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Exhibit 2.3
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of July 2,
1999, is made and entered into by and among XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation (the "Company"), the persons identified as
"Shareholder/Directors" on Schedule 1 attached hereto, DMR FINANCIAL SERVICES,
INC., a Michigan corporation ("DMRFS"), and DETROIT MORTGAGE AND REALTY COMPANY,
a Michigan corporation ("DMR"). For purposes of this Agreement, the term "DMR
Shareholders" means the shareholders of DMR, as identified on Schedule 2
attached hereto. For purposes of this Agreement, the term "Shareholders" means
(i) each of the Shareholder/Directors and DMRFS, until such time, if ever, as
DMRFS distributes to DMR the shares of Common Stock (defined in Recital B below)
issued to DMRFS pursuant to the Reorganization Agreement (defined in Recital A
below); (ii) each of the Shareholder/Directors and DMR, after DMRFS so
distributes such shares to DMR, and until such time, if ever, as DMR distributes
such shares to the DMR Shareholders pursuant to the Reorganization Agreement;
and (iii) each of the Shareholder/Directors and each of the Bound DMR
Shareholders (defined below), thereafter. For purposes of this Agreement, the
term "Bound DMR Shareholders" means those DMR Shareholders who agree, in
writing, and in a form reasonably acceptable to Xxxxxxx, to be bound by and
subject to the terms of this Agreement, as and to the same extent as DMR, and
jointly and severally with DMR and any and all other DMR Shareholders who have
agreed to be identically bound by and subject to the terms of this Agreement.
RECITALS
A. The Company, DMRFS, DMR and Xxxxxxx & Xxxxxxx Mortgage Associates,
Inc. ("H&W") have entered into that certain Reorganization Agreement dated June
30, 1999 (as the same may have been or may be amended or supplemented, the
"Reorganization Agreement").
B. The Company's authorized capital stock consists of 10,000,000 shares
of common stock (the "Common Stock") and 10,000,000 shares of preferred stock,
of which there were 2,422,484 shares of common stock, without par value, issued
and outstanding as of June 30, 1999. The shares of the Common Stock have all of
the rights, preferences and limitations of shares of common stock stated in the
Michigan Business Corporation Act, as amended (the "Act").
C. Pursuant to the Reorganization Agreement, the Company shall acquire
all of the issued and outstanding shares of the capital stock of H&W from DMR.
D. In connection with that transaction, DMRFS shall become a
shareholder of the Company. Current directors and key shareholders of the
Company (i.e. the Shareholder/Directors) have executed and joined this Agreement
as Shareholders and, as of the date of this Agreement, are the beneficial owners
of shares of Common Stock in the amounts set forth on Schedule 1 hereto.
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NOW THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and agreements contained in this Agreement and other good and
valuable consideration, the receipt and adequacy of which is acknowledged, the
undersigned agree as follows:
SECTION 1. CERTAIN GOVERNANCE MATTERS.
1.1 [intentionally omitted]
1.2 Board Elections. In connection with any election of directors,
DMRFS and the Bound DMR Shareholders shall vote all of their respective shares
of Common Stock in accordance with the recommendations of the Board.
1.3 Standstill. DMRFS and DMR agree that, until this Agreement is
terminated in accordance with its terms, unless specifically requested by the
Company in writing, neither DMR, DMRFS nor any of its affiliates (as such term
is defined in the Securities Exchange Act of 1934, as amended (the "1934 Act"))
or any of their respective directors, officers, employees, agents, advisors or
representatives will in any manner, directly or indirectly, or in conjunction
with any other person or entity: (a) effect or seek, offer or propose (whether
publicly or otherwise) to effect, or cause or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or assets of the
Company or any plan or proposal which would require the filing of a Schedule 13D
or an amendment to a schedule 13D to report a plan or purpose which would relate
to or would result in any of the events discussed in Items (a) through (j) of
the instructions to Item 4 of the Schedule 13D, other than for investment
purposes; (ii) any tender or exchange offer, merger or other business
combination involving the Company; (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company; or (iv) any "solicitation" of "proxies" (as such terms are defined in
Rule 14a-1 under the 0000 Xxx) or consents to vote any securities of the
Company; (b) form, join or in any way participate in a "group" (as defined in
the 0000 Xxx) or otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or policies of the
Company, other than in their roles in management and as members of the Board of
Directors; (c) take any action which would result in or reasonably be expected
to result in the Company making a public announcement regarding any of the
foregoing; or (d) enter into any discussions or arrangements with any third
party with respect to any of the foregoing.
SECTION 2. TAG-ALONG RIGHTS.
2.1 Proposed Transfer. If one or more of the Shareholders proposes
(the person or group making such proposal being the "Selling Group" and the
remaining Shareholders being the "Tag-Along Group") a Transfer (defined in
Section 2.4 below) of five percent (5%) or more of the Common Stock, and
provided that the Transfer is not an Exempt Transfer (defined in Section 2.5
below), then each of the Shareholders comprising the Tag-Along Group (each a
"Tag-Along Shareholder") shall have the right ("Tag-Along Right") to require the
proposed purchaser(s) to purchase from such Tag-Along Shareholder up to the
number of whole shares of Common Stock not to exceed the number derived by
multiplying the total number of shares of Common Stock to be
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purchased by the proposed purchaser(s) by a fraction, the numerator of which is
the total number of shares of Common Stock owned by such Tag-Along Shareholder,
and the denominator of which is the total number of shares of Common Stock owned
by (i) the members of the Seller Group, (ii) the members of the Tag-Along Group,
and (iii) any other shareholders of the Company who are entitled to analogous
tag-along rights in connection with the transaction in question, collectively.
Any shares purchased from Tag-Along Shareholders pursuant to this Section 2
shall be paid for at the same price per share and upon the same terms of payment
and conditions, including price per share and the total number of shares
proposed to be transferred, as such proposed Transfer by the Selling Group (the
"Transfer Terms").
2.2 Tag-Along Notice. The Selling Group shall promptly notify the
Company and the Tag-Along Group in the event they propose to make a Transfer
giving rise to Tag-Along Rights, and shall furnish the Tag-Along Group with the
Transfer Terms and a copy of any written offer or agreement pertaining thereto.
The Tag-Along Right may be exercised by any Tag-Along Shareholder by delivery of
a written notice to the Selling Group (the "Tag-Along Notice") within twenty
(20) days following such Tag-Along Shareholder's receipt of such notice from the
Selling Group. The Tag-Along Notice shall state the number of shares of Common
Stock that such Tag-Along Shareholder proposes to include in the Transfer to the
proposed purchaser (not to exceed the number determined in accordance with
Section 2.1 above). In the event that the proposed purchaser does not purchase
the specified number of shares from the Tag-Along Shareholders on the Transfer
Terms, then the Selling Group shall only be permitted to sell any other number
of shares of Common Stock to the proposed purchaser (an "Alternate Transfer")
if: (a) the number of shares to be sold in the Alternate Transfer is less than
five percent (5%) of the then-issued and outstanding Common Stock of the
Company; or (b) the Tag-Along Shareholders are given five (5) days written
notice of the proposed Alternate Transfer and the right to participate pro rata
in the Alternate Transfer (calculated using the formula set forth in Section
2.1) under the same terms and conditions as the Selling Group.
2.3 Closing. At the closing of any Transfer pursuant to this
Section 2, the proposed purchaser shall remit to each selling Shareholder the
consideration for the total sales price of the Common Stock of such Shareholder
sold pursuant hereto, upon delivery by such Shareholder of certificate(s) for
such shares duly endorsed in blank for transfer or accompanied by stock power(s)
duly executed in blank and such other transfer documentation, including but not
limited to representations and warranties of title, as shall be reasonably
required by the purchaser or its counsel.
2.4 Transfer. A "Transfer" of stock under this Section 2 shall
mean a sale, exchange, or other transfer to be consummated in a single transfer
or a series of related transfers, to a single purchaser or a group of
purchasers, as part of a single transaction or group of related transactions.
For purposes of this Section 2, transactions which occur or are proposed to
occur more than six (6) months apart shall not be considered to be a group of
related transactions, so long as those transactions are not part of an expressly
related group of transactions.
2.5 Exempt Transfer. The following transactions shall constitute
"Exempt Transfers" as that term is used in this Section 2: (a) a Transfer to the
Company, DMR or the shareholders of DMR
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pursuant to and in accordance with Section 15.7 of the Reorganization
Agreement; (b) a Transfer entirely between or among any of the Shareholders
executing this Agreement; (c) a Transfer by will or intestate succession to a
Shareholder's executors, administrators, testamentary trustees, legatees or
beneficiaries; (d) a Transfer to a Shareholder's immediate family members or to
a Michigan revocable inter-vivos trust, of which a Shareholder is the grantor,
or another entity controlled by such Shareholder formed primarily for estate
planning purposes for the benefit of said Shareholder (and/or his spouse,
children, grandchildren, parents and/or siblings); (e) a Transfer to an
organization exempt from taxation under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), so long as the transferor is not
a "disqualified person" (as defined in Section 4946(a) of the Code, assuming
that all references to "private foundation" or "foundation" in such Section
4846(a) are interpreted to mean the organization in question) with respect to
such organization (the parties identified in (b), (c), (d) and (e), or any one
of them are hereinafter collectively referred to as "Permitted Transferees"); or
(f) a Transfer in a public offering by the Company pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
or in a transaction not involving a public offering pursuant to Rule 144
promulgated thereunder. The transferee in any Exempt Transfer shall take the
shares in Common Stock in question subject to the terms of this Agreement.
2.6 [Intentionally Omitted]
SECTION 3. REGISTRATION RIGHTS.
The Company covenants and agrees as follows, for the benefit of all of
the DMR Shareholders (provided, however, that with respect to any given DMR
Shareholder, the Company's willingness to make the following covenants and
agreements is conditioned on such DMR Shareholder being subject to the
provisions of this Section 3):
3.l Definitions. For purposes of this Section 3:
(a) The terms "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document pursuant to the Securities Act of 1933,
as amended (the "1933 Act"), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means Common Stock of
the Company issued pursuant to the Reorganization Agreement
("Consideration Stock") and any Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of Consideration Stock, held by
the Holders (as defined below), excluding shares sold or otherwise
transferred pursuant to Rule 144 under the Securities Act, and also
excluding, for the purposes of Section 3.2 below only, (i) shares that
are held by Holders who are not affiliates of the Company that are
eligible for sale pursuant to Rule 144 under the Securities Act, and
(ii) shares held by each Holder who is an affiliate of the company if
all of such shares are eligible for sale pursuant to Rule 144 under the
Securities Act and could be sold in one transaction in accordance with
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the volume limitations contained in Rule 144(e)(1)(i) under the
Securities Act; provided, however, that Common Stock or other
securities shall only be treated as Registrable Securities if and so
long as (1) they have not been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities
transaction, and (2) they have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the 1933
Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the
consummation of such sale;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which
are, Registrable Securities;
(d) The term "Holder" means DMR and/or any DMR Shareholder who
is the record owner of Registrable Securities and who, at the request
of Xxxxxxx, agrees in writing to be bound by and subject to the terms
of Section 3.9 below, or any assignee thereof in accordance with
Section 3.11 hereof; and
(e) The term "SEC" means the Securities and Exchange
Commission or any other federal agency at the time administering the
1933 Act.
3.2 Company Registration. If at any time, the Company (without any
obligation to do so) proposes to register any of its stock or other securities
under the 1933 Act in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a SEC Rule 145 transaction (or any transaction under
any successor provision)), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within thirty (30) days after mailing of such notice by the Company
in accordance with Section 5.6, the Company shall, subject to the provisions of
Sections 3.5, 3.6, 3.7 and 3.8, cause to be registered under the 1933 Act all of
the Registrable Securities that each such Holder has requested to be registered.
If the number of Registrable Securities which a Holder desires to be registered,
together with the number of shares of stock or other securities of the Company
with respect to which other persons or entities have registration rights and
which such persons and entities desire to be registered, exceed the number of
shares of stock or other securities which the Company intends to register, then
each Holder and each such other person or entity shall be entitled to have
registered a pro-rata share of his, her or its shares of stock or other
securities, based on the number of shares of stock or other securities which all
such Holders and other persons and entities desired to be registered.
Notwithstanding the foregoing, the Company will not be required to give notice
to the Holders of Registrable Securities if the underwriters managing the
proposed offering have advised the Company in writing that in their judgment
market conditions will not allow the inclusion of any secondary shares in such
offering. In the event the managing underwriters and the Company subsequently
determine to add any secondary
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shares in the offering, such notice shall be provided, and each Holder shall
have the registration rights provided in this Section 3. Notwithstanding the
foregoing, no Holder shall have any rights under this Section 3.2 in connection
with any "demand registration" initiated or requested by any person or entity
(other than a Holder) who or which has registration rights with respect to
shares of stock or other securities of the Company, unless the number of
Registrable Securities which the Holders desire to be registered will not limit
in any way the number of shares of stock or other securities of the Company
which such other person or entity desires to register.
3.3 Demand Registration.
(a) Subject to the terms of this Agreement, in the event that
the Company shall, not sooner than the second (2nd) anniversary of the
date of this Agreement, and not later than the fifth (5th) anniversary
of the date of this Agreement, receive from the Holders, or any subset
of them, a written notice that it or they intend to offer or cause to
be offered for public sale Registrable Securities at an aggregate
offering price to the public of not less than Five Million Dollars
($5,000,000.00), the Company will so notify DMRFS, DMR or the
Shareholder Representative (as defined in the Reorganization
Agreement), and DMRFS, DMR or the Shareholder Representative, as the
case may be, shall so notify all Holders.
(b) Subject to the terms of this Agreement, in the event that
the Company shall, not sooner than the fifty (5th) anniversary of the
date of this Agreement, and not later than the seventh (7th)
anniversary of the date of this Agreement, receive from the Holders, or
any subset of them, a written notice that it or they intend to offer or
cause to be offered for public sale Registrable Securities at an
aggregate offering price to the public of not less than Five Million
Dollars ($5,000,000.00), the Company will so notify DMRFS, DMR or the
Shareholder Representative (as defined in the Reorganization
Agreement), and DMRFS, DMR or the Shareholder Representative, as the
case may be, shall so notify all Holders.
(c) Upon written request of any Holder given within eighteen
(18) days after the receipt by DMRFS, DMR or the Shareholder
Representative, as is appropriate, from the Company, of a notification
pursuant to Section 3.3(a) or 3.3(b) above, the Company will use
commercially reasonable efforts to cause such of the Registrable
Securities as may be requested by any Holder (including the Holder
giving the initial notice of intent to offer) to be registered under
the Act as expeditiously as possible (a "Demand Registration"). The
Company shall not be required to effect more than one (1) Demand
Registration pursuant to Section 3.3(a) above, and the Company shall
not be required to effect more than one (1) Demand Registration
pursuant to Section 3.3(b) above.
(d) If (i) in the good faith judgment of the Board, a Demand
Registration would be materially detrimental to the Company and the
Board concludes, as a result, that it is essential to defer the filing
of such registration statement at such time, and (ii) the Company shall
furnish to DMRFS, DMR or the Shareholder Representative, as is
appropriate, a certificate signed by the President of the Company
stating that, in the good
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faith judgment of the Board, it would be materially detrimental to the
Company for such registration statement to be filed in the near future,
then the Company shall have the right to defer such filing for the
period during which such Demand Registration would be materially
detrimental, provided that the Company may not defer the filing for a
period of more than ninety (90) days after receipt of the request for a
Demand Registration, and more than once in any 12-month period.
(e) In the case of any registration, filing or qualification
of Registrable Securities pursuant to this Section 3.3, DMRFS or the
Shareholder Representative, as the case may be, shall be responsible
for sending all notifications to the Holders, and for obtaining the
signatures of the Holders to all documents required to be delivered by
the Holders pursuant to this Agreement in connection with such
registration, filing or qualification, and all costs and expenses
associated with sending such notices or obtaining such signatures, any
provision of this Agreement to the contrary notwithstanding.
3.4 Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities pursuant to Sections 3.2 or 3.3 above, or a
combination thereof, including (without limitation) all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses and fees and reimbursements the
counsel, independent certified public accountants, underwriters and other
persons retained by the Company, the expense of reporting or disclosing this
Agreement or its attendant rights and obligations (including filings required
under Section 13(d) of the 1934 Act), the expense of any annual audit, the
expense of any liability insurance and the expense and fees for listing the
securities, but excluding underwriting discounts and commissions and stock
transfer taxes relating to Registrable Securities, and also excluding costs
incurred under Section 3.3 in connection with notifying the Holders.
3.5 Obligations of the Company. Whenever registering any
Registrable Securities pursuant to Sections 3.2 or 3.3 above, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use commercially
reasonable efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration
statement effective for up to ninety (90) days (or longer if otherwise
provided in this Section 3) or until all of the securities registered
thereunder are sold, whichever occurs sooner.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement.
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(c) Furnish to the Holders, in the case of a registration
pursuant to Section 3.2 above, or to DMR or the Shareholder
Representative, as is appropriate, in the case of a registration
pursuant to Section 3.3 above, such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the 1933 Act, and such other documents as they or it may reasonably
request in order to facilitate the disposition of Registrable
Securities owned by the Holders.
(d) On request, furnish to the counsel of any Holder, in the
case of a registration pursuant to Section 3.2 above, or to DMRFS, DMR
or the Shareholder Representative, as is appropriate, in the case of a
registration pursuant to Section 3.3 above, a copy of the registration
statement five (5) days prior to the filing of such registration
statement.
(e) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement for
listing on a national securities exchange, the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") or such other
similar exchange.
(f) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to
(i) qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction, (iii) consent to
general service of process in any such jurisdiction, or (iv) qualify
such Registrable Securities in a given jurisdiction where expressions
of investment interest are not sufficient in such jurisdiction to
reasonably justify the expense of qualifying in the jurisdiction.
(g) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
(h) Notify each Holder of Registrable Securities covered by
such registration statement, in the case of a registration pursuant to
Section 3.2 above, or DMR or the Shareholder Representative, as is
appropriate, in the case of a registration pursuant to Section 3.3
above, at any time when a prospectus relating thereto is required to be
delivered under the 1933 Act of the happening of any event as a result
of which the prospectus included in such registration statement, as
then in effect, includes an untrue
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statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
3.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
3.7 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Sections 3.2 or 3.3 above to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the persons entitled to select the underwriters, and then only in such quantity
as the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by Holders and other persons or
entities having analogous registration rights to be included in such offering
exceeds the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with the success
of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among all
selling stockholders according to the total amount of securities owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder" and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares owned by all
entities and individuals included in such "selling stockholder," as defined in
this sentence.
3.8 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 3.
3.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the 0000
Xxx) for such Holder and each person, if any, who controls such Holder
or underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages, or liabilities (joint or
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several) to which they may become subject under the 1933 Act, or the
1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the 1933 Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder,
underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by one law firm retained by them (or such
additional law firms retained by a Holder or Holders if such Holder or
Holders reasonably believe there exists a conflict of interest among
them) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 3.9(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by any such Holder, underwriter or controlling
person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the 1933 Act, any
underwriter, any other Holder or other person or entity selling
securities in such registration statement and any controlling person of
any such underwriter or other Holder or other person or entity, against
any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the 1933 Act, or
the 1934 Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this Subsection
3.9(b), in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Subsection 3.9(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld;
provided, that, the obligation to indemnify will be in several, not
joint and
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several, among such sellers of Registrable Securities, and in no event
shall any indemnity under this Subsection 3.9(b) exceed the net
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 3.9, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 3.9, but the
failure to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 3.9.
(d) The obligations of the Company and Holders under this
Section 3.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 3, and shall
survive the termination of the Agreement.
3.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
1933 Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration,
the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of
SEC Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information
as
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may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
3.11 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 3 may only
be assigned to a Permitted Transferee of the underlying Registrable Securities
who has executed and delivered to the Company a counterpart of this Agreement,
binding such Permitted Transferee to all of the restrictions and obligations
contained herein. Such rights also may be assigned to a third party to which the
Registrable Securities have been pledged pursuant to a bona fide loan
transaction, provided that pledgee executes and delivers to the Company a
counterpart of this Agreement, binding such pledgee to all of the restrictions
and obligations contained herein. No Holder shall be entitled to assign such
rights in connection with any short sale, hedge, collar or other transaction
which is not a bona fide loan.
3.12 "Market Stand-Off" Agreement. Each Holder hereby agrees that
for a period of ninety (90) days following the effective date of any
registration effected pursuant to Sections 3.2 or 3.3 (provided the Holders are
given written notice of the offering at least fifteen (15) days prior to the
Company's filing with the SEC of a registration statement relating thereto), it
shall not, unless otherwise agreed by the Company and the managing underwriters,
if any, directly or indirectly sell, offer to sell, contract to sell (including,
without limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company held by it at any time during such period except
Common Stock included in such registration. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.
3.13 Termination. The rights and obligations provided in this
Section 3 (other than those provided under Section 3.9 above) shall terminate
upon the termination of this Agreement, and also shall terminate as provided in
Section 5.2 below.
SECTION 4. STOCK CERTIFICATE LEGEND.
4.1 Required Legend - Shareholders Agreement. Simultaneously with
the execution of this Agreement, each Shareholder shall surrender all
certificates of stock, except those certificates representing shares which are
or were acquired through ordinary brokerage transactions and not pursuant to the
Reorganization Agreement or as part of the Company's initial public offering, to
the Company for endorsement with the following legend, which shall be
conspicuously placed on such certificates:
"The holder of the shares represented by this certificate is
subject to the provisions of the Shareholders Agreement, dated as of
___________, 1999 (as it may be amended from time to time), to which
the company and the holder of this certificate, among others,
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are parties, a copy of which may be inspected at the principal office
of the company. The provisions of such agreement is incorporated herein
by reference."
All certificates of stock issued to or acquired by any such Shareholder after
the date of this Agreement, except certificates representing shares which are or
were acquired through ordinary brokerage transactions and not pursuant to this
Agreement or as part of the Company's initial public offering, shall also bear
the foregoing legend; provided, however, that the Company shall remove the
required legend from any shares transferred to a third party (other than a Bound
DMR Shareholder) pursuant to a sale (other than a sale to a Permitted
Transferee) which is not subject to, or which has been subject to, and has
complied with, the tag-along rights as set forth in Section 2 above (to the
extent of the shares of Common Stock included in such sale), or pursuant to a
registered offering under Sections 3.2 or 3.3 above, so that such transferee
shall not be subject to the requirements contained in this Agreement.
4.2 Required Legend - Lockup Agreement. Simultaneously with the
execution of this Agreement, DMRFS shall surrender all certificates of stock,
except those certificates representing shares which are or were acquired through
ordinary brokerage transactions and not pursuant to this Agreement or as part of
the Company's initial public offering, to the Company for endorsement with the
following legend, which shall be conspicuously placed on such certificates:
"The holder of the shares represented by this certificate is
subject to the provisions of a Lockup Agreement executed by the holder
of this certificate in favor of the company, a copy of which may be
inspected at the principal office of the company. The provisions of
such agreement is incorporated herein by reference."
All certificates of stock issued to or acquired by any DMRFS, DMR or any Bound
DMR Shareholder after the date of this Agreement, except certificates
representing shares which are or were acquired through ordinary brokerage
transactions and not pursuant to this Agreement or as part of the Company's
initial public offering, shall also bear the foregoing legend; provided,
however, that the Company shall remove the required legend from any shares which
are no longer subject to the Lockup Agreement, as provided therein.
4.3 Effect of Missing Legend. Sections 4.1 and 4.2 above
notwithstanding, the fact that such legends have not been placed on a given
certificate of stock held by DMRFS, DMR, any Bound DMR Shareholder or any other
party hereunder shall not affect the rights of the parties to this Agreement in
any way, and all certificates of stock on which such legends have not been
placed, except those certificates representing shares which are or were acquired
through ordinary brokerage transactions and not pursuant to this Agreement or as
part of the Company's initial public offering, shall be deemed to have had those
legends placed on them for the purposes of this Agreement.
4.4 Availability of Agreement. The Company shall maintain a copy
of this Agreement at its principal place of business and shall make such copies
available for review to any person who shall inquire about the Agreement.
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SECTION 5. MISCELLANEOUS.
5.1 Waivers and Amendments. With the written consent of DMR, the
obligations of the Company and the rights of the holders of Common Stock under
this Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of time
or indefinitely), and with the same consent, the Company, when authorized by
resolution of its Board, may enter into a supplementary agreement for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement. Any provisions of this Agreement to the
contrary, the consent of the DMR Shareholders shall not be required to amend
this Agreement or waive any of its provisions. Upon the effectuation of each
such waiver, consent, agreement of amendment or modification, the Company
promptly shall give written notice thereof to the record holders of the then
outstanding Common Stock. This Agreement or any provision hereof may not be
changed, waived, discharged or terminated orally, but only by a statement in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, except to the extent provided in this
Section 5.1.
5.2 Termination. All of the rights and obligations in this
Agreement (other than those under Section 3.9 above) shall terminate ten (10)
years from the date of this Agreement (except that the Company's obligations
under Sections 3.3(a) and 3.3(b) above shall terminate five (5) and seven (7)
years after the date of this Agreement, respectively), or upon the consummation
of a sale which has been subject to, and has complied with, the tag-along rights
as set forth in Section 2 above (to the extent of the shares of Common Stock
included in such sale), or upon the dissolution or liquidation of the Company,
whichever occurs sooner. If not sooner terminated, all tag-along rights (under
Section 2) and registration rights (under Section 3) shall be permanently
terminated when the Shareholders, as a group, hold less than ten percent (10%)
of the issued and outstanding Common Stock of the Company. Sections 1 and 2 of
this Agreement are also subject to termination as and to the extent provided in
Section 2.4 of the Reorganization Agreement.
5.3 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Michigan as such laws are applied to
agreements between Michigan residents entered into and to be performed entirely
within Michigan, without regard to the State of Michigan's conflict of laws
provisions.
5.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
5.5 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
5.6 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or
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upon the seventh day following mailing by registered air mail, postage prepaid,
addressed (a) if to the Shareholders, DMR, DMRFS or the Shareholder
Representative, as indicated on Schedule 1 or Schedule 2 attached hereto, as the
case may be or at such other address as they shall have furnished to the
Company, (b) if to the Company, to Xxxxxxx Financial Services Corporation, 00000
Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000, and addressed to
the attention of the corporate secretary, or at such other address as the
Company shall have furnished to the Shareholders, or (c) if to any other holder
of Common Stock at such address as such holder shall have furnished to the
Company in writing, or, until such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Common Stock, who
so furnished an address to the Company.
5.7 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any securities issued or sold
or to be issued or sold hereunder, upon any breach or default of the Company
under this Agreement shall impair any such right, power or remedy of such holder
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or in any similar breach or default thereafter occurring,
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
5.8 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall be modified in such manner as to be
valid, legal, and enforceable but so as to most nearly retain the intent of the
parties, and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
5.9 Titles and Subtitles. The titles and subtitles of this
Agreement are intended for reference and shall not by themselves determine the
construction or interpretation of this Agreement.
5.10 Counterparts; Copies. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Copies
(photostatic, facsimile or otherwise) of signatures to this Agreement shall be
deemed to be originals and may be relied on to the same extent as the originals.
5.11 Expenses. The Company and each Shareholder shall pay his, her
or its own costs and expenses in connection with the negotiation, execution,
delivery and performance of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement, dated as of July 2, 1999, to be executed by themselves or by their
respective representatives thereunto duly authorized as of the day and year
first above written. DMR, DMRFS shall be subject to this Agreement with respect
to all shares of capital stock of the Company currently owned and hereafter
acquired, to the extent provided herein.
"The Company"
XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Its: Chief Executive Officer
---------------------------------
"DMR"
DETROIT MORTGAGE AND REALTY COMPANY,
a Michigan corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Its: Chairman
---------------------------------
"DMRFS"
DMR FINANCIAL SERVICES, INC.,
a Michigan corporation
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Its: President and CEO
---------------------------------
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Shareholders Agreement, dated ___________, 0000
Xxxxxxx Financial Services Corporation
signatures, continued
"Shareholder/Directors"
------------------------------
XXXX X. XXXXXXXX
------------------------------
XXXXXX X. XXXXX
------------------------------
XXXXX X. XXXXXXXX
------------------------------
XXXXXX X. XXXXX
------------------------------
XXXXXXXXX X. XXXXX
------------------------------
XXXXXX X. XXXXX
------------------------------
XXXXXX X. XXXXX
------------------------------
XXXXX XXXXXXX
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SCHEDULE 1 TO SHAREHOLDERS AGREEMENT
XXXXXXX FINANCIAL SERVICES CORPORATION
Shareholder Number of Shares
--------------- ----------------
"Shareholder/Directors"
Xxxx X. Xxxxxxxx 78,666
Xxxxxx X. Xxxxx 20,000
Xxxxx X. Xxxxxxxx 42,000
Xxxxxx X. Xxxxx 97,939
Xxxxxxxxx X. Xxxxx 97,939
Xxxxxx X. Xxxxx 3,000
Xxxxxx X. Xxxxx 16,000
Xxxxx Xxxxxxx 1,000
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SCHEDULE 2 TO SHAREHOLDERS AGREEMENT
XXXXXXX FINANCIAL SERVICES CORPORATION
Shareholder
DMR Financial Services, Inc.
Detroit Mortgage and Realty Company
"DMR Shareholders"
[TO BE COMPLETED]
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