EXHIBIT 4.20
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of May 10, 1999, between FINET HOLDINGS CORPORATION, a Delaware corporation
(the "Company"), and the person executing this Agreement on the signature
page hereof (the "Signature Page") as Purchaser (the "Purchaser"):
RECITALS:
WHEREAS, the Company has authorized the issuance and sale pursuant
to the terms and conditions hereof of 1,000,000 shares of its Common Stock
(the "Common Stock"); and
WHEREAS, the Purchaser desires to purchase and the Company desires
to sell the Common Stock on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained and other valuable consideration,
the receipt and adequacy of which the parties hereto acknowledge, the parties
agree as follows:
1. PURCHASE AND SALE OF THE SHARES. The Company agrees to sell to
the Purchaser, and upon the basis of the representations and warranties, and
subject to the terms and conditions, set forth in this Agreement, the
Purchaser agrees to purchase from the Company __________ shares of Common
Stock (the "Shares") in consideration for a purchase price (the "Purchase
Price") of US$6.00 per share, subject to adjustment as follows: The Company
has reached an agreement in principle with Banco Espirito Santo de
Investimento S.A. ("BES") for the placement of up to an additional $10
million of the Company's common stock at a price to be based on a discount
from the market price of the Company's common stock at the time of closing
which placement is anticipated to close during June, 1999. In the event the
BES placement closes on or before June 15, 1999, and the cash purchase price
per share (before placement agent commissions, fees and expenses) of the
shares to be sold through BES is less than $6.00 per share, the Company will
issue to Purchaser such number of additional shares, if any, as will make the
Purchase Price equal to the purchase price per share paid by the BES
investors. In the event the BES placement does not close by June 15, 1999,
the Company will issue to Purchaser such number of additional shares, if any,
as will make the Purchase Price equal to the average closing price of the
Company's common stock during the ten trading day period ending June 10,
1999, but not less than $4.00 nor greater than $6.00.
2. CLOSING DATE; DELIVERY. The closing of the purchase and sale of
the Shares shall be held at the offices of the Company, 0000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx on May 10, 1999, or at such other time
and place as the parties may agree upon. At the closing, subject to the terms
of this Agreement, the Purchaser shall deliver
the purchase price in immediately available funds by transfer to the account
of the Company. Within ten (10) days following closing the Company will
deliver to Purchaser against certificates representing the Shares to be
purchased by the Purchaser from the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Purchaser that:
(a) ORGANIZATION AND STANDING, ARTICLES AND BYLAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws.
The Company's principal operating subsidiary, Monument Mortgage, Inc.
("Monument"), is a corporation duly organized and validly existing under, and
by virtue of, the laws of the State of California. Each of the Company and
Monument has the requisite corporate power to own and operate its properties
and assets, and to carry on its business as presently conducted and as
proposed to be conducted. Each of the Company and Monument is qualified,
licensed or domesticated as a foreign corporation in all jurisdictions where
the nature of its activities or of its properties owned or leased makes such
qualification, licensing or domestication necessary at this time.
(b) CORPORATE POWER. The Company has now, or will have at the
Closing Date, all requisite legal and corporate power to enter into this
Agreement, to sell the Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement. All references to this
Agreement and the Shares to be issued hereunder shall for all purposes of the
Agreement, unless the context clearly requires otherwise, be deemed to
include the warrants that may be issued pursuant to Section 7(g) hereof and
the shares of Common Stock issuable upon exercise thereof, respectively.
(c) AUTHORIZATION.
(i) All corporate action on the part of the Company, its
officers, directors, and stockholders necessary for the sale and issuance of
the Shares pursuant hereto and the performance of the Company's obligations
hereunder has been taken or will be taken prior to the Closing. This
Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting enforcement of creditors' rights, and except
as limited by application of legal principles affecting the availability of
equitable remedies.
(ii) The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that such shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein and as may be
required by future changes in such laws.
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(iii) No shareholder of the Company has any right of first
refusal or any preemptive rights in connection with the issuance of the
Shares or of Common Stock by the Company.
(d) FINANCIAL STATEMENTS. The Company's audited consolidated
balance sheet as of April 30, 1998, audited consolidated statement of
operations, stockholders' equity and cash flows for the fiscal year ended
April 30, 1998, unaudited consolidated balance sheet and statements of
operations, stockholders' equity and cash flows for the nine months ended
January 31, 1999 (hereinafter collectively referred to as the "Financial
Statements") have been supplied by the Company to the Purchaser and such
Financial Statements are true and correct, have been prepared in accordance
with generally accepted accounting principles consistently applied (except as
disclosed therein and except that the unaudited Financial Statements do not
contain the footnotes required by generally accepted accounting principles),
and fairly present the financial condition of the Company as of the date
indicated and the results of the operations of the Company for the period
ended, as indicated.
(e) PUBLIC REPORTING. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "1934 Act"); the Company's (a) Annual Report on Form 10-KSB for the
fiscal year ended Xxxxx 00, 0000, (x) Annual Proxy Statement on Form 14A for
the fiscal year ended April 30, 1998, (c) Consent Statements dated December
18, 1998 and Xxxxx 00, 0000, (x) Current Reports on Form 8-K dated May 15,
1998, May 19, 1998, May 27, 1998, September 30, 1998, October 13, 1998,
November 30, 1998, December 7, 1998, January 5, 1999, January 19, 1999,
February 11, 1999 and February 19, 1999, (e) Quarterly Reports on Forms
10-QSB and 10-QSB/A for the three months ended July 31, 1998, the six months
ended October 31, 1998, and the nine months ended January 31, 1999
(collectively, the "Public Disclosure") filed by the Company with the U.S.
Securities and Exchange Commission (the "SEC") have been so filed in a timely
fashion (except for the amendment to the Form 8-K dated May 15, 1998 and the
Quarterly Reports on form 10-QSB) and include all reports and other
information required to be filed or furnished by the Company under the 1934
Act and the Company has provided copies of all such Public Disclosure to the
Purchaser
(f) VALIDITY OF MATERIAL CONTRACTS AND COMMITMENTS. All the
material contracts, commitments, agreements, and instruments to which the
Company or Monument is a party are legal, valid, binding, and in full force
and effect in all material respects and enforceable by the Company or
Monument, as the case may be, in accordance with their terms except as
limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application affecting enforcement of creditors' rights, and
except as limited by application of legal principles affecting the
availability of equitable remedies. Except as disclosed to Purchaser, neither
the Company nor Monument is in material default under any of such contracts.
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(g) COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Neither the Company nor any subsidiary is in violation of any term of its
respective Articles of Incorporation or Bylaws, or, except as disclosed to
Purchaser, in any material respect of any mortgage, indenture, contract,
agreement, instrument, or, to the best knowledge of the Company, any
judgment, decree, order, statute, rule, or regulation applicable to it. The
execution, delivery, and performance by the Company of this Agreement, and
the issuance and sale of the Shares pursuant hereto, will not result in any
such violation or be in conflict with or constitute a default under any such
term, or cause the acceleration of maturity of any loan or material
obligation to which the Company or the subsidiaries are a party or by which
any of them are bound or with respect to which any of them is an obligor or
guarantor, or result in the creation or imposition of any material lien,
claim, charge, restriction, equity or encumbrance of any kind whatsoever
upon, or, to the best knowledge of the Company after due inquiry, give to any
other person any interest or right (including any right of termination or
cancellation) in or with respect to any of the material properties, assets,
business or agreements of the Company or the subsidiaries. To the best
knowledge of the Company after due inquiry, no such term or condition
materially adversely affects or in the future (so far as can reasonably be
foreseen by the Company at the date of this Agreement) may materially
adversely affect the business, property, prospects, condition, affairs, or
operations of the Company and the subsidiary.
(h) LITIGATION, ETC. Other than as described in the Financial
Statements or the Public Disclosure and ongoing regulatory proceedings
relating to Mical Mortgage, Inc., there are no actions, proceedings or
investigations pending (or to the best of the Company's knowledge, any basis
therefor or threat thereof), which, either in any case or in the aggregate,
might result in any adverse change in the business, prospects, conditions,
affairs, or operations of the Company, or in any of its properties or assets,
or in any impairment of the right or ability of the Company to carry on its
business as proposed to be conducted, or in any material liability on the
part of the Company, or which question the validity of this Agreement or any
action taken or to be taken in connection herewith.
(i) GOVERNMENTAL CONSENT ETC. No consent, approval, or
authorization of, or designation, declaration, or filing with, any
governmental unit is required on the part of the Company in connection with
the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Shares, or the consummation of any other transaction
contemplated hereby (except qualification or exemption under the California
Corporate Securities Law, which exemption or qualification will be available
or obtained and will be effective on the Closing Date).
(j) OFFERING. The offer, sale and issuance of the Shares in
conformity with the terms of this Agreement (the "Offering") will not violate
the Securities Act of 1933, as amended ("Securities Act").
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(k) TITLE TO AND CONDITION OF PROPERTIES. The Company and its
subsidiaries have good and marketable title to all their respective tangible
and intangible property and assets, including those reflected in the Public
Disclosure and the Financial Statements (except such property or assets as
have since January 31, 1999, been sold or otherwise disposed of in the
ordinary course of business). Such property and assets are subject to no
mortgage or security interests, conditional sales contract, charge, lien or
encumbrance (except for the lien of current taxes not yet due and payable and
such imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value of, or interfere with the present use of the properties subject
thereto or affected thereby, or otherwise materially impair the business
operations of the Company and any subsidiary). Subsequent to January 31,
1999, neither the Company nor any subsidiary has sold or disposed of any of
its property and assets or obligated itself to do so except in the ordinary
course of business. Except for such minor defects as are not substantial in
character and which do not have a materially adverse effect upon the validity
thereof, all material real and personal property leases to which the Company
or the subsidiaries are a party are in good standing, valid and effective,
and there is not under any such lease any existing material default or event
which with notice or lapse of time or both would constitute a material
default and in respect of which the Company or the subsidiaries have not
taken reasonable steps to prevent such a default from occurring.
(l) DISCLOSURE. This Agreement, the Public Disclosure, the
Financial Statements, and all certificates delivered to Purchaser pursuant to
this Agreement, when read together, do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained therein or herein not misleading, it being
understood that the information provided to the Purchaser regarding the
Company contains estimates and projections which constitute forward looking
statements and which have been made in good faith by the Company and no
warranty of such projections is expressed or implied hereby. There is, to the
best of the Company's knowledge, no fact which materially adversely affects
the business, prospects, condition, affairs or operations of the Company or
any of its properties or assets which has not been set forth in this
Agreement, the Public Disclosure, the Financial Statements or the other
information provided to Purchaser.
(m) THE SHARES:
(i) are free and clear of any security interests, liens,
claims, or other encumbrances;
(ii) have been duly and validly authorized and issued and
are, and on the Closing Date will be, fully paid and non-assessable;
(iii) will not have been, individually and collectively,
issued or sold in violation of any pre-emptive or other similar rights of the
holders of any securities of the Company; and
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(iv) will not subject the holders thereof to personal
liability by reason of being such holders.
(n) FURNISHING OF FINANCIAL STATEMENTS AND INFORMATION. The
Company will deliver to the Purchaser :
(i) as soon as practicable, but in any event within 90 days
after the end of each fiscal year, a consolidated balance sheet of the
Company and its Subsidiaries, as of the end of such fiscal year, together
with the related consolidated statements of operations, shareholders' equity
and cash flow for such fiscal year, setting forth in comparative form figures
for the previous fiscal year, all in reasonable detail and duly certified by
the Company's independent public accountants, which accountants shall have
given the Company an opinion, unqualified as to the scope of the audit,
regarding such statements.
(ii) with reasonable promptness, such other financial data
relating to the business, affairs and financial condition of the Company and
any Subsidiaries as is available to the Company and as from time to time the
Purchasers may reasonably request.
(o) INSPECTION. The Company will permit each Purchaser and any of
its partners, officers or employees, or any outside representatives
designated by such Purchaser, to visit and inspect at such Purchaser's
expense any of the properties of the Company or its Subsidiaries, including
their books and records (and to make photocopies thereof or make extracts
therefrom), and to discuss their affairs, finances, and accounts with their
officers, lawyers and accountants, except with respect to trade secrets and
similar confidential information, all to such reasonable extent and at such
reasonable times and intervals as such Purchaser may reasonably request.
Except as otherwise required by laws or regulations applicable to a
Purchaser, the Purchasers shall maintain, and shall require their
representatives to maintain, all information obtained pursuant to Sections
3(m) and 3(n) hereof on a confidential basis.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company:
(a) No consent, approval, authorization, or order of any court,
governmental agency or body, or arbitrator having jurisdiction over the
Purchaser is required for execution of this Agreement, including, without
limitation, the purchase of the Shares or the performance of the Purchaser's
obligations hereunder.
(b) The Purchaser understands that no federal or state agency has
passed on or made any recommendation or endorsement of the Shares.
(c) The Company has given the Purchaser the opportunity to have
answered all of the Purchaser's questions concerning the Company and its
business and has made available to the Purchaser all information requested by
the Purchaser which is
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reasonably necessary to verify the accuracy of other information furnished by
the Company. The Purchaser has received and evaluated all information about
the Company and its business which the Purchaser deems necessary to formulate
an investment decision and does not desire any further information.
(d) The Purchaser understands that the Shares are being offered
and sold to it in reliance on specific exemptions or non-application from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments, and understandings of the Purchaser
set forth herein in order to determine the applicability of such exemptions
or non-applications and the suitability of the Purchaser to acquire the
Shares.
(e) The Purchaser is aware that the Shares have not been
registered under the Securities Act of 1933 by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) and Regulation D thereof and
that they must be held by the Purchaser indefinitely, and the Purchaser must
therefore bear the economic risk of such investment indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from registration. The Purchaser is aware of the provisions of Rule
144 promulgated under the Securities Act which permits limited resale of
shares purchased in a private placement subject to the satisfaction of
certain conditions, including among other things the existence of a public
market for the Shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party
has purchased and paid for the security to be sold, the sale being through a
"broker's transaction" or in transactions directly with a "market maker" (as
provided by Rule 144(f)), and the number of shares being sold during any
three-month period not exceeding specified limitations. The Purchaser is also
aware that while many of the restrictions of Rule 144 do not apply to the
resale of shares by a person who owned those shares for at least two years
prior to their resale and who is not an "affiliate" (within the meaning of
Rule 144(a)) of the issuer and has not been an affiliate of the issuer for at
least three months prior to the date of resale of the restricted securities.
Based on Purchaser's representation that after giving effect to the
transactions contemplated by this Agreement, Purchaser, together with its
affiliates, will own less than 10% of the Company's outstanding Common Stock,
the Company acknowledges that the Purchaser is not an affiliate as of the
date of this Agreement and that the Purchaser will not be an affiliate after
giving effect to the transactions contemplated by this Agreement.
(f) Each instrument representing the Shares is to be endorsed
with the following legends:
(i) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION
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STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(ii) Any other legend required by California or other state
securities laws.
The Company need not register a transfer of legended Shares and may
instruct its transfer agent not to register the transfer of the Shares unless
one of the conditions specified in the foregoing legends is satisfied.
(g) Any legend endorsed on an instrument pursuant to Section 4(f)
hereof and the stop transfer instructions with respect to such Shares shall
be removed, and the Company shall issue an instrument without such legend to
the holder of such Shares if such Shares are registered under the Securities
Act and a prospectus meeting the requirements of Section 10 of the Securities
Act is available or if such holder provides the Company with an opinion of
counsel for such holder of the Shares, reasonably satisfactory to the
Company, to the effect that a public sale, transfer or assignment of such
Shares may be made without registration.
(h) The Purchaser is either (i) acquiring the Shares for the
Purchaser's own account; or (ii) for the account of another for which the
Purchaser acts as a fiduciary, in which case the Purchaser will so advise the
Company. If acting as a fiduciary, the Purchaser makes the representations,
warranties, and covenants as set forth herein on its own behalf and as agent
for and on behalf of such other party. The Purchaser is acquiring the Shares
for investment and without any present intention to engage in a distribution
thereof.
(i) The Purchaser has the knowledge and experience in financial
and business matters to evaluate the merits and risks of the proposed
investment.
(j) The Purchaser is an "Accredited Investor" as that term is
defined under Rule 501 adopted pursuant to the Securities Act.
5. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The
obligations of the Purchaser hereunder are subject to the performance by the
Company of its obligations hereunder and to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) The representations and warranties made by the Company in
this Agreement shall, unless waived by the Purchaser, be true and correct as
of the date hereof
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and at the Closing Date, with the same force and effect as if they had been
made on and as of the Closing Date; and
(b) After the date hereof until the Closing Date, there shall not
have occurred:
(i) any change, or any development involving a prospective
change, in either (A) the condition, financial or otherwise, or in the
earnings, business or operations, or in or affecting the properties of the
Company, or (B) the financial or market conditions or circumstances in the
United States, in either case which, in the Purchaser's judgment, is material
and adverse and makes it impractical or inadvisable to proceed with the
offering, sale, or delivery of the Shares;
(ii) an imposition of a new legal or regulatory restriction
not in effect on the date hereof, or any change in the interpretation of
existing legal or regulatory restrictions, that materially and adversely
affects the offering, sale, or delivery of the Shares; or
(iii) a suspension or material limitation of trading (A)
generally on or by the New York Stock Exchange or NASDAQ or (B) of any
securities of the Company on any exchange or in any over-the-counter market.
(c) The Company shall have delivered to Purchaser an officer's
certificate attesting to the satisfaction as of the Closing of each of the
conditions precedent set forth in this Section 5.
6. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company hereunder are subject to the performance by the
Purchaser of its obligations hereunder, and the satisfaction of the condition
that the representations and warranties made by the Purchaser in this
Agreement shall, unless waived by the Company, be true and correct at the
Closing Date, with the same force and effect as if they had been made on and
as of, the Closing Date.
7. REGISTRATION RIGHTS.
(a) RIGHTS TO REGISTRATION. The Company shall use its best
efforts to file with the SEC as promptly as practicable and thereafter shall
use its best efforts to cause to be declared effective within ninety (90)
days from the date of the Closing a "shelf" registration statement on the
appropriate form under the Securities Act providing for the registration of,
and the sale on a continuous or delayed basis by the holders of, all of the
Shares, pursuant to Rule 415 or any similar rule that may be adopted by the
SEC (the "Shelf Registration Statement").
The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Purchasers for a period
ending on the earlier of (i) (x) the
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second anniversary of the Closing, (y) the expiration of the period following
the Closing after which Rule 144(k) under the Securities Act becomes
available to the Purchasers or (z) in the event the Company has at any time
suspended the use of the prospectus contained in the Shelf Registration
Statement pursuant to this paragraph, the date beyond the earlier of the
periods referred to in clauses (x) and (y) that reflects an additional period
of days equal to the number of days during all of the periods from and
including the dates the Company gives notice of such suspension pursuant to
this paragraph to and including the date when holders of Shares receive an
amended or supplemented prospectus necessary to permit resales of Shares
under the Shelf Registration Statement or to and including the date on which
the Company gives a resumption notice or (ii) such time as all of the Shares
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or pursuant to Rule 144 (in any such case, such
period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in holders of Shares covered thereby not being able
to offer and sell Shares during that period, unless such action, in the
opinion of the Company after consulting with legal counsel, is required by
applicable law.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Shelf Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated herein
or necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In addition, if, at any time during the period after the Closing and
ending ten (10) years thereafter, the Company shall determine to register
under the Securities Act any shares of Common Stock to be offered for cash by
it or others, pursuant to a registration statement on Form S-1 (or its
equivalent) or any other form permitting such registration (the "S-1
Registration Statement" and, together with the Shelf Registration Statement,
the "Registration Statements"), the Company will (i) promptly give written
notice to Purchaser of its intention to file such S-1 Registration Statement
and (ii) at the Company's expense (which shall include, without limitation,
all registration and filing fees, printing expenses, fees and disbursements
of counsel and independent accountants for the Company, and fees and expenses
incident to compliance with state securities law, but shall not include fees
and disbursements of counsel for Purchaser) include among the securities
covered by the S-1 Registration Statement such portions of the Shares then
held by Purchaser as shall be specified in a written request to the Company
within thirty (30) days after the date on which the Company gave the notice
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described in (i) above. Upon receipt of such written request and of the
Shares specified in the request (any shareholder requesting registration
being individually called a "Selling Shareholder"), the Company shall (i) use
its reasonable best efforts to effect the registration, qualification or
compliance of the Shares under the Securities Act and under any other
applicable federal law and any applicable securities or blue sky laws of
jurisdictions within the United States; (ii) furnish each Selling Shareholder
such number of copies of the prospectus contained in the S-1 Registration
Statement filed under the Securities Act (including preliminary prospectus)
in conformity with the requirements of the Securities Act, and such other
documents as the Selling Shareholder may reasonably request in order to
facilitate the disposition of the Shares covered by the S-1 Registration
Statement; (iii) notify each Selling Shareholder, at any time when a
prospectus relating to the Shares covered by such S-1 Registration Statement
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus forming a part of such S-1
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and (iv)
at the request of the Selling Shareholder, prepare and furnish to the Selling
Shareholder any reasonable number of copies of any supplement to or amendment
of such prospectus as may be necessary so that, as thereafter delivered to
purchasers of the Shares, such prospectus shall not include 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.
(b) REGISTRATION OF UNDERWRITTEN OFFERING. If the offering of
Common Stock to be registered by the Company pursuant to the S-1 Registration
Statement is underwritten, each Selling Shareholder shall sell the Shares to
or through the underwriter(s) of the Common Stock being registered for the
account of the Company or others upon the same terms applicable to the
Company or others. If the managing underwriter(s) reasonably determine that
all or any portion of the Shares held by the Selling Shareholder should not
be included in either of the Registration Statements, then notwithstanding
anything to the contrary in this Section, the determination of such
underwriter(s) shall be conclusive; provided, however, that if such
underwriter(s) determine that some but not all of the Shares of the Selling
Shareholder shall be included in the Registration Statement, the number of
Shares owned by each Selling Shareholder to be included in the Registration
Statement will be proportionately reduced in accordance with the respective
written requests given as provided above.
(c) INDEMNIFICATION. In the event that Shares are included in a
Registration Statement under this Section 7, the Company will indemnify and
hold harmless each Selling Shareholder and each other person, if any, who
controls such Selling Shareholder within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such Selling Shareholder or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained, in either of the Registration Statements pursuant to
which the Shares were
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registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or are based upon the
failure by the Company to file any amendment or supplement thereto that was
required to be filed under the Securities Act, and will reimburse such
Selling Shareholder and each such controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company will not be liable in any such
case to a Selling Shareholder to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by or on behalf of that Selling Shareholder specifically for use in
the preparation of such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement. It shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Section
that the Company shall have received an undertaking satisfactory to it from
each Selling Shareholder to indemnify and hold harmless the Company (in the
same manner and to the same extent as set forth in this Section), each
director of the Company, each officer who shall sign such registration
statement, and any persons who control the Company within the meaning of the
Securities Act, with respect to any statement or omission from such
registration statement, preliminary prospectus, or any final prospectus
contained therein, or any amendment or supplement thereto, if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
the indemnifying party specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, or
amendment or supplement. Promptly following receipt by an indemnified party
of notice of the commencement of any action involving a claim referred to
above in this Section 7(c), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action, provided, however,
that any failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any
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governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under
this Section 7 or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise
or consent (i) includes an unconditional release of each indemnified party
from all liability arising out of such litigation, investigation, proceeding
or claim and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) BINDING PROVISIONS. The provisions of this Section 7 shall be
binding on the successors of the Company. In the event of a merger or
consolidation in which the Company or the Purchaser is not the survivor, the
Company or the Purchaser, as the case may be, shall assign and transfer, and
successor shall assume, the provisions of this Section 7.
(e) CONFLICTS. To the extent that the Company's compliance with
the obligations set forth in Sections 8(a) through 8(d) above would conflict
with or otherwise cause a breach of or default under any of its existing
obligations pursuant to any other agreements to which it currently is a
party, the Company's failure to comply with those obligations under such
other agreements shall not be deemed a breach of this Agreement.
(f) TRANSFER OF REGISTRATION RIGHTS. The rights and obligations
granted to the Purchaser by the Company under Section 7 may be assigned by
the Purchaser to a transferee or assignee of any of the Purchaser's Shares,
provided that the Company is given written notice by the Purchaser at the
time of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and identifying the Shares with
respect to which such registration rights are being assigned.
(g) ISSUANCE OF WARRANTS. In the event that the Company shall
fail to cause the Shelf Registration Statement with respect to the Shares to
be declared effective by the SEC within ninety (90) days from the date of the
Closing as provided in Section 7(a), the Company shall issue to the Purchaser
five year warrants in form and substance reasonably satisfactory to the
Purchaser to purchase 117,000 of the Company's common stock at $6.00 per
share, subject to customary anti-dilution adjustments. Provided that the
Company shall continue to use its reasonable best efforts to cause such Shelf
Registration Statement to become effective as promptly as practicable, the
delivery of such warrants shall be in full satisfaction of any liability on
the part of the Company for failing to register the Shares as provided
herein; provided further however, that such delivery shall not excuse the
Company from the obligation to register all of such Shares which obligation
shall continue. Any shares of Common Stock issuable upon exercise of the
warrants issued pursuant to this Section 7(g) shall be subject to the same
registration rights provided in this Section 7.
8. CONTRIBUTION
(a) If the indemnification provided for in Section 7 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of
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any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Selling Shareholder on the one
hand and the Company on the other hand from the offer and sale of the
Purchase Shares pursuant to this Agreement or (ii) if the allocation provided
by clause (i) 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 also the relative fault of the Selling Shareholder on the one
hand and of the Company on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
(b) The relative fault of the Company on the one hand and the
Selling shareholder on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Selling Shareholder
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(c) The Company and the Selling Shareholder agree that it would
not be just and equitable if a contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
(d) 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.
(e) For purposes of this Section 8, each person, if any, who
controls the Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Selling Shareholder, and each director of the Company,
each officer of the Company, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Company.
9. FEES AND EXPENSES. The Purchaser and the Company each agrees to
pay its own expenses incident to the performance of its obligations hereunder.
10. SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC. The respective
agreements, representations, warranties, indemnities, and other statements
made by or on
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behalf of the Company and Purchaser pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on
behalf of the other party to this Agreement or any officer, director, or
employee, or person controlling or under common control with, such party, and
will survive delivery of any payment of the Shares.
11. NOTICES. All communications hereunder shall be in writing and,
if sent to the Purchasers, shall be sufficient in all respects if delivered,
sent by registered mail, or by telecopy and confirmed to the Purchasers at
the address set forth on the Signature Page or, if sent to the Company, shall
be delivered, sent by registered mail, or by telecopy and confirmed to the
Company at:
Finet Holdings Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
12. MISCELLANEOUS.
(a) The Company agrees to make a public announcement of the
purchase of the Shares hereunder not later than ten days following the
Closing Date by means of a press release in a form reasonably acceptable to
the Purchaser.
(b) This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.
(c) This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors and, with respect to
Section 8 hereof, the officers, directors, and controlling persons thereof
and each person under common control therewith, and no other person shall
have any right or obligation hereunder.
(d) This Agreement shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made
and to be performed wholly, within such jurisdiction. Each of the parties
hereto irrevocably and unconditionally consents to submit to the jurisdiction
of the courts of the State of New York and of the United States of America
located in the Southern District of New York for any actions, suits or
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any action, suit or
proceeding relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by registered mail to its
respective address set forth in Section 11 shall be effective service of
process for any action, suit or proceeding brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby, in the
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courts of the State of New York or the United States of America located in
the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to co-plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
(e) The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
IN WITNESS HEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
COMPANY:
FINET HOLDINGS CORPORATION
By____________________________
Its_______________
By____________________________
Its Chief Financial Officer
PURCHASER:
By____________________________
Its_______________
By____________________________
Its_______________
________________________
Address
________________________
Telephone Number
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