EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made as of June 12, 1997, between CONSUMER PORTFOLIO SERVICES, INC.,
a California corporation (the "Company"), and STANWICH FINANCIAL SERVICES,
CORP., a Rhode Island corporation ("Purchaser").
RECITALS
This Agreement is made pursuant to the $15,000,000 Partially Convertible
Note (the "Note"), dated June 12, 1997, between the Company and the Purchaser,
under which the Company has agreed, among other things, upon certain terms and
conditions contained in the Note, that 20% of the face amount of the Note is
convertible into shares of common stock of the Company.
To induce the Purchaser to provide funds to the Company pursuant to the
terms of the Note, the Company has agreed to provide the registration rights set
forth in this Agreement. This Agreement shall become effective upon the
issuance of any shares of common stock of the Company to the Purchaser (or any
other holder of the Note) pursuant to the terms of the Note.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
(a) "Agreement" shall mean this Registration Rights Agreement.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same has been or may hereafter be amended.
(c) "Holder" means any person owning or having the right to acquire the
Shares.
(d) "Indemnified Party" shall mean a party entitled to indemnification
under Section 7 of this Agreement.
(e) "Indemnifying Party" shall mean the party required to provide
indemnification under Section 7 of this Agreement.
(f) "Other Shareholders" shall mean, collectively, officers or directors
of the Company who own common stock of the Company or other holders of the
Company common stock who are entitled, by contract with the Company, to have
their common stock included in a registration of the Company securities.
(g) "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and applicable rules and regulations
thereunder, and such registration statement becoming effective.
(h) "Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Sections 2 and 3, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration, but excluding
fees and disbursements of counsel to,
or other experts retained by, any Holder.
(i) "Securities Act" shall mean the Securities Act of 1933, as the same
has been or may hereafter be amended.
(j) "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of securities registered.
(k) "Shares" shall mean the shares of the common stock of the Company
issued upon exercise of the conversion rights of the Note, and any shares of the
Company's common stock issued in respect of or exchange for such shares, whether
by stock split, stock dividend or otherwise.
2. Registration under Securities Act, etc.
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2.1 Demand Registration.
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(a) Request. At any time on or after the date of this Agreement, upon
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the written request of the Purchaser, or an assignee of Shares as provided in
Section 9, that the Company effect the registration under the Securities Act of
all or part of the Shares specifying the number of Shares to be registered and
the intended method of disposition thereof, the Company will give prompt written
notice of such request to all registered holders of the Shares, and thereupon
the Company will use its best efforts to effect the registration under the
Securities Act of:
(i) those Shares that the Company has been requested to register by
the Purchaser, and
(ii) all other Shares that the Company has been requested to register
by written request of the Holders thereof given to the Company within 30 days
after the giving of the aforesaid written notice by the Company (specifying the
intended method of disposition of such Shares), all to the extent requisite to
permit the intended disposition of the Shares to be so registered.
(b) Registration of Other Securities. Whenever the Company shall
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effect a registration pursuant to this Section 2.1 in connection with an
underwritten offering by one or more Holders of the Shares, no securities other
than the Shares shall be included among the securities covered by such
registration unless (i) the managing underwriter of such offering shall have
advised the Purchaser in writing that the inclusion of such other securities
would not adversely affect such offering or (ii) the Purchaser shall have
consented in writing to the inclusion of such other securities.
(c) Registration Statement Form. Registrations under this Section 2.1
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shall be on such appropriate registration form of the Commission (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Purchaser
and (ii) as shall permit the disposition of the Shares in accordance with the
intended method or methods of disposition specified in the request for such
registration. The Company agrees to include in any such registration statement
all information which, in the opinion of counsel to the Purchaser and counsel to
the Company, is required to be included.
(d) Effective Registration Statement. A registration statement
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requested pursuant to this Section 2.1 shall not be deemed to have been effected
and will not be considered a demand registration which may be requested pursuant
to this Agreement (i) unless a registration statement with respect thereto has
become effective, (ii) if after it has become effective, it does not remain
effective for a period of at least 180 days (unless the Shares registered
thereunder have been sold or disposed of prior to the expiration of such 180 day
period) or such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement entered into in
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connection with such registration are not satisfied or waived other than by
reason of the failure or refusal of a Holder of Shares to satisfy or perform a
condition to such closing.
(e) Priority in Demand Registrations. If a demand registration
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pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy sent to each Holder
of the Shares requesting registration) that the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Purchaser, or such other Person
demanding registration pursuant to Section 9 hereof, such registration will
include only that number of the Shares which the Company is so advised can be
sold in such offering, drawn pro rata from the Holders of the Shares requesting
such registration on the basis of the percentage of Shares held by the Holders
of Shares which have requested that such securities be included. In connection
with any such registration, no securities other than the Shares shall be covered
by such registration.
(f) Demand Registration. Without limiting the ability of other Holders
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of Shares to have such securities registered once a demand registration has been
requested, a demand registration may only be requested by the Purchaser and any
other Person entitled to demand registration pursuant to Section 9 hereof, and
notwithstanding anything in this Section 2.1 to the contrary, the Company shall
not be required to effect more than one registration pursuant to this Section
2.1; provided, however, that the Purchaser, or any other Person entitled to
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demand registration pursuant to Section 9 hereof, shall be entitled to one
additional demand registration if all of the Shares which the Purchaser or such
other Person requested to be included in any prior demand registration were not,
for whatever reason, sold pursuant to such prior demand registration.
2.2 Company Registration.
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(a) If at any time during the period commencing on the date on which the
Shares are issued pursuant to exercise of the conversion right under the Note
and ending on the third anniversary of such date, the Company proposes to
register (including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Securities Act in connection with the public offering of such securities
solely for cash (other than a registration of securities to be offered by
employees pursuant on employee benefit plan on Form S-8, a registration in
connection with an exchange offer or any acquisition 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
Shares), the Company shall, each such time, give each Holder written notice of
such proposed registration at least twenty (20) days prior to filing the
registration statement respecting such proposed registration. Upon the written
request of any Holder given within fifteen (15) days after mailing of such
notice by the Company, the Company shall cause to be registered under the
Securities Act all of the Shares that each such Holder has requested to be
registered, subject to Section 5 hereof.
(b) Priority in Incidental Registrations. In a registration pursuant to
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this Section 2.2 involving an underwritten offering of the securities so being
registered, whether or not for sale for the account of the Company by or through
one or more underwriters of recognized standing, if the managing underwriter of
such underwritten offering shall inform the Company and the Holders of the
Shares requesting registration in such offering by letter of its belief that the
number or type of securities to be included in such registration would
materially adversely affect its ability to effect such offering, then the
Company will be required to include in such registration only that number, if
any, and type of Shares which it is so advised can be sold in such offering,
drawn pro rata from the Holders of the Shares requesting such registration on
the basis of the percentage of the Shares held by the Holders of Shares which
have requested that such securities be included.
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3. Obligations of the Company. Whenever required under this Agreement to
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effect the registration of any Shares, the Company shall use its best efforts
to, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Shares and use its best efforts to cause such registration statement to
become effective.
(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
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Shares owned by them.
(d) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification of any of the Shares for sale in any
jurisdiction, at the earliest possible moment;
(e) 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 in no event shall:
the Company be required to qualify to do business in any state or to take any
action which would subject it to general or unlimited service of process in any
state where it is not now so subject, any stockholder be required to escrow
their shares of capital stock of the Company, or the Company or any stockholder
be required to comply with any other requirement which they deem unduly
burdensome; and
(f) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 90 days after the end of any 12-month period (i)
commencing at the end of any fiscal quarter in which Shares are sold to
underwriters in a firm or best efforts underwriting offering and (ii) beginning
with the first day of the Company's first fiscal quarter next succeeding each
sale of Shares after the effective date of a registration statement, which
statements shall cover said 12-month periods;
The Company may require each holder of Shares as to which any registration
is being effected to furnish to the Company such information regarding such
Holder and the distribution of such Shares as the Company may from time to time
reasonably request in writing in order to comply with the Securities Act. Each
Holder of Shares as to which any registration is being effected agrees to notify
the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Holder to the Company or of the
happening of any event in either case as a result of which any prospectus
relating to such registration contains an untrue statement of a material fact
regarding such holder or the distribution of such Shares or omits to state any
material fact regarding such holder or the distribution of such Shares required
to be stated therein or necessary to make the statement therein not misleading
in light of the circumstances then existing, and to promptly furnish to the
Company any additional information required to correct and update any previously
furnished information or required such that such prospectus shall not contain,
with respect to such Holder or the distribution of such Shares, 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 in
light of the circumstances then existing.
Each Holder of Shares agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(d)
hereof, or notice from the Company that revision or
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correction of any of the information contained in such registration statement or
prospectus is then required, such Holder will forthwith discontinue disposition
of such Shares covered by such registration statement or prospectus until such
Holder's receipt of the copies of the supplemented or amended prospectus
relating to such registration statement or prospectus, or until it is advised in
writing by the Company that the use of the applicable prospectus may be resumed,
and has received copies of any additional or supplemental filings which are
incorporated by reference in such Prospectus, and, if so directed by the
Company, such Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the prospectus covering the Shares current at the time of receipt of such
notice.
(g) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with terms generally
satisfactory to the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
4. Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Agreement, that
the selling Holders shall furnish to the Company such information regarding
themselves, the Shares held by them, and the intended method of disposition of
such securities as shall be required to effect the registration of their Shares.
5. Expenses Of Registration. All expenses incurred in connection with any
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registration pursuant to this Agreement (other than underwriter's commissions
and fees or any fees of others employed by a selling Holder, including
attorneys' fees), including without limitation all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
6. Underwriting Requirements. In connection with any offering involving
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an underwriting of securities being issued by the Company, the Company shall not
be required under Section 2 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 it, and then only in such
quantity, if any, as will not, in the opinion of the underwriters, jeopardize or
in any way reduce the success of the offering by the Company. If the total
amount of Shares that all Holders with registration rights under Section 2
request to be included in such offering exceed the amount of such securities
that the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of Shares of the Holders that the underwriters believe will not
jeopardize the success of the offering; provided that the Shares to be included
in such case shall be apportioned pro rata among the Holders according to the
total amount of Shares requested to be registered.
7. Indemnification. In the event any Shares are included in a
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registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the officers and directors of each Holder, any underwriter
(as defined in the Exchange Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
Securities Exchange Act of 1934, as amended ("Exchange Act") against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or any state securities law
or regulation, 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
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misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and the Company will reimburse each such Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in a connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this paragraph 7(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 such 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 or
his or their representative or agent.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors and officers, any underwriter
(as defined in the Securities Act) for the Company, each person, if any, who
controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, and any other holder selling securities in
such registration statement or any of its directors or officers or any person
who controls such Holder, against any losses, claims, damages, or liabilities
(or actions in respect thereto) which 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 or his representative or agent expressly for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, any person who controls the Company, any underwriter or controlling
person of any such underwriter, any other such Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this paragraph 7(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), and provided further that the obligations of each
selling Holder hereunder shall be limited to an amount equal to the proceeds of
each such selling Holder of the shares sold by such selling Holder pursuant to
such registration.
(c) Promptly after receipt by an indemnified party under this Section 7 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 7, notify the indemnifying party in
writing 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 shall have the right to retain its own
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 notify an indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability that it may have to any indemnified party
otherwise than under this Section 7.
8. Reports Under the Exchange Act. With a view to making available to the
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Holders the benefits of Rule 144 promulgated under the Securities 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 or pursuant to a
registration form which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC,
the Company agrees that it shall, for at least three (3) years from the date on
which the Shares are issued pursuant to exercise of the conversion
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right under the Note:
(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 Securities Act and the Exchange Act; and
(c) Furnish to any Holder, so long as the Holder owns any Shares,
forthwith upon reasonable request (i) a written statement by the Company that it
has complied with the reporting requirements of the Exchange Act (at any time
after it has become subject to such reporting requirements), (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 may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
permitting the selling of any such securities without registration or pursuant
to such form.
9. Assignment of Registration Rights. The rights to cause the Company to
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register Shares pursuant to this Agreement may be assigned by a Holder to a
transferee or assignee of such securities by providing the Company, within a
reasonable time after such transfer, with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; provided, however, that such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act, (i) such transferee explicitly accepts all obligations of
the transferor hereunder, and (ii) such transfer is of not less than 50% of the
total number of the Company Shares initially issued.
10. Exceptions to Registration. Notwithstanding any other provision of
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this Agreement, the Company shall not be required to register any of the Shares
if and to the extent that the Holder may at such time dispose of all of such
Shares pursuant to Rule 144 promulgated under the Securities Act, or pursuant to
any currently effective registration statement previously filed by the Company.
11. Nominees for Beneficial Owners. In the event that any Shares are held
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by a nominee for the beneficial owner thereof, the beneficial owner thereof may,
at its election, be treated as the holder of such securities for purposes of any
request or other action by any holder or holders of securities pursuant to this
Agreement or any determination of any number or percentage of shares of
securities held by any holder or holders of securities contemplated by this
Agreement. If the beneficial owner of any Shares so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Shares.
12. Legend. Prior to the sale of the Shares pursuant to a registration
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under the Securities Act, a legend in substantially the following form will be
placed on all documents or certificates evidencing the Shares:
"THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAW OF ANY
STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
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13. Transfer of Note and/or Shares. The Purchaser hereby represents that
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the Note and the Shares are being acquired solely for investment purposes, for
the Purchaser's own account and not for the interest of any other Person and not
with a view to the resale or distribution thereof other than pursuant to an
exemption under the Securities Act and in compliance with the terms hereof.
14. GENERAL AND MISCELLANEOUS
14.1 Survival Of Warranties. The warranties, representations and
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covenants of the parties contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement.
14.2 Entire Agreement. This Agreement constitutes the entire agreement
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among the parties concerning registration of the Shares, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, guarantees or covenants except as specifically set forth in
this Agreement. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
14.3 Governing Law. This Agreement shall be governed by and construed
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under the internal laws of the State of California without regard to conflicts
of law.
14.4 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.5 Notices. Except as otherwise provided herein, all notices, demands
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and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) three (3) days after it shall have been mailed by United States
mail, first class, certified or registered, return receipt requested, with
postage prepaid, or (c) in the case of notice by such a telecommunications
device, when properly transmitted, in each case addressed to the party to be
notified as follows:
If to Purchaser: Stanwich Financial Services Corp.
c/o Stanwich Partners, Inc.
One Stamford Landing
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
If to the Company: Consumer Portfolio Services, Inc.
2 Ada
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
or to such other address as each party may designate for itself by like notice.
14.6 Severability. If one or more provisions of this Agreement are held
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to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written.
CONSUMER PORTFOLIO SERVICES, INC.
a California corporation
By:
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Its:
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STANWICH FINANCIAL SERVICES CORP.
a Rhode Island corporation
By:
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Its:
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