EXHIBIT 7(a)
NEW CENTURY FINANCIAL CORPORATION
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement"), dated as of ___________,
2002, is made by and among U.S. Bancorp, a Delaware corporation (the "Selling
Stockholder"), New Century Financial Corporation, a Delaware corporation (the
"Company"), Friedman, Billings, Xxxxxx & Co., Inc. (the "Placement Agent"), and
each purchaser named on the signature pages hereto (a "Purchaser" and
collectively, the "Purchasers").
RECITALS:
A. The Selling Stockholder desires to offer and sell (the "Offering")
an aggregate of 3,624,462 shares (the "Shares") of the Company's Common Stock to
the Purchasers at a price per share to Purchasers of $14.00 (the "Purchase
Price").
B. The Purchasers desire, upon the terms and conditions stated in this
Agreement, to purchase shares of the Company's Common Stock in the Offering.
C. In connection with the Offering, the Company has prepared and
delivered to the Purchasers its Confidential Private Placement Memorandum dated
February 25, 2002 (the "Private Placement Memorandum").
D. The capitalized terms used herein and not otherwise defined have the
meanings given them in Article X hereof.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Shares.
(a) Upon the basis of the representations and warranties and
other terms and conditions set forth herein, each Purchaser agrees to purchase
from the Selling Stockholder, and the Selling Stockholder agrees to sell to each
Purchaser, at the Closing such number of Shares set forth beneath the name of
each such Purchaser on the signature page hereto for a price per share equal to
the Purchase Price.
(b) Upon execution of this Agreement, the Selling Stockholder
will deposit with the Company's transfer agent (the "Transfer Agent") one or
more stock certificates representing 32,856 shares of Preferred Stock of the
Company convertible into the 3,624,462 Shares to be included in the Offering,
together with an irrevocable notice of conversion in form reasonably
satisfactory to the Placement Agent so that such shares of Preferred Stock will
be converted automatically into Common Stock on or prior to the Closing without
any further action by the Selling Stockholder.
(c) Upon conversion of the Preferred Stock, the Selling
Stockholder will deposit with the Transfer Agent one or more stock certificates
representing the Shares duly endorsed for transfer, with appropriate stock
powers attached, properly signed and with any necessary documentary or transfer
tax stamps affixed (the "Certificates").
(d) Prior to the Closing, each Purchaser will deposit with the
Placement Agent the Purchase Price for the number of Shares it is purchasing
hereunder.
1.2 Closing.
(a) Subject to the satisfaction or waiver of the conditions
set forth in Articles VIII and IX hereof, the closing of the purchase and sale
of the Shares (the "Closing") will take place within three (3) business days
following the effectiveness of the Registration Statement (the "Closing Date").
The Closing will be held at the offices of O'Melveny & Xxxxx LLP, 000 Xxxxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or at such other
place as the Selling Stockholder and the Placement Agent shall agree. The
Company will authorize its transfer agent (the "Transfer Agent") to xxxx the
Certificates "cancelled" and re-issue as of the Closing Date one or more stock
certificates representing the Shares in accordance with written instructions
from the Placement Agent, each such certificate to be registered in the name of
such Purchaser or, if so indicated by the Purchaser, in the name of a nominee
designated by such Purchaser.
(b) At the Closing:
(i) the Placement Agent will deliver to the Selling
Stockholder the Purchase Price multiplied by the number of Shares so purchased,
minus a discount of five percent (5%) of the aggregate Purchase Price; and
(ii) the Transfer Agent will deliver stock
certificates representing the Shares, registered in the name of the Purchasers
or their nominees, to the Purchasers in accordance with written instructions
from the Placement Agent.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each Purchaser represents, warrants and covenants to the Selling
Stockholder, the Company and the Placement Agent, severally and solely with
respect to itself and its purchase hereunder and not with respect to any other
Purchaser, that:
2
2.1 Investment Purpose. The Purchaser is purchasing the Shares for its
own account and not with a present view toward the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the Securities Act; provided, however, that by making this representation, the
Purchaser does not agree to hold any of the Shares for any minimum or other
specific term and reserves the right to dispose of the Shares at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act and the terms and conditions of this Agreement.
2.2 Accredited Investor Status. The Purchaser is an "accredited
investor" as defined in Rule 501(a) of Regulation D. The Purchaser has
sufficient knowledge and experience in investing in companies similar to the
Company so as to be able to evaluate the risks and merits of its investment in
the Company.
2.3 Reliance on Exemptions. The Purchaser understands that the Shares
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Shares.
2.4 Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company, and materials relating to the offer and sale of the Shares, that
have been requested by the Purchaser or its advisors, if any. The Purchaser and
its advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigation
conducted by the Purchaser or any of its advisors or representatives modifies,
amends or affects the Purchaser's right to rely on the Company's representations
and warranties contained in Article III below. The Purchaser acknowledges and
understands that its investment in the Shares involves a significant degree of
risk and the Purchaser's financial condition is such that it is able to bear the
risk of holding the Shares for an indefinite period of time and the risk of loss
of its entire investment.
2.5 Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Shares or an
investment therein.
2.6 Transfer or Resale. The Purchaser understands that:
(a) except as provided in Article VI, the Shares have not been
and are not being registered under the Securities Act or any applicable state
securities laws and, consequently, the Purchaser may have to bear the risk of
owning the Shares for an indefinite period of time because the Shares may not be
transferred unless (i) the resale of the Shares is registered pursuant to an
effective registration statement under the Securities Act; or (ii) the Purchaser
has delivered to the Company an opinion of counsel (in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or under Rule 144 and, in the case of sales or
transfers not under Rule 144, the Shares are to be sold
3
or transferred only to one or more "accredited investors" (as defined in Rule
501(a) of Regulation D);
(b) any sale of the Shares made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Shares under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(c) except as set forth in Article VI, neither the Company nor
any other person is under any obligation to register the Shares under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
2.7 Legends. The Purchaser understands that until (a) the Shares may be
sold by the Purchaser under Rule 144(k) and the Purchaser has delivered the
Company the legal opinion described in Section 2.6(a) above or (b) such time as
the Registration Statement has been declared effective as contemplated by
Article VI, the certificates representing the Shares will bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Shares):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR
UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
The legend set forth above will be removed and the Company will issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article VII hereof.
2.8 Authorization; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Purchaser and is a
valid and binding agreement of the Purchaser enforceable in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity. The Purchaser has
all requisite power to enter into and perform its obligations under the
Agreement.
2.9 Residency. The Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on the signature pages hereto.
2.10 Acknowledgements Regarding Placement Agent. The Purchasers
acknowledge that Friedman, Billings, Xxxxxx & Co., Inc. is acting as placement
agent for the Shares being offered hereby and will be compensated for acting in
such capacity as set forth in Section
4
1.2(b)(i). The Purchasers further acknowledge that the Placement Agent has acted
solely as placement agent in connection with the offering of the Shares by the
Selling Stockholder, that the information and data provided to the Purchasers in
connection with the transactions contemplated hereby have not been subjected to
independent verification by the Placement Agent and the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material. Each Purchaser further
acknowledges that in making its decision to enter into this Agreement and
purchase the Shares, it has relied on its own examination of the Company and the
terms of, and consequences of, holding the Shares. The Purchasers further
acknowledge that the provisions of this Section 2.10 are for the benefit of, and
may be enforced by, the Placement Agent.
2.11 No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement
by the Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby will not (i) conflict with or result in a violation of any
provision of the Purchaser's Certificate of Incorporation or other
organizational document, or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment (including without limitation the triggering of
any anti-dilution provision), acceleration or cancellation of, any agreement,
indenture or other instrument to which the Purchaser is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Purchaser.
(b) The Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement in
accordance with the terms hereof, except for such consents, authorizations,
orders, filings or registrations which have already been obtained.
2.12 No Brokers. The Purchaser has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with Friedman, Billings, Xxxxxx & Co., Inc., whose
commissions and fees will be paid as provided in Section 1.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to each of the
Purchasers that:
Since January 1, 1999, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Exchange Act (all of the
foregoing actually filed by the Company with the SEC prior to the date hereof
and all exhibits included therein and financial statements and schedules thereto
and documents incorporated by reference therein are hereinafter referred to
collectively as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and
5
regulations of the SEC applicable to the SEC Documents. None of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Private
Placement Memorandum, as of its date, did not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER
The Selling Stockholder represents, warrants and covenants to each of
the Purchasers, the Company and the Placement Agent that:
4.1 Due Execution and Delivery. The Selling Stockholder has full power
and authority to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it. All authorizations and consents
necessary for the execution and delivery by the Selling Stockholder of this
Agreement have been given. This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder and this Agreement
constitutes a legal, valid and binding obligation of the Selling Stockholder,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and except as enforceability
may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.2 Good Title. The Selling Stockholder has (i) valid title to the
shares of preferred stock to be converted into the Shares, free and clear of all
encumbrances, and (ii) the legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver such shares of
Preferred Stock and to make the representations, warranties and agreements made
by it herein. At the Closing, the Selling Stockholder will have (i) valid title
to the Shares, free and clear of all encumbrances, and (ii) the legal right and
power, and all authorizations and approvals required by law, to sell, transfer
and deliver the Shares to the Purchasers.
4.3 Investment Intent. The Selling Stockholder acquired all of the
shares of Preferred Stock which it currently holds from the Company and paid the
full purchase price for the Shares to the Company on November 24, 1998 and July
26, 1999. The Selling Stockholder acquired all of the shares of Preferred Stock
which it currently holds for its own account and not with a view toward the
public sale or distribution thereof, except pursuant to sales registered or
exempted from registration under the Securities Act. The Selling Stockholder is
not selling the Shares for or on behalf of the Company or in connection with or
as part of a distribution by the Company.
4.4 No General Solicitation. At no time did the Selling Stockholder
solicit any offer to buy or offer to sell any of the Shares, or shares of
Preferred Stock convertible into the Shares, by means of any form of general
solicitation or general advertising within the meaning of Regulation D under the
Securities Act.
6
4.5 No Defaults. None of the execution, delivery or performance of this
Agreement, and the consummation of the transactions contemplated herein or
therein by the Selling Stockholder conflicts or will conflict with or results or
will result in any breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
encumbrance upon, any property or assets of the Selling Stockholder pursuant to
(i) the terms of any contract or other agreement to which the Selling
Stockholder is a party or by which it is bound or to which any of its properties
is subject, which conflict, breach, violation or default would adversely affect
the Selling Stockholder's ability to perform its obligations hereunder; (ii) any
statute, rule or regulation of any governmental body having jurisdiction over
the Selling Stockholder or any of its activities or properties; (iii) the terms
of any judgment, decree or order of any arbitration or governmental body having
such jurisdiction, or (iv) any provision of its Certificate of Incorporation or
Bylaws, as amended.
4.6 Consents. No consent, approval, authorization or order of, or any
filing or declaration with, any governmental body is required for the
consummation by the Selling Stockholder of the transactions on its part
contemplated herein, except such as may be necessary under federal and state
securities or blue sky laws.
4.7 Material Information. On the date of the Private Placement
Memorandum, the information with respect to the Selling Stockholder and its
holdings in the Company contained in the Private Placement Memorandum under the
caption "Principal and Selling Stockholders" did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.
4.8 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to be sold to the Purchasers hereunder will
be, or will have been, fully paid or provided for by the Selling Stockholder,
and all laws imposing such taxes will be or will have been fully complied with.
4.9 Legal Opinion. At the Closing, counsel to the Selling Stockholder
will deliver its legal opinion to the Placement Agent covering the matters
contained in Exhibit B hereto. Such opinion also shall state that each of the
Purchasers may rely thereon as though it were addressed directly to such
Purchaser.
ARTICLE V
COVENANTS
5.1 Reasonable Commercial Efforts. Each party will use its reasonable
commercial efforts to satisfy in a timely fashion each of the conditions to be
satisfied by it under Articles VIII and IX of this Agreement.
5.2 Securities Law Compliance. Each party will comply with all
applicable laws relating to the sale of the Shares and with all applicable rules
and regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act, the Exchange Act and the rules and
regulations promulgated by the SEC).
7
5.3 Expenses. Each Purchaser is liable for, and will pay, its own
expenses incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement and the other agreements to be executed in connection
herewith, including, without limitation, attorneys' and consultants' fees and
expenses. The Company is liable for, and will pay, its own expenses and the
expenses of the Selling Stockholder incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other agreements
to be executed in connection herewith, including, without limitation, attorneys'
and consultants' fees and expenses consistent with the Company's obligations
under Section 5 of that certain Amended and Restated Registration Rights
Agreement, dated as of April 28, 2000, by and among the Company, the Selling
Stockholder and U.S. Bank National Association.
5.4 Financial Information. The Company agrees to send to each Purchaser
those reports that it generally sends to holders of its Common Stock, until such
Purchaser transfers, assigns or sells all of its Shares.
5.5 Notification to Nasdaq. On or before the tenth (10th) business day
after the date of this Agreement, if required, the Company will file with Nasdaq
a "Change in Number of Shares" or similar form or documentation to permit the
trading of all of the Shares on Nasdaq in the same manner as the Common Stock of
the Company is traded generally.
5.6 Questionnaires. Concurrently with the execution of this Agreement,
the Purchaser will complete and deliver to the Company a Suitability
Questionnaire in the form of Exhibit C hereto and a Selling Stockholder's
Questionnaire in the form of Exhibit E hereto.
ARTICLE VI
REGISTRATION OF THE SECURITIES
6.1 Registration Procedures and Expenses. The Company shall:
(a) Subject to receipt of necessary information in writing
from the Purchasers, prepare and file with the SEC as promptly as reasonably
practicable but no later than five (5) business days after the execution of this
Agreement by all of the parties hereto (the "Filing Date"), a registration
statement on Form S-3 (the "Registration Statement") to enable the resale of the
Shares (together with any shares of capital stock issued or issuable from time
to time, with any adjustments, in exchange for or otherwise with respect to the
Shares) by the Purchasers from time to time through the automated quotation
system of the Nasdaq Stock Market (or the facilities of any national securities
exchange on which the Company's Common Stock is then traded) or in
privately-negotiated transactions. If Form S-3 is not available at that time,
then the Company shall file a Registration Statement on such form as is then
available to effect a registration of the Shares, subject to the consent of the
Purchasers who have agreed to buy a majority of the Shares, which consent shall
not be unreasonably withheld.
(b) Use its reasonable commercial efforts, subject to receipt
of necessary information from the Purchasers, to cause the Registration
Statement to be declared effective by the SEC as soon as practicable after
filing, and in any event no later than sixty (60) days after the Filing Date
(the "Required Effective Date"). However, so long as the Company filed the
Registration Statement by the Filing Date, if the Registration Statement
receives SEC review,
8
then the Required Effective Date will be ninety (90) days after the Filing Date.
The Company's reasonable commercial efforts will include, but not be limited to,
promptly responding to all comments received from the staff of the SEC. If the
Company receives notification from the SEC that the Registration Statement will
receive no action or review from the SEC, then the Company will, subject to its
rights under Section 6.2, use its commercially reasonable efforts to cause the
Registration Statement to become effective within five (5) business days after
such SEC notification.
(c) Use its reasonable commercial efforts to prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement current and effective for a period not exceeding, with
respect to each Purchaser's Shares purchased hereunder, the earliest of (i) the
second anniversary of the date of effectiveness of the Registration Statement
with respect to the Shares, (ii) the date on which the Purchaser may sell all of
the Shares then held by the Purchaser, without registration or without regard to
any volume limitations by reason of Rule 144(k) of the Securities Act or (iii)
such time as all of the Shares purchased by such Purchaser in this Offering have
been sold pursuant to the Registration Statement (the "Registration Period").
Thereafter, the Company shall be entitled to withdraw the Registration Statement
and the Purchasers shall have no further right to offer or sell any of the
Shares pursuant to the Registration Statement.
(d) Furnish to each Purchaser whose Shares are included in the
Registration Statement, and to its legal counsel, (i) promptly after each
document is prepared and publicly distributed, filed with the SEC or received by
the Company, one copy of the Registration Statement filed pursuant to this
Agreement and any amendments thereto, each Preliminary Prospectus and final
Prospectus and each amendment or supplement thereto; and each letter written by
or on behalf of the Company to the SEC and each item of correspondence from the
SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion of any item thereof which contains information
for which the Company has sought confidential treatment); and (ii) such number
of copies of the Registration Statement, Prospectuses and Preliminary
Prospectuses in conformity with the requirements of the Securities Act and such
other documents as the Purchaser may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Shares by the
Purchaser, provided, however, that the obligation of the Company to deliver
copies of Prospectuses or Preliminary Prospectuses to the Purchaser shall be
subject to the receipt by the Company of reasonable assurances from the
Purchaser that the Purchaser will comply with the applicable provisions of the
Securities Act and of such other securities or Blue Sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses. The Company will promptly notify by facsimile each Purchaser whose
Shares are included in the Registration Statement of the effectiveness of the
Registration Statement and any post-effective amendment.
(e) Use its reasonable commercial efforts to (i) register and
qualify the Shares covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as each Purchaser who holds
(or has the right to hold) Shares being offered reasonably requests, (ii)
prepare and file in those jurisdictions any amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain their effectiveness during the Registration Period, (iii)
take any other
9
actions necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period, and (iv) take any other actions
reasonably necessary or advisable to qualify the Shares for sale in such
jurisdictions. Notwithstanding the foregoing, the Company is not required, in
connection with such obligations, to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 6.1, (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause material expense or burden to the Company,
or (E) make any change in its Certificate of Incorporation or By-laws, which in
each case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its stockholders.
(f) During the period when copies of the Prospectus are
required to be delivered under the Securities Act or the Exchange Act, file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act within the time periods required by the Exchange Act and
the rules and regulations promulgated thereunder.
(g) Bear all registration expenses in connection with the
procedures in paragraphs (a) through (f) of this Section 6.1 and the
registration of the Shares pursuant to the Registration Statement (excluding
underwriting, brokerage and other selling commissions and discounts and the fees
and expenses of counsel(s) to the Purchasers).
(h) Advise the Purchasers, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the SEC delaying
or suspending the effectiveness of the Registration Statement or of the
initiation of any proceeding for that purpose; and it will promptly use its
reasonable commercial efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(i) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 6.1, that the Purchaser
shall furnish to the Company such information regarding itself, the Shares to be
sold by the Purchaser, and the intended method of disposition of such Shares as
shall be required to effect the registration of the Shares, all of which
information shall be furnished to the Company in writing specifically for use in
the Registration Statement.
(j) The Company understands that each Purchaser disclaims
being an underwriter, but the Purchaser being deemed an underwriter by the SEC
shall not relieve the Company of any obligations it has hereunder, provided,
however, that if the Company receives notification from the SEC that the
Purchaser is deemed an underwriter, then the period in which the Company is
obligated to submit an acceleration request to the SEC shall be extended to the
earlier of (i) thirty (30) days after such SEC notification, or (ii) ninety (90)
days after the initial filing of the Registration Statement with the SEC.
Notwithstanding the foregoing, the parties understand and agree that the offer
and sale of the Shares pursuant to the Registration Statement shall not be
underwritten.
6.2 Transfer of Shares After Registration; Suspension. The Purchaser
agrees that it will not effect any disposition of the Shares except as
contemplated in the Registration Statement referred to in Section 6.1 or as
otherwise permitted by law and by this Agreement, and that it will
10
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of distribution.
(a) The Company agrees that any Registration Statement
(including any amendments or supplements thereto and Prospectuses contained
therein) filed by the Company covering the Shares will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided that the Company
makes no representation or warranty regarding information relating to any
Purchaser, the Shares sold by any Purchaser or the intended method of
distribution of such Shares that is contained in any Registration Statement and
shall not be responsible for the accuracy or completeness of any such
information to any Purchaser or Purchasers. Except in the event that subsection
(c) below applies, the Company shall: (i) subject to the proviso in the
preceding sentence of this Section 6.2(a), prepare and file from time to time
with the SEC a post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to the Purchasers of the Shares being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit 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; (ii) provide the Purchaser copies of any documents filed
pursuant to Section 6.2(b)(i); and (iii) inform each Purchaser that the Company
has complied with its obligations in Section 6.2(b)(i) (or that, if the Company
has filed a post-effective amendment to the Registration Statement which has not
yet been declared effective, the Company will notify the Purchaser to that
effect, will use its reasonable commercial efforts to secure the effectiveness
of such post-effective amendment as promptly as possible and will promptly
notify the Purchaser pursuant to Section 6.2(b)(i) hereof when the amendment has
become effective).
(b) In the event: (i) of any request by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to a Registration
Statement or a related Prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose; or (iv)
except for those events or circumstances that are the subject of Section 6.4
below, of any event or circumstance which necessitates the making of any changes
in the Registration Statement or Prospectus, or any document incorporated or
deemed to be incorporated therein by reference, so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or any omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
any omission to state 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; then the Company shall deliver a certificate in
11
writing to the Purchaser (the "Suspension Notice") to the effect of the
foregoing and, upon receipt of such Suspension Notice, the Purchaser will
refrain from selling any Shares pursuant to the Registration Statement (a
"Suspension") until the Purchaser's receipt of copies of a supplemented or
amended Prospectus prepared and filed by the Company, or until it is advised in
writing by the Company that the current Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such Prospectus. In the event of any Suspension
(except pursuant to Section 6.4 below), the Company will use its reasonable
commercial efforts to cause the use of the Prospectus so suspended to be resumed
as soon as reasonably practicable within thirty (30) business days, in the case
of clauses (b)(i)-(iii) above, or ten (10) business days, in the case of clause
(b)(iv) above, after delivery of a Suspension Notice to the Purchasers, will
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and will deliver a number of copies of such
supplement or amendment to each Purchaser as such Purchaser may reasonably
request. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Purchaser, the
Purchaser shall be entitled to specific performance of the Company's obligations
in this Section 6.2(b) in the event that the Company fails to comply with the
provisions of this Section 6.2(b). Subject to the Company's rights under this
Section 6.2(b), the Company will use its reasonable commercial efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement and, if such an order is issued, will use its
commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time and to notify each Purchaser that holds the Shares being
sold of the issuance of such order and the resolution thereof. If the use of the
Registration Statement is suspended by the Company, the Company will promptly
give notice of the suspension to all Purchasers whose Shares are covered by the
Registration Statement, and will promptly notify each such Purchaser as soon as
the use of the Registration Statement may be resumed.
(c) Notwithstanding the foregoing paragraphs of this Section
6.2, the Purchaser shall not be prohibited from selling the Shares under the
Registration Statement as a result of Suspensions specified in Section
6.2(b)(iv) on more than four (4) occasions of not more than sixty (60) days each
in any twelve-month period.
(d) Provided that a Suspension is not then in effect the
Purchaser may sell the Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company has agreed to provide an
adequate number of current Prospectuses to the Purchaser and to supply copies to
any other parties requiring such Prospectuses.
6.3 Review by the Purchasers. The Company will permit a single firm of
legal counsel, designated by the Purchasers or their permitted transferees or
assignees who hold a majority in interest of the Shares being sold pursuant to
the Registration Statement, to review the Registration Statement and all
amendments and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) for a reasonable period of time prior to its filing with
the SEC, and will not file any document in a form to which such counsel
reasonably objects, unless otherwise required by law in the opinion of the
Company's counsel; provided, that, any deadline imposed by this Agreement with
respect to the filing or effectiveness of such Registration Statement shall be
stayed pending resolution of such objection. The fees and expenses of such
12
counsel shall be paid by the Purchasers. The sections of any such Registration
Statement, including information with respect to the Purchasers, the Purchasers'
beneficial ownership of the Shares of the Company or the Purchasers' intended
method of disposition of the Shares, must conform to the information provided to
the Company by each of the Purchasers.
6.4 Deferral. Notwithstanding anything in this Agreement to the
contrary and in addition to the rights set forth in Section 6.2(b) hereof, if
the Company shall furnish the selling Purchasers a certificate signed by the
President or Chief Executive Officer of the Company stating that the Board of
Directors of the Company has made a good faith determination (i) that continued
use by the selling Purchasers of the Registration Statement for purposes of
effecting offers or sales of Shares pursuant thereto would require, under the
Securities Act, premature disclosure in the Registration Statement (or the
Prospectus relating thereto) of material, nonpublic information concerning the
Company, its business or prospects or any proposed material transaction
involving the Company, (ii) that such premature disclosure would be materially
adverse to the Company, its business or prospects or any such proposed material
transaction or would make the successful consummation by the Company of any such
material transaction less likely and (iii) that it is therefore essential to
suspend the use by the Purchasers of such Registration Statement (and the
Prospectus relating thereto) for purposes of effecting offers or sales of Shares
pursuant thereto, then the right of the selling Purchasers to use the
Registration Statement (and the Prospectus relating thereto) for purposes of
effecting offers or sales of Shares pursuant thereto shall be suspended for a
period of not more than 75 days after delivery by the Company of the certificate
referred to in this Section 6.4 (the "Suspension Period"). During the Suspension
Period, none of the Purchasers shall offer or sell any Shares pursuant to, or in
reliance upon, the Registration Statement (or the Prospectus relating thereto).
6.5 Indemnification.
(a) For the purpose of this Section 6.5:
(i) The term "Registration Statement" shall include
any final Prospectus, exhibit, supplement or amendment included in or relating
to the Registration Statement referred to in Section 6.1; and
(ii) The term "untrue statement" shall include any
untrue statement or alleged untrue statement, or any omission or alleged
omission to state in the Registration Statement 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.
(b) The Company agrees to indemnify and hold harmless each
Purchaser and the Selling Stockholder, each person, if any, who controls any
Purchaser or the Selling Stockholder within the meaning of the Securities Act,
and any affiliate of any Purchaser or the Selling Stockholder within the meaning
of the Securities Act, and their respective directors, officers, employees,
agents and controlling persons (each, a "Selling Indemnified Party") from and
against any losses, claims, damages, liabilities or expenses, joint or several,
to which such Selling Indemnified Party may become subject (under the Securities
Act, the Exchange Act or otherwise), including in settlement of any litigation,
if such settlement is effected with the written consent of the Company, which
consent shall not be unreasonably withheld, insofar as
13
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the Prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A or pursuant to Rule 434 of the rules and regulations
of the SEC, or the Prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) filing is
required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading. The Company shall reimburse such Selling Indemnified Party
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, provided,
however, that the Company shall not be liable in any such case with respect to
any Selling Indemnified Party to the extent that such loss, claim, damage or
liability arises out of, or is based upon, an untrue statement made in such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Indemnified
Party specifically for use in preparation of the Registration Statement, which
the parties agree with respect to the Selling Stockholder consists solely of
statements and information concerning the Selling Stockholder and its holdings
in the Company contained in the Private Placement Memorandum under the caption
"Principal and Selling Stockholders", or the failure of such Selling Indemnified
Party to comply with its covenants and agreements contained in Sections 6.2 or
6.4 hereof or any statement or omission in any Prospectus that is corrected in
any subsequent Prospectus that was delivered to such Selling Indemnified Party
prior to the pertinent sale or sales by such Selling Indemnified Party.
(c) Each Purchaser agrees to indemnify and hold harmless the
Company (and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, each officer of the Company who signs the
Registration Statement and each director of the Company), and each of the other
Purchasers (and each person, if any, who controls such other Purchasers within
the meaning of Section 15 of the Securities Act) from and against any losses,
claims, damages or liabilities to which the Company (or any such officer,
director or controlling person) or such other Purchasers (or controlling
persons) may become subject (under the Securities Act or otherwise), insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, (i) any failure to comply with
the covenants and agreements contained in Sections 6.2 or 6.4 hereof, or (ii)
any untrue statement of a material fact contained in the Registration Statement
or Prospectus, or in any amendment or supplement to the Registration Statement
or Prospectus, but only to the extent that such untrue statement was made in
reliance upon and in conformity with written information furnished by or on
behalf of such Purchaser specifically for use in preparation of the Registration
Statement, and such Purchaser will reimburse the Company (or such officer,
director or controlling person) and each other Purchaser (and controlling
person), as the case may be, for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action, proceeding
or claim; provided, however, that such Purchaser shall not be liable for any
such untrue or alleged untrue statement or omission or
14
alleged omission of which such Purchaser has delivered notice to the Company in
writing pursuant to the requirements of Section 12.6 hereof of a correction
before the occurrence of the transaction from which such loss was incurred, and
such Purchaser will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person and each
other Purchaser (and controlling person) for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person or each other
Purchaser or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
(d) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 6.5,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying person will not relieve it from any liability which it may have to
any indemnified person under this Section 6.5 (except to the extent that such
omission materially and adversely affects the indemnifying person's ability to
defend such action) or from any liability otherwise than under this Section 6.5.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified person promptly after receiving the aforesaid
notice from such indemnified person, shall be entitled to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified person. After
notice from the indemnifying person to such indemnified person of its election
to assume the defense thereof, such indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the reasonable opinion of counsel to the indemnified person,
for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel to the extent of such
conflict at the expense of such indemnifying person; provided, however, that no
indemnifying person shall be responsible for the fees and expenses of more than
one separate counsel (together with appropriate local counsel) for all
indemnified parties. In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying person shall,
without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding. Notwithstanding the
provisions of this Section 6.5, each Purchaser shall not be liable for any
indemnification obligation under this Agreement in excess of the amount of gross
proceeds received by such Purchaser from the sale of the Shares.
(e) If the indemnification provided for in this Section 6.5 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred
15
to therein, then each indemnifying person shall contribute to the amount paid or
payable by such indemnified person as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to (i) reflect the relative benefits received by the Company and the
indemnified person from the sale of the Shares or if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but the relative fault of the Company and the indemnified person in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company on the one hand and each indemnified person on the other shall be deemed
to be in the same proportion as the amount paid by such indemnified person to
the Company pursuant to this Agreement for the Shares purchased by such
indemnified person that were sold pursuant to the Registration Statement bears
to the difference (the "Difference") between the amount such indemnified person
paid for the Shares that were sold pursuant to the Registration Statement and
the amount received by such Purchaser from such sale. The relative fault shall
be determined by reference to, among other things, whether the untrue statement
or the omission or alleged omission to state a mutual fact relates to
information supplied by the Company on the one hand or the Indemnified Party on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement. The provisions set
forth in Section 6.5 with respect to the notice of the threat or commencement of
any threat or action shall apply if a claim for contribution is to be made under
this Section; provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
Section 6.5 for purposes of indemnification. The Company, the Purchasers and the
Selling Stockholder agree that it would not be just and equitable if
contribution pursuant to this subsection (e) were determined by pro rata
allocation (even if the Purchasers were treated as one entity for such purpose)
or by any other method of allocation which does not take into account the
equitable considerations referred to above in this subsection (e). 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 in this
subsection (e) shall be deemed to include, subject to the limitations set forth
in this Section 6.5, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (e), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages which such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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 Purchasers' obligations in this subsection to contribute
are several in proportion to their sales of the Shares to which such loss
relates and not joint.
(f) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 6.5, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 6.5
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that
16
federal or state public policy as interpreted by the courts in certain
jurisdictions may be contrary to certain of the provisions of this Section 6.5,
and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this Section
6.5 and further agree not to attempt to assert any such defense.
6.6 Termination of Conditions and Obligations. The conditions precedent
imposed by Article II or this Article VI upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares when such
Shares shall have been effectively registered under the Securities Act and sold
or otherwise disposed of in accordance with the intended method of disposition
set forth in the Registration Statement covering such Shares or at such time as
an opinion of counsel satisfactory to the Company shall have been rendered to
the effect that such conditions are not necessary in order to comply with the
Securities Act.
6.7 Information Available. So long as the Registration Statement is
effective covering the resale of the Shares owned by a Purchaser, the Company
will furnish to each Purchaser:
(a) upon the request of the Purchaser, as soon as practicable
after it is available (but in the case of the Company's Annual Report to
Stockholders, within one hundred twenty (120) days after the end of each fiscal
year of the Company), one copy of (i) its Annual Report to Stockholders (which
Annual Report shall contain financial statements audited in accordance with
generally accepted accounting principles by a national firm of certified public
accountants); (ii) if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-K (the foregoing, in each case,
excluding exhibits); (iii) if not included in substance in its Quarterly Reports
to Stockholders, its quarterly reports on Form 10-Q; or (iv) a full copy of the
Registration Statement covering the Shares (the foregoing, in each case,
excluding exhibits);
(b) upon the reasonable request of the Purchaser, all exhibits
excluded by the parenthetical to subparagraphs (a)(ii), (iii) and (iv) of this
Section 6.7 as filed with the SEC and all other information that is made
available to stockholders; and
(c) upon the reasonable request of the Purchaser, an adequate
number of copies of the Prospectuses to supply to any other party requiring such
Prospectuses; and the Company, upon the reasonable request of the Purchaser,
will meet with the Purchaser or a representative thereof at the Company's
headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and will otherwise reasonably
cooperate with any Purchaser conducting an investigation for the purpose of
reducing or eliminating such Purchaser's exposure to liability under the
Securities Act, including the reasonable production of information at the
Company's headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with any
Purchaser until and unless the Purchaser shall have entered into a
confidentiality agreement with the Company in form and substance reasonably
satisfactory to the Company with respect thereto.
6.8 Rule 144 Information. In order to make available to the Purchasers
the benefits of Rule 144 or any similar rule or regulation of the SEC that may
at any time permit the Purchasers
17
to sell the Shares of the Company to the public without registration, the
Company will use its reasonable commercial efforts to:
(a) file with the SEC in a timely manner, and make and keep
available, all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein limits the Company's
obligations under Section 4.3 hereof) and the filing and availability of such
reports and other documents is required for the applicable provisions of Rule
144; and
(b) furnish to each Purchaser, so long as such Purchaser holds
the Shares, promptly upon the Purchaser's request, (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents filed by
the Company with the SEC and (iii) such other information as may be reasonably
requested to permit the Purchasers to sell such Shares pursuant to Rule 144
without registration.
6.9 Assignment of Registration Rights. After the Closing, the rights of
the Purchasers hereunder will be automatically assigned by the Purchasers to
permitted transferees or assignees of all or any portion of the Shares, but only
if (a) the Purchaser 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 transfer or assignment, (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of the name and address of such transferee or assignee and the Shares with
respect to which such registration rights are being transferred or assigned, (c)
after such transfer or assignment, the further disposition of such Shares by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (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, (e) the transferee is an "accredited investor" as that term is
defined in Rule 501 of Regulation D and (f) the transfer of Shares is made in
accordance with the provisions of Section 2.6 hereof; provided, however, that if
as a result of such transfers or assignments a Purchaser transfers or assigns
Shares purchased at the Closing to ten or more separate persons or entities,
then the Purchaser, and not the subsequent transferees or assignees, shall have
the right to enforce the terms of, and receive notices under, Section 6.5 of
this Agreement.
18
ARTICLE VII
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
7.1 Issuance of Certificates. At the Closing, the Company shall
authorize its transfer agent (the "Transfer Agent") to arrange delivery to each
Purchaser of one or more stock certificates representing the number of Shares
set forth on the signature pages hereto, each such certificate to be registered
in the name of the Purchaser or, if so indicated by the Purchaser, in the name
of a nominee designated by the Purchaser in accordance with the provisions of
Section 12.7 hereof, and the Transfer Agent shall deliver to the Placement Agent
a certificate as to the transfer of the Shares to the Purchasers in form and
substance reasonably acceptable to the Placement Agent. Nothing in this Section
will affect in any way the Purchaser's obligations and agreement set forth in
Sections 2.6 and 2.7 hereof to resell the Shares only pursuant to an effective
registration statement or in compliance with an exemption from the registration
requirement of applicable securities laws.
7.2 Unrestricted Shares. If, unless otherwise required by applicable
state securities laws, (a) the resale of the Shares represented by a certificate
has been registered under an effective registration statement filed under the
Securities Act, or (b) subject to compliance with Section 2.6(a) hereof, a
holder of the Shares provides the Company and the Transfer Agent with an opinion
of counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Shares may be made without registration under the Securities Act and such sale
either has occurred or may occur without restriction on the manner of such sale
or transfer, the Company will permit the transfer of the Shares, and the
Transfer Agent will issue one or more certificates, free from any restrictive
legend, in such name and in such denominations as specified by such holder. In
the event that the restrictive legend is removed from any of the certificates
for the Shares and thereafter the effectiveness of a registration statement
covering such Shares is suspended or terminated or the Company determines that a
supplement or amendment thereto is required by applicable securities laws, then
upon a reasonable advance notice to the Purchaser the Company may (i) require
that the restrictive legend be placed on any certificates for the Shares that
cannot be sold pursuant to an effective registration statement, and each
Purchaser shall cooperate in the replacement of such legend, or (ii) deliver to
the Transfer Agent a "stop transfer" order with respect to such Shares. Such
legend shall thereafter be removed when such Shares may again be sold pursuant
to an effective registration statement or Rule 144, subject to the receipt of an
opinion of counsel as described in clause (b) above.
ARTICLE VIII
CONDITIONS TO THE SELLING STOCKHOLDER'S OBLIGATION TO SELL
The obligation of the Selling Stockholder to sell the Shares to each
Purchaser at the Closing is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions. These conditions are for the
Selling Stockholder's sole benefit and may be waived by the Selling Stockholder
at any time in its sole discretion:
8.1 Each Purchaser will have executed and delivered this Agreement to
the Selling Stockholder and the Company.
19
8.2 The representations and warranties of each Purchaser must be true
and correct as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and the
Purchaser will have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by each Purchaser at or prior to the Closing.
8.3 Each Purchaser will have delivered the purchase price for the
Shares to the Placement Agent in accordance with this Agreement.
8.4 The Placement Agent will have received gross subscriptions for at
least ninety percent (90%) of the number of Shares included in the Offering.
8.5 The Company and the Placement Agent have entered into the Placement
Agency Agreement.
8.6 Each Purchaser shall have executed and delivered to the Company and
the Selling Stockholder a Purchaser Questionnaire in the form attached hereto as
Exhibit C.
8.7 Each Purchaser shall have executed and delivered to the Company a
Confidentiality Agreement in the form attached hereto as Exhibit D.
8.8 No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit alter, prevent or materially delay
the Closing shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending. In addition, the
sale of the Shares shall not be prohibited by any law or governmental order or
regulation.
ARTICLE IX
CONDITIONS TO THE PURCHASERS' OBLIGATION TO PURCHASE
The obligation of each Purchaser hereunder to purchase the Shares from
the Selling Stockholder at the Closing is subject to the satisfaction, on or
before the Closing Date, of each of the following conditions. These conditions
are for each Purchaser's respective benefit and may be waived by any Purchaser
(but only with respect to such Purchaser) at any time in its sole discretion:
9.1 The Company and the Selling Stockholder will have executed and
delivered this Agreement to the Purchasers.
9.2 The respective representations and warranties of the Company and
the Selling Stockholder must be true and correct in all material respects as of
the Closing as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties must be true and correct as of such date) and each of the Company and
the Selling Stockholder must have performed and complied in all material
respects with the covenants and conditions required by this Agreement to be
performed or complied with by each of them at or prior to the Closing. The
Placement Agent shall have received a certificate or certificates dated as of
the Closing Date and executed by the Chief Executive Officer or the
20
Chief Financial Officer of each of the Company and the Selling Stockholder
certifying as to such matters as may be reasonably requested by the Placement
Agent, including, but not limited to, (a) the respective representations and
warranties of the Company and the Selling Stockholder made herein, (b) the
Company's Certificate of Incorporation, as amended, and Bylaws, as amended, (c)
Board of Directors' resolutions of the Company relating to the transactions
contemplated hereby, and (d) the incumbency and signatures of each of the
officers of the Company and the Selling Stockholder who may execute on behalf of
the Company or the Selling Stockholder, as the case may be, any document
delivered at the Closing.
9.3 The Registration Statement will have been declared effective by the
SEC and remain effective at the Closing with respect to all of the Shares, and
no stop order by the SEC delaying or suspending the effectiveness of the
Registration Statement shall be in effect and no proceeding for that purpose
will have been initiated.
9.4 Trading and listing of the Common Stock on Nasdaq must not have
been suspended by the SEC or Nasdaq.
9.5 The Placement Agent will have received an opinion from O'Melveny &
Xxxxx LLP, counsel for the Company, dated as of the Closing Date and addressed
to the Purchasers and the Placement Agent, as to the matters addressed in
Exhibit A attached hereto.
9.6 The Placement Agent will have received an opinion from counsel to
the Selling Stockholder, dated as of the Closing Date and addressed to the
Purchasers and the Placement Agent, as to the matters addressed in Exhibit B
attached hereto.
9.7 The Transfer Agent will have issued a certificate as to the
transfer of the Shares to the Purchasers in form and substance reasonably
acceptable to the Placement Agent.
ARTICLE X
DEFINITIONS
10.1 "Closing" means the closing of the purchase and sale of the Shares
under this Agreement.
10.2 "Closing Date" has the meaning set forth in Section 1.2.
10.3 "Common Stock" means the common stock, $0.01 par value per share,
of the Company.
10.4 "Company" means New Century Financial Corporation, a Delaware
corporation.
10.5 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
10.6 "Preferred Stock" means the Series 1998-A Preferred Stock, $0.01
par value per share, of the Company, and the Series 1999-A Preferred Stock,
$0.01 par value per share, of the Company.
21
10.7 "Purchasers" means the purchasers whose names are set forth on the
signature pages of this Agreement.
10.8 "Nasdaq" means the Nasdaq National Market System.
10.9 "Regulation D" means Regulation D as promulgated under by the SEC
under the Securities Act.
10.10 "Rule 144" and "Rule 144(k)" mean Rule 144 and Rule 144(k),
respectively, promulgated under the Securities Act, or any successor rule.
10.11 "SEC" means the United States Securities and Exchange Commission.
10.12 "SEC Documents" has the meaning set forth in Article III.
10.13 "Shares" means the Common Stock to be sold pursuant to this
Agreement.
10.14 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor statute.
ARTICLE XI
TERMINATION
This Agreement and all of the obligations of the parties hereunder
shall terminate prior to the Closing if the Registration Statement covering all
of the Shares has not become effective by or on the ninetieth day after the
Filing Date.
ARTICLE XII
GOVERNING LAW; MISCELLANEOUS
12.1 Governing Law; Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of California
without giving effect to the principles of conflicts of law. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("Related Proceedings") may be instituted in
the federal courts of the United States of America located in the County of
Orange or the courts of the State of California in each case located in the
County of Orange (collectively, the "Specified Courts"), and each party
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"Related Judgment"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party's address set forth above shall be
effective service of process for any suit, action or other proceeding brought in
any such court. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum. With respect to any
Related Proceeding, each party irrevocably waives, to the fullest extent
permitted by applicable law, all immunity (whether on the basis of sovereignty
or otherwise) from jurisdiction, service of process, attachment (both before and
after judgment)
22
and execution to which it might otherwise be entitled in the Specified Courts or
any other court of competent jurisdiction.
12.2 Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause the manually
executed pages to be physically delivered to the other parties within five
business days of the execution hereof.
12.3 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
12.4 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
12.5 Entire Agreement; Amendments. This Agreement (including all
schedules and exhibits hereto) constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. This Agreement shall
be considered one agreement executed by the Purchasers and the addition of
Purchasers to this Agreement shall not constitute an amendment or modification
to this Agreement. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof . No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement. This Agreement shall be considered one agreement
executed by Purchasers
12.6 Notices. Any notices required or permitted to be given under the
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and will be effective five (5) days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally, by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications are:
If to the Selling Stockholder: U.S. Bancorp
U.S. Bank Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxx X. Mitau, Esq.
Facsimile number (000) 000-0000
23
With a copy to: Xxxxxx and Xxxxxxx LLP
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile number (000) 000-0000
If to the Company: New Century Financial Corporation,
00000 Xxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx Xxxx
Facsimile number (000) 000-0000
With a copy to: O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile number (000) 000-0000
If to the Placement Agent: Friedman, Billings, Xxxxxx & Co., Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile number (000) 000-0000
With a copy to: Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile number (000) 000-0000
If to a Purchaser: To the address set forth immediately below such
Purchaser's name on the signature pages hereto.
Each party will provide written notice to the other parties of any
change in its address.
12.7 Successors and Assigns. This Agreement is binding upon and inures
to the benefit of the parties and their successors and assigns. The Company may
assign this Agreement or any rights or obligations hereunder in connection with
a merger, consolidation, sale of all or substantially all of the Company's
assets or sale of 50% or more of the outstanding equity securities of the
Company without the prior written consent of the Purchasers. At any time prior
to the effectiveness of the Registration Statement, a Purchaser may assign this
Agreement or any rights or obligations hereunder to its "affiliates," as that
term is defined under the Securities Act, without the consent of the Company, so
long as (i) such affiliate is an "accredited investor" (within the meaning of
Regulation D under the Securities Act), (ii) such affiliate agrees in writing to
be bound by all of the provisions in this Agreement, (iii) such affiliate
completes and delivers to the Company the questionnaires attached as Exhibits C
and E to this Agreement, and (iv) any transfer of Shares to such affiliate
complies with the provisions of Section 2.6 hereof;
24
provided, however, that if such assignment is made to ten or more separate
persons or entities, then the Purchaser, and not the subsequent assignee, shall
have the right to enforce the terms of, and receive notices under, Section 6.5
of the Agreement. At any time after the Closing, the Purchasers may assign this
Agreement or any rights or obligations hereunder only in accordance with Section
6.9 hereof.
12.8 Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
12.9 Survival. The representations and warranties of the Company,
Selling Stockholder and the Purchasers set forth herein will survive the Closing
hereunder. The Company makes no representations or warranties in any oral or
written information provided to Purchasers, other than the representations and
warranties included herein. The covenants of the Company in Article V and VI
hereof shall terminate as to each Purchaser at the expiration of the
Registration Period applicable to such Purchaser, except that the covenants in
Section 6.5 shall survive such termination
12.10 Further Assurances. Each party will do and perform, or cause to
be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
12.11 No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
[Signature page follows]
25
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this Agreement to be duly executed as of the date first above written.
SELLER: COMPANY:
U.S. BANCORP NEW CENTURY FINANCIAL CORPORATION
By: ____________________________ By: ____________________________
Name: Name:
Title: Title:
PLACEMENT AGENT: PURCHASER:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
Name of Purchaser: ______________________
By: ____________________________
Name: By: _____________________________________
Title: (Signature)
Name: ___________________________________
Title: __________________________________
Shares Purchased: _______________________
Total Amount: $__________________________
Mailing Address: ________________________
__________________________________
__________________________________
Facsimile No.: (____) __________________
26
