since the effective date of the Letter of Intent and effective date of
this Agreement.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section 6 of
this Agreement upon exercise of the Option. The shares of Issuer Common Stock to
be issued upon due exercise of the Option, including all additional shares of
Issuer Common Stock or other securities which may be issuable pursuant to
Section 6 of this Agreement, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever, including any pre-emptive right of any shareholder of Issuer.
(c) NO VIOLATION. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation pursuant to any provisions of the Articles of
Incorporation or Bylaws of Issuer or,
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subject to obtaining any approvals or consents contemplated hereby, result in
any violation of any loan or credit agreement, note, mortgage, indenture, lease,
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Issuer or its properties or assets which violation would have a
material adverse effect on the Issuer.
5. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents and
warrants to Issuer that:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power and
authority to enter to this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) PURCHASE NOT FOR DISTRIBUTION. This Option is not being, and any Option
Shares or other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Grantee shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Grantee would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 6(a)), the number of shares of Issuer Common Stock subject to the
Option shall be adjusted so that, after such issuance, the Option, together with
any shares of Issuer Common Stock previously issued pursuant hereto, equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
(b) In the event that, prior to the Termination Date, Issuer shall enter in
an agreement:
(i) to consolidate with or merge into any person, other than Grantee
or one of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger; (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer where
Issuer shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of
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Issuer Common Stock shall be changed into or exchanged for stock or other
securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such
merger shall after such merger represent less than 25% of the outstanding
shares and share equivalents of the merged company; or (iii)to sell or
otherwise transfer all or substantially all of its assets to any person,
other than Grantee or one of its subsidiaries, then, and in each such case,
the agreement governing such transaction shall make proper provisions so
that, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, the Option, notwithstanding the fact that as
of the date of consummation of such transaction the Termination Date shall
have occurred, shall be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the
Acquiring Corporation (as defined below), (y) any person that controls the
Acquiring Corporation, or (z) in the case of a merger described in clause
(ii), the Issuer (in each case, such entity being referred to as the
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option, provided
that, if the terms of the Substitute Option cannot, because of the applicability
of any law or regulation, have the exact terms as the Option, such terms shall
be as similar as possible and in no event less advantageous to Grantee. The
Substitute Option Issuer and the then-holder or holders of the Substitute Option
shall execute an agreement evidencing the foregoing.
(d) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of the Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of each share of
Substitute Common Stock subject to the Substitute Option (the "Substitute
Purchase Price") shall be equal to the Purchase Price multiplied by a fraction
in which the numerator is the number of shares of the Issuer Common Stock for
which the Option was theretofore exercisable and the denominator is the number
of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or surviving
corporation of a consolidation or merger with respect to which Issuer is
one of the parties (if other than Issuer), (y) the Issuer in a
consolidation or merger or in which the Issuer is the continuing or
surviving corporation, and (z) the transferee of all or any substantial
part of the Issuer's assets.
(ii) "Assigned Value" shall mean the highest of (x) the price per
share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee), (y) the price
per share of the Issuer Common Stock to be paid by any person (other than
the Grantee) pursuant to the agreement with Issuer referred to in Section
6(b), or (z) in any other case, the highest last sales price per share of
Issuer Common Stock quoted on any national securities exchange (including
the NASDAQ - National Market System) (or if Issuer Common Stock is not
quoted on any such national securities exchange, the highest bid price per
share on any day as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Grantee) within the thirty (30)
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business days immediately preceding the agreement described in Section 6(b)
above; provided, however, that in the event of a sale of less than all of
Issuer's assets, the Assigned Value shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized investment
banking firm selected by Grantee, divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. In the event a
Tender Offer or Exchange Offer is made for the Issuer Common Stock or an
agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for the Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
mutually selected by Grantee and Issuer (or if applicable, Acquiring
Corporation).
(iii) "Average Price" shall mean the average last sales price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, as quoted on any national
securities exchange (including the NASDAQ - National Market System), and if
the Substitute Common Stock is not quoted on any such national securities
exchange, the average of the bid price for the one year period described
above, as quoted on the principal trading market or securities exchange on
which such Substitute Common Stock is traded, as reported by a recognized
source, as chosen by Grantee, but in no event higher than the last sales
price or closing price or the bid price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger, or sale;
provided that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls or
is controlled by such person, as Grantee may elect.
(iv) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon the exercise of the Substitute Option.
(f) In no event pursuant to any of the foregoing paragraphs shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of the Substitute Common
Stock but for this clause (f), the Substitute Option Issuer shall make a cash
payment to Grantee equal to the amount of (i) the value of the Substitute Option
without giving effect to the limitation in this clause (f) in excess of (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 6 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assumes in writing all of the obligations of Issuer
hereunder and takes all other actions that may be necessary so that the
provisions of this Section 6 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguished from or have lesser economic value
(other than any diminution resulting from the fact that the Substitute Common
Stock is "restricted
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securities" within the meaning of Rule 144 under the Securities Act) than other
shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 7, 8 and 9 shall apply, with appropriate
adjustments, to any securities for which the Option becomes exercisable pursuant
to this Section 6 and, as applicable, references in such sections to "Issuer,"
"Option," "Purchase Price," and "Issuer Common Stock" shall be deemed to be
references to "Substitute Option Issuer," "Substitute Option, " "Substitute
Purchase Price, " and "Substitute Common Stock, " respectively.
7. REPURCHASE AT THE OPTION OF GRANTEE.
(a) Subject to the last sentence of Section 2(a) of this Agreement, at the
request of Grantee at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 7(d)) and ending at the close of
business 365 days thereafter, Issuer shall repurchase from Grantee the Option
and all shares of Issuer Common Stock purchased by Grantee pursuant hereto with
respect to which Grantee then has beneficial ownership. The date on which
Grantee exercises its rights under this Section 7 is referred to as the "Request
Date." Such repurchase shall be at an aggregate price (the "Section 7 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to complete or partial exercise of
the Option with respect to which Grantee then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 6), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 6) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Grantee for each share of
Issuer Common Stock with respect to which the Option has been exercised and
with respect to which Grantee then has beneficial ownership, multiplied by
the number of such shares.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within ten (10) business days after the Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and
contemporaneously with such payment Grantee shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Grantee then has beneficial ownership, and
Grantee shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or consent of any regulatory authority is
required in connection with the payment of all or any portion of the Section 7
Repurchase Consideration, or Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify
Grantee and thereafter deliver from time to
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time, and as permitted by applicable law or regulation, that portion of the
Section 7 Repurchase Consideration that it is not then so prohibited from paying
within five (5) business days after the date on which Issuer is no longer
prohibited; provided, however, that if Issuer at any time is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
delivering to the Grantee the Section 7 Repurchase Consideration, in full (and
Issuer hereby undertakes to use its best efforts to obtain all required consents
of regulatory authorities and to file any required notices as promptly as
practicable in order to accomplish such repurchase), the Grantee may, at its
option, revoke its request that Issuer repurchase the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Grantee that portion of
the Section 7 Repurchase Consideration that Issuer is not prohibited from
delivering; and (ii) deliver, to the Grantee either (A) a new Stock Option
Agreement evidencing the right of Issuer to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Section 7 Repurchase Consideration less the portion thereof theretofore
delivered to the Grantee and the denominator of which is the Section 7
Repurchase Consideration, or (B) a certificate for the Option Shares it is then
prohibited from repurchasing.
Notwithstanding anything herein to the contrary, all of Grantee's rights
under this Section 7 shall terminate on the Termination Date of this Option
pursuant to Section 2(a) of this Agreement.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of: (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 7(d)(i) below; (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 6(b)(i), 6(b)(ii) or 6(b)(iii) above; or (iii) the highest
last sales price per share of Issuer Common Stock quoted on any national
securities exchange (including the NASDAQ - National Market System) (or if
Issuer Common Stock is not quoted on any such national securities exchange, the
highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Grantee) during the thirty (30) business days preceding the
Request Date; provided, however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking firm selected
by Grantee, divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be offered, paid
or received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in good
faith by an independent nationally recognized investment banking firm selected
by Grantee and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule l3d-3 promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been
10
formed which beneficially owns or has the right to acquire beneficial ownership
of, more than 25% of the then outstanding shares of Issuer Common Stock, or (ii)
any of the transactions described in Section 6(b)(i), 6(b)(ii) or 6(b)(iii) of
this Agreement shall be consummated.
8. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the conditions of
subparagraph (c) below, if requested by Grantee, as expeditiously as possible
prepare and file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Grantee upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by Grantee in such
request, including without limitation a "shelf'" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities for sale under
any applicable state securities laws.
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act, Issuer will promptly give written notice to Grantee
(and any permitted transferee) of its intention to do so and, upon the written
request of Grantee (or any such permitted transferee of Grantee) given within 30
days after receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by Grantee (or such permitted transferee)), Issuer will cause
all such shares, the holders of which shall have requested participation in such
registration, to be so registered and included in such underwritten public
offering; provided, that the Issuer may elect not to cause all of the shares for
which the Grantee has requested participation in such registration to be
registered and included in such underwritten public offering if the
underwriters, for good business reasons and in good faith, object to such
inclusion.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use all reasonable
efforts to cause each registration statement referred to in subparagraph (a)
above to become effective and to obtain all consents or waivers of other parties
which are required therefor and to keep such registration statement effective,
provided, however, Issuer shall not be required to register Option Shares under
the Securities Act pursuant to subparagraph (a) above:
(i) prior to a Purchase Event;
(ii) on more than one occasion (regardless of the division of this
Agreement and/or of the Option granted hereunder pursuant to Section 10 or
any other provision of this Agreement); and
(iii) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the holder or
holders of the Option Shares concerned were afforded the opportunity to
register such shares under the Securities Act and such shares were
registered as requested.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement after the expiration of 365 days
from the effective date of such
11
registration statement. Issuer shall use all reasonable efforts to make any
filings, and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of distribution for such
shares.
(d) EXPENSES. Except where applicable state law prohibits such payments,
Issuer will pay all of its expenses (including, without limitation, registration
fees, qualification fees, blue sky fees and expenses, legal expenses, printing
expenses and the costs of special audits or "cold comfort" letters, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to subparagraph (a) or (b)
above.
(e) INDEMNIFICATION. In connection with any registration under subparagraph
(a) or (b) above Issuer hereby indemnifies the holder of the Option Shares, and
each underwriter thereof, including each person, if any, who controls such
holder or underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement of a material fact contained in any
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party expressly
for use therein, and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such holder of the Option Shares, or by such
underwriter, as the case may be, for all such expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such holder or such underwriter, as the case may be,
expressly for such use.
Promptly upon receipt by a party indemnified under this subparagraph (e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this subparagraph (e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action, but
the failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and
12
participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable costs of investigation) shall be paid by the indemnified
party unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party fails to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and expenses
of such counsel. No indemnifying party shall be liable for any settlement
entered into without its consent, which consent may not be unreasonably
withheld.
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, the selling shareholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the selling shareholders
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall the holders of the
Option Shares be responsible, in the aggregate, for any amount in excess of the
net offering proceeds attributable to its Option Shares included in the
offering. 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. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to subparagraph (a) or (b)
above, Issuer and each holder of any Option Shares (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) MISCELLANEOUS REPORTING. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the holder thereof in
accordance with and to the extent permitted by any rule or regulation
promulgated by the Securities and Exchange Commission from time to time. Issuer
shall at its expense provide the holder of any Option Shares with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
(g) ISSUE TAXES. Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Grantee harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
13
9. QUOTATION; LISTING. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then authorized for quotation or
trading or listing on any national securities exchange (including the NASDAQ -
National Market System) or any securities exchange, Issuer, upon the request of
Grantee, will promptly file an application, if required, to authorize for
quotation or trading or listing the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on any such national
securities exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
10. DIVISION OF OPTION. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft, or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
11. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 8 of this Agreement,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision if such
waiver is in writing. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARY; SEVERABILITY. This
Agreement, together with the Letter of Intent (subject to Section 11(j) hereof)
and the other documents and instruments referred to herein and therein, between
Grantee and Issuer (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
person other than the parties hereto (other than any transferees of the Option
Shares or any permitted transferee of this Agreement pursuant to Section 11(h))
any rights or remedies hereunder. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or a
federal or state regulatory agency to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Option does not permit Grantee to acquire, or does not require Issuer
to repurchase, the full number of shares of Issuer Common Stock as provided in
Sections 2 and 7 (as adjusted pursuant to Section 6), it is
14
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas without regard to any applicable
conflicts of law rules.
(e) DESCRIPTIVE HEADING. The descriptive headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or a such other address
for a party as shall be specified by like notice):
IF TO ISSUER TO:
Xx. Xxx X. Xxxxxx
President/CEO
Matrix Bancorp, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
WITH A COPY TO:
Xx. Xxxxx XxXxxxxxx
Matrix Bancorp, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Xx. Xxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telecopy: (000) 000-0000
IF TO GRANTEE:
Xx. Xxxxxxx X. Xxxxx
Executive Vice President
Southwest Securities Group, Inc.
Xxxxx 0000
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy (000) 000-0000
15
WITH A COPY TO:
Xx. Xxxxx Xxxxxxxxx
President
Southwest Securities Group, Inc.
Xxxxx 0000
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy (000) 000-0000
Xx. Xxxxx X. Xxxx
Southwest Securities Group, Inc.
Xxxxx 0000
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy (000) 000-0000
Xx. Xxxxxxx X. Xxxxx
Jenkens & Xxxxxxxxx,
a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
(g) COUNTERPARTS. This Agreement and any amendments hereto may be executed
in multiple counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) FURTHER ASSURANCES. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) CONTROLLING AGREEMENT. The terms and conditions of this Agreement
pertaining to the issuance and the grant of the Option shall supersede Section 5
of the Letter of Intent. The
16
parties agree that the execution and delivery of this Agreement shall be deemed
to satisfy the requirements of Section 5 of the Letter of Intent.
(k) SPECIFIC PERFORMANCE. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the day
and year first written above.
MATRIX BANCORP, INC.
By: /s/ Xxxx Xxxxxxx
Its: Chairman
SOUTHWEST SECURITIES GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Executive Vice President
