PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC. FORM OF PRIVATE PLACEMENT PURCHASE AGREEMENT
Exhibit 1.3
FORM OF PRIVATE PLACEMENT PURCHASE AGREEMENT
PRIVATE PLACEMENT PURCHASE AGREEMENT (this “Agreement”) made as of this ____th day of
_____________, 2011, by and between Provident Mortgage Capital Associates, Inc., a Maryland
corporation (the “Company”), and Provident Funding Associates, L.P., a California limited
partnership (the “Purchaser”).
WHEREAS, the Purchaser has a substantive, pre-existing relationship with the Company;
WHEREAS, the Company has filed a registration statement on Form S-11 (File No. 333-172672)
(the “Registration Statement”) under the Securities Act of 1933, as amended (the
“Securities Act”) with the Securities and Exchange Commission (the “SEC”) in
connection with a proposed initial public offering (the “IPO”) of shares of
the Company’s common stock, par value $0.01 per share (the “Common Stock”); and
WHEREAS, concurrent with the consummation of the IPO, the Company desires to issue and sell,
and the Purchaser desires to purchase, upon the terms and conditions set forth in this Agreement,
shares of Common Stock (the “Private Placement Shares” and each, a “Private
Placement Share”).
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter
set forth, the parties hereto do hereby agree as follows:
1. Sale and Purchase of Private Placement Shares. Subject to and concurrent
with the consummation of the IPO, the Company shall issue and sell to the Purchaser and the
Purchaser shall purchase from the Company, at a purchase price per Private Placement Share
equal to the public offering price per share of Common Stock sold in the IPO, the Private
Placement Shares.
2. Closing. The closing of the purchase and sale of the Private Placement
Shares hereunder, including payment for and delivery of the Private Placement Shares, will
take place at the offices of the Company or the Company’s legal counsel concurrently with,
and shall be subject to, the completion of the IPO.
3. Representations and Warranties of the Company. In connection with the
issuance and sale of the Private Placement Shares, the Company hereby represents and
warrants to the Purchaser the following:
3.1 The Company is a corporation duly formed, validly existing and in good
standing under the laws of the State of Maryland and the Company has all necessary
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
3.2 All corporate action necessary to be taken by the Company to authorize the
execution, delivery and performance of this Agreement and all other agreements and
instruments delivered by the Company in connection with the transactions
contemplated hereby has been duly and validly taken and this Agreement has been duly
executed and delivered by the Company. This Agreement constitutes the valid,
binding and enforceable obligation of the Company, enforceable in accordance with
its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). The issuance and sale by the Company
of the Private Placement Shares does not conflict with its organizational documents
or any material contract by which the Company or its property or assets is bound, or
any federal or state laws or regulations or decree, ruling or judgment of any United
States or state court applicable to the Company or its property or assets.
3.3 Upon issuance in accordance with, and payment pursuant to, the terms
hereof, the Purchaser will have good title to the Private Placement Shares free and
clear of all liens, claims and encumbrances of any kind, other than transfer
restrictions hereunder and under other agreements contemplated hereby.
3.4 The Company has a substantive, pre-existing relationship with the
Purchaser and directly contacted the Purchaser or its agents outside of the IPO
effort. The Company (i) did not identify or contact the Purchaser through the
marketing of the IPO and (ii) was not independently contacted by the Purchaser as a
result of the general solicitation by means of the Registration Statement.
4. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company that:
4.1 The Purchaser is an “accredited investor” as that term is defined in Rule
501 of Regulation D promulgated under the Securities Act. The Purchaser has
accurately completed the Accredited Investor Questionnaire attached hereto as
Exhibit A indicating the basis for such Purchaser’s accredited investor
status.
4.2 The Private Placement Shares are being acquired for the Purchaser’s own
account, only for investment purposes and not with a view to, or for resale in
connection with, any public distribution or public offering thereof within the
meaning of the Securities Act.
4.3 The Purchaser is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of California. The Purchaser has all
necessary power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
4.4 All action necessary to be taken by the Purchaser to authorize the
execution, delivery and performance of this Agreement and all other agreements and
instruments delivered by the Purchaser in connection with the transactions
contemplated hereby has been duly and validly taken and this Agreement has been duly
executed and delivered by the Purchaser. This Agreement constitutes the valid,
binding and enforceable obligation of the Purchaser, enforceable in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar laws of
general application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). The purchase by the Purchaser of the
Private Placement Shares does not conflict with the organizational documents of the
Purchaser or with any material contract by which the
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Purchaser or its property or assets is bound, or any laws or regulations or
decree, ruling or judgment of any court applicable to the Purchaser or its property
or assets.
4.5 The Purchaser understands and acknowledges that (i) the offering of the
Private Placement Shares pursuant to this Agreement will not be registered under the
Securities Act on the grounds that the offering and sale of the Private Placement
Shares is exempt from registration under the Securities Act pursuant to Rule 506 of
Regulation D thereof and exempt from registration pursuant to applicable state
securities or blue sky laws and, therefore, the Private Placement Shares will be
characterized as “restricted securities” under the Securities Act and such laws and
may not be sold unless the Private Placement Shares are subsequently registered
under the Securities Act and qualified under state law or unless an exemption from
such registration and such qualification is available.
4.6 The Purchaser has a substantive, pre-existing relationship with the
Company and was directly contacted by the Company or the Company’s agents outside of
the IPO effort. The Purchaser (i) was not identified or contacted through the
marketing of the IPO and (ii) did not independently contact the Company as a result
of the general solicitation by means of the Registration Statement.
4.7 The Purchaser (i) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
Purchaser’s prospective investment in the Private Placement Shares; (ii) has the
ability to bear the economic risks of the Purchaser’s prospective investment; and
(iii) has not been offered the Private Placement Shares by any form of
advertisement, article, notice, or other communication published in any newspaper,
magazine, or similar medium; or broadcast over television or radio; or any seminar
or meeting whose attendees have been invited by any such medium.
5. Restriction on Sale of Private Placement Shares. Until 18 months from the
date of this Agreement, the Purchaser will not, without the prior written consent of the
Company, directly or indirectly, sell, offer, dispose of, hedge or enter into any
transaction that is designed to, or might reasonably be expected to result in the
disposition of, any Private Placement Shares. The foregoing shall not apply to: (1)
transfers to limited partners, members or stockholders, or other equity owners of the
Purchaser, and (2) bona fide gifts; provided, however, that in the case of any transfer, it
shall be a pre-condition to such transfer that the transferee or donee has agreed in writing
with the Company to be bound by the terms of this Agreement.
6. Registration Rights Agreements. As a further inducement for the Purchaser
to purchase the Private Placement Shares, at the time of the completion of the IPO, the
Company and the Purchaser shall enter into a registration rights agreement, substantially in
the form of Exhibit B hereto, pursuant to which the Company will grant certain
registration rights to the Purchaser relating to the Private Placement Shares.
7. Successors and Assigns. Except as otherwise expressly provided herein, all
covenants and agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors of the parties
hereto whether so expressed or not. Notwithstanding the foregoing or anything to the
contrary herein, the parties may not assign this Agreement or their obligations hereunder.
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8. Amendments. This Agreement may not be amended, modified or waived, in
whole or in part, except by an agreement in writing signed by each of the parties hereto.
9. Counterparts; Facsimile. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument. This Agreement or any
counterpart may be executed via facsimile transmission, and any such executed facsimile copy
shall be treated as an original.
10. Governing Law. This Agreement shall for all purposes be deemed to be made
under and shall be construed in accordance with the laws of the State of New York. The
parties hereby agree that any action, proceeding or claim against it arising out of or
relating in any way to this Agreement shall be brought and enforced in the courts of the
State of New York or the United States District Court for the Southern District of New York,
and irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive. The
parties hereby waive any objection to such exclusive jurisdiction and agree not to plead or
claim that such courts represent an inconvenient forum.
11. Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.
12. Legends. Each certificate, if any, representing the Private Placement
Shares shall be endorsed with the following legend or a substantially similar legend:
“The securities represented by this certificate have not been registered under the Securities
Act of 1933, as amended, and are “restricted securities” as defined in Rule 144 promulgated under
the Securities Act. The securities may not be sold or offered for sale or otherwise distributed
except (i) in conjunction with an effective registration statement for the shares under the
Securities Act of 1933, as amended, or (ii) pursuant to an opinion of counsel, satisfactory to
Provident Mortgage Capital Associates, Inc., that such registration or compliance is not required
as to said sale, offer, or distribution. The securities represented by this certificate are
subject to the terms and conditions of the Private Placement Purchase Agreement, dated as of
, 2011, by and between Provident Mortgage Capital Associates, Inc. and the Purchasers
named therein.”
13. Severability. In case any provision of this Agreement shall be found by a
court of law to be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby.
14. 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 and they supersede, merge, and render
void every other prior written and/or oral understanding or agreement among or between the
parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| PROVIDENT MORTGAGE CAPITAL | ||||||
| ASSOCIATES, INC. | ||||||
| By: | ||||||
| Title: | ||||||
(Signatures Continue on Next Page)
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| Provident Funding Associates, L.P., | ||||||
| a California limited partnership | ||||||
| By: | ||||||
| Title: | ||||||
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EXHIBIT A
ACCREDITED INVESTOR QUESTIONNAIRE
ACCREDITED INVESTOR STATUS FOR ENTITIES
(Please check the applicable boxes):
1. o Any bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”) or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934,
as amended; any insurance company as defined in section 2(a)(13) of the Securities Act; any
investment company registered under the Investment Company Act of 1940, as amended, (the
“Investment Act”), or a business development company as defined in Section 2(a)(48) of the
Investment Act; any Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958; any
plan established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000, or if it is a self-directed plan,
with investment decisions made solely by persons that are accredited investors (within the meaning
of Rule 501(a) under the Securities Act).
2. o Any private business development company as defined in Section 202(a)(22) of the Investment Act.
3. o Any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for
the specific purpose of acquiring the Private Placement Shares, with total assets in excess of
$5,000,000.
4. o Any trust with total assets in excess of $5,000,000, that was not formed for the specific
purpose of acquiring the Private Placement Shares and whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii).
5. o Any entity in which all of the equity owners are accredited investors (within the meaning of
Rule 501(a) under the Securities Act).
Exh. A-1
EXHIBIT B
FORM OF
BY AND BETWEEN
AND
PMF ADVISORS, LLC
dated as of
, 2011
Exh. B-1
This REGISTRATION RIGHTS AGREEMENT, dated as of , 2011, is made and entered into
by and between Provident Mortgage Capital Associates, Inc., a Maryland corporation (the
“Company”), and PMF Advisors, LLC, a Delaware limited liability company (the
“Manager”).
RECITALS
WHEREAS, the Company has prepared a registration statement on Form S-11 (File No. 333-172670)
with respect to the issuance and sale of its common stock, par value $0.01 per share (the
“Common Stock”), with the Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the
Company intends to conduct an underwritten initial public offering of shares of the Company’s
Common Stock (the “IPO”);
WHEREAS, pursuant to and in accordance with the terms and provisions of the IPO Management
Agreement, dated as of , 2011, by and among the Company, PMCA Asset I, LLC, PMCA
Asset II, LLC and the Manager (the “Management Agreement”), the Company will pay the
Manager a base management fee and an incentive fee, which fees are payable, subject to certain
limited exceptions, in shares of Common Stock (the “Manager Shares”); and
WHEREAS, in order to induce the Manager to enter into the Management Agreement, the Company
has agreed to provide the Manager with the registration rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
“Agreement” shall mean this Registration Rights Agreement as originally executed and
as amended, supplemented or restated from time to time.
“Board” shall mean the Board of Directors of the Company.
“Business Day” shall mean Monday, Tuesday, Wednesday, Thursday, and Friday that is
not a day on which banking institutions in New York or other applicable places where such act is to
occur are authorized or obligated by applicable law, regulation or executive order to close.
“Common Stock” shall have the meaning set forth in the Recitals hereof.
“Commission” shall have the meaning set forth in the Recitals hereof.
“Company” shall have the meaning set forth in the introductory paragraph hereof.
“Controlling Person” shall have the meaning set forth in Section 5(a) of this
Agreement.
“Depositary” shall mean The Depository Trust Company, or any other depositary
appointed by the Company, provided, however, that such depositary must have an address in the
Borough of Manhattan, in the City of New York.
“End of Suspension Notice” shall have the meaning set forth in Section 3(b) of
this Agreement.
Exh. B-2
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any
corresponding provision of succeeding law) and the rules and regulations thereunder.
“FINRA” shall mean the Financial Industry Regulatory Authority.
“Holder” shall mean the holder of the Common Stock, listed in Schedule 1
hereto, in its capacity as a holder of Registrable Shares and its direct and indirect transferees
who agree to be bound by the terms and conditions of this Agreement. For purposes of this
Agreement, the Company may deem and treat the registered holder of a Registrable Share as the
Holder and absolute owner thereof, unless notified to the contrary in writing by the registered
Holder thereof.
“IPO” shall have the meaning set forth in the Recitals hereof.
“Liabilities” shall have the meaning set forth in Section 5(a)(i) of this
Agreement.
“Management Agreement” shall have the meaning set forth in the Recitals hereof.
“Manager” shall have the meaning set forth in the Recitals hereof.
“Manager Shares” shall have the meaning set forth in the Recitals hereof.
“Maximum Threshold” shall have the meaning set forth in Section 2(b)(ii) of
this Agreement.
“Non-Holder Securities” shall have the meaning set forth in Section 2(b)(iii)
of this Agreement.
“Person” shall mean any individual, partnership, corporation, limited liability
company, joint venture, association, trust, unincorporated organization or other governmental or
legal entity.
“Piggyback Registration” shall have the meaning set forth in Section 2(b)(i)
of this Agreement.
“Private Placement Purchase Agreement” shall have the meaning set forth in the
Recitals hereof.
“Private Placement Shares” means at any time the shares of Common Stock issued and
sold by the Company in the concurrent private placement pursuant to those certain private placement
purchase agreements, each dated , 2011, by and between the Company and the persons
named therein, together with any class of equity securities of the Company or of a successor to the
entire business of the Company which are issued in exchange for the Private Placement Shares.
“Prospectus” means the prospectus or prospectuses included in any Registration
Statement (including without limitation, any prospectus subject to completion and a prospectus that
includes any information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the Securities Act and any term
sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion of the Registrable
Shares covered by such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus or prospectuses.
“Registrable Shares” with respect to any Holder, shall mean at any time the Manager
Shares, together with any class of equity securities of the Company or of a successor to the entire
business of the Company which are issued in exchange for the Manager Shares; provided, however,
that such Registrable
Exh. B-3
Shares shall cease to be Registrable Shares with respect to any Holder upon
the earliest to occur of (A) when a Registration Statement with respect to such Holder’s
Registrable Shares shall have been declared effective under the Securities Act and all of such
Holder’s Registrable Shares shall have been disposed of pursuant to such Registration Statement,
(B) when such Holder’s Registrable Shares may be sold without restriction pursuant to Rule 144
under the Securities Act or (C) when such Holder’s Registrable Shares shall have ceased to be
outstanding.
“Registration Expenses” shall mean (i) the fees and disbursements of counsel and
independent public accountants for the Company incurred in connection with the Company’s
performance of or compliance with this Agreement, including the expenses of any special audits or
“comfort” letters required by or incident to such performance and compliance, and any premiums and
other costs of policies of insurance obtained by the Company against liabilities arising out of the
sale of any securities and (ii) all registration, filing and stock exchange fees, all fees and
expenses of complying with securities or “blue sky” laws, all fees and expenses of custodians,
transfer agents and registrars, all printing expenses, messenger and delivery expenses and any fees
and disbursements of one common counsel retained by a majority of the Registrable Shares; provided,
however, that “Registration Expenses” shall not include any out-of-pocket expenses of the
Holders, transfer taxes, underwriting or brokerage commissions or discounts associated with
effecting any sales of Registrable Shares that may be offered, which expenses shall be borne by
each Holder of Registrable Shares on a pro rata basis with respect to the Registrable Shares so
sold.
“Registration Statement” means any registration statement of the Company filed with
the Commission under the Securities Act which covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference or deemed to be incorporated by reference in such Registration Statement.
“Securities Act” shall have the meaning set forth in the Recitals hereof.
“Selling Holders’ Counsel” shall mean counsel for the Holders that is selected by the
Holders holding a majority of the Registrable Shares included in a Registration Statement and that
is reasonably acceptable to the Company.
“Shelf Registration Statement” shall have the meaning set forth in Section
2(a) of this Agreement.
“Suspension Event” shall have the meaning set forth in Section 3(b) of this
Agreement.
“Suspension Notice” shall have the meaning set forth in Section 3(a) of this
Agreement.
“Underwritten Offering” shall mean a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
Section 2. Shelf Registrations and Piggy Back Registrations.
(a) Shelf Registration.
(i) The Company agrees to use commercially reasonable efforts to file with the
Commission, no earlier than 24 months following the closing of the IPO and no later than 26
months following the closing of the IPO, one or more registration statements with respect to
the Registrable Shares under the Securities Act for the offering to be made on a continuous
basis pursuant to Rule 415 under the Securities Act (the “Shelf Registration
Statement”). The
Exh. B-4
Company will use commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission as soon as practicable
after the filing thereof. The Shelf Registration Statement shall be on an appropriate form
and the registration statement and any form of prospectus included therein (or prospectus
supplement relating thereto) shall reflect the plan of distribution or method of sale as the
Holders may from time to time notify the Company.
(ii) Effectiveness. The Company shall use commercially reasonable efforts to
keep the Shelf Registration Statement continuously effective for the period beginning on the
date on which the Shelf Registration Statement is declared effective and ending on the date
that all of the Registrable Shares registered under the Shelf Registration Statement cease
to be Registrable Shares. During the period that the Shelf Registration Statement is
effective, the Company shall supplement or make amendments to the Shelf Registration
Statement if required by the Securities Act or if reasonably requested by the Holders
(whether or not required by the form on which the securities are being registered),
including to reflect any specific plan of distribution or method of sale, and shall use its
commercially reasonable efforts to have such supplements and amendments declared effective,
if required, as soon as practicable after filing; provided that in no event shall the
Company be required to file an amendment to the Shelf Registration Statement to increase the
amount of Registrable Shares included in the Shelf Registration Statement unless the amount
of additional Registrable Shares to be included pursuant to such amendment exceeds $
.
(iii) Selection of Underwriters. If any offering pursuant to a Shelf
Registration Statement is an underwritten offering, a majority-in-interest of the Holders
participating in such underwritten offering shall have the right to select the managing
underwriter or underwriters to administer any such offering, which managing underwriter or
underwriters shall be reasonably acceptable to the Company.
(b) Piggyback Registrations.
(i)
Right to Piggyback. Subject to Section 2(b)(v), from and after the 24-month anniversary of the closing of the IPO, whenever the Company proposes to register
any of its common equity securities under the Securities Act (other than a registration
statement on Form S-8 or on Form S-4 or any similar successor forms thereto), whether for
its own account or for the account of one or more stockholders of the Company, and the
registration form to be used may be used for any registration of Registrable Shares (a
“Piggyback Registration”), the Company shall give prompt written notice to all
Holders of its intention to effect such a registration and, subject to
Sections 2(b)(ii) and
2(b)(iii), shall include in such registration all Registrable Shares with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.
2(b)(iii), shall include in such registration all Registrable Shares with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.
(ii) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of securities requested to be
included in such registration exceeds the number that can be sold in such offering and/or
that the number of Registrable Shares proposed to be included in any such registration would
adversely affect the price per share of the Company’s equity securities to be sold in such
offering (such maximum number of securities or Registrable Shares, as applicable, the
“Maximum Threshold”), the underwriting shall be allocated among the Company and all
Holders as follows (A) first, the shares of Common Stock or other securities that the
Company desires to sell that can be sold
Exh. B-5
without exceeding the Maximum Threshold;
(B) second, to the extent that the Maximum Threshold has not been reached under the
foregoing clause (A), the shares of Common Stock or other securities, if any, comprised of
Private Placement Shares, as to which registration has been requested pursuant to the
applicable written contractual piggy-back registration rights of such holders thereof, pro
rata, among the holders of such Private Placement Shares who have elected to participate in
such offering that can be sold without exceeding the Maximum Threshold; (C) third, to the
extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and
(B), the shares of Common Stock or other securities, if any, comprised of Registrable
Shares, as to which registration has been requested pursuant to the applicable written
contractual piggy-back registration rights of the Holders thereof, pro rata, among the
Holders who have elected to participate in such offering that can be sold without exceeding
the Maximum Threshold; (D) fourth, to the extent that the Maximum Threshold has not been
reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other
securities for the account of other Persons that the Company is obligated to register
pursuant to written contractual piggy-back registration rights with such Persons and that
can be sold without exceeding the Maximum Threshold.
(iii) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of a holder of the Company’s securities other
than Registrable Shares, including a holder of Private Placement Shares (“Non-Holder
Securities”), and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration exceeds the
number that can be sold in such offering and/or that the number of Registrable Shares
proposed to be included in any such registration would adversely affect the price per share
of the Company’s equity securities to be sold in such offering, the underwriting shall be
allocated among the holders of Non-Holder Securities and all Holders electing to participate
in such offering prorata on the basis of the Non-Holder Securities and Registrable Shares
offered for such registration by the holder of Non-Holder Securities and each Holder,
respectively, electing to participate in such registration.
(iv) Withdrawal. Any Holder may elect to withdraw such Holder’s request for
inclusion of Registrable Shares in any Piggyback Registration by giving written notice to
the Company of such request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the result of a withdrawal
by Persons making a demand pursuant to written contractual obligations) may withdraw a
Registration Statement at any time prior to the effectiveness of the Registration Statement
without thereby incurring any liability to the Holders of Registrable Shares.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the
Holders in connection with such Piggyback Registration as provided in Section 9(c).
(v) Limitation on Piggy Back Registrations. Notwithstanding anything to the
contrary, no Holder shall be entitled to any rights under this Section 2(b),
including the right to receive notice of a Piggyback Registration, unless such Holder holds
in excess of Registrable Shares.
Section 3. Black-Out Periods.
(a) Subject to the provisions of this Section 3, the Company shall be permitted, in
limited circumstances, to suspend the use, from time to time, of the Prospectus that is part of a
Shelf Registration Statement (and therefore suspend sales of the Registrable Shares under such
Shelf Registration Statement), by providing written notice (a “Suspension Notice”) to the
Selling Holders’ Counsel, if any, and the Holders and by issuing a press release, making a filing
with the Commission or
Exh. B-6
such other means that the Company reasonably believes to be a reliable means
of communication, for such times as the Company reasonably may determine is necessary and advisable
(but in no event for more than an aggregate of 90 days in any rolling 12-month period commencing on
the date of this Agreement or more than 45 consecutive days, except as a result of a refusal by the
Commission to declare any post-effective amendment to the Shelf Registration Statement effective
after the Company has used all commercially reasonable efforts to cause the post-effective
amendment to be declared effective by the Commission, in which case, the Company must terminate the
black-out period immediately following the effective date of the post-effective amendment) if any
of the following events shall occur: a majority of the Board determines in good faith that (i) (A)
the offer or sale of any Registrable Shares would materially impede, delay or interfere with any
proposed financing, offer or sale of securities, acquisition, corporate reorganization or other
material transaction involving the Company, (B) upon the advice of counsel, the sale of Registrable
Shares pursuant to the Shelf Registration Statement would require disclosure of non-public material
information not otherwise required to be disclosed under applicable law, and (C) (x) the Company
has a bona fide business purpose for preserving the confidentiality of such transaction, (y)
disclosure would have a material adverse effect on the Company or the Company’s ability to
consummate such transaction, or (z) such transaction renders the Company unable to comply with
Commission requirements, in each case under circumstances that would make it impractical or
inadvisable to cause the Shelf Registration Statement (or such filings) to become effective or to
promptly amend or supplement the Shelf Registration Statement on a post effective basis, as
applicable; or (ii) upon the advice of counsel, it is in the Company’s best interest or it is
required by law, rule or regulation to supplement the Shelf Registration Statement or file a
post-effective amendment to the Shelf Registration Statement in order to ensure that the prospectus
included in the Shelf Registration Statement (1) contains the information required under Section
10(a)(3) of the Securities Act; (2) discloses any facts or events arising after the effective date
of the Shelf Registration Statement (or of the most recent post-effective amendment) that,
individually or in the aggregate, represents a material change in the information set forth
therein; or (3) discloses any material information with respect to the plan of distribution that
was not disclosed in the Shelf Registration Statement or any material change to such information.
Upon the occurrence of any such suspension, the Company shall use its commercially reasonable
efforts to cause the Shelf Registration Statement to become effective or to promptly amend or
supplement the Shelf Registration Statement on a post effective basis or to take such action as is
necessary to make resumed use of the Shelf Registration Statement as soon as possible.
(b) In the case of an event that causes the Company to suspend the use of a Shelf Registration
Statement as set forth in paragraph (a) above (a “Suspension Event”), the Company shall
give a Suspension Notice to the Selling Holders’ Counsel, if any, and the Holders to suspend sales
of the Registrable Shares and such notice shall state generally the basis for the notice and that
such suspension shall continue only for so long as the Suspension Event or its effect is continuing
and the Company is using its commercially reasonable efforts and taking all reasonable steps to
terminate suspension of the use of the Shelf Registration Statement as promptly as possible. A
Holder shall not effect any sales of the Registrable Shares pursuant to such Shelf Registration
Statement (or such filings) at any time after it has received a Suspension Notice from the Company
and prior to receipt of an End of Suspension Notice (as defined below). If so directed by the
Company, each Holder will deliver to the Company (at the expense of the Company) all copies other
than permanent file copies then in such Holder’s possession of the prospectus covering the
Registrable Shares at the time of receipt of the Suspension Notice. The Holders may recommence
effecting sales of the Registrable Shares pursuant to the Shelf Registration Statement (or such
filings) following further written notice to such effect (an “End of Suspension Notice”)
from the Company, which End of Suspension Notice shall be given by the Company to the Holders and
to the Selling Holders’ Counsel, if any, promptly following the conclusion of any Suspension Event
and its effect.
Section 4. Registration Procedures.
Exh. B-7
(a) In connection with the filing of any Registration Statement as provided in this Agreement,
the Company shall use commercially reasonable efforts to, as expeditiously as reasonably
practicable:
(i) prepare and file with the Commission the Registration Statement, within the
relevant time period specified in Section 2, on the appropriate form under the
Securities Act, which form (1) shall be selected by the Company, (2) shall be available for
the registration and sale of the Registrable Shares by the selling Holders thereof,
(3) shall comply as to form in all material respects with the requirements of the applicable
form and include or incorporate by reference all financial statements required by the
Commission to be filed therewith or incorporated by reference therein, and (4) shall comply
in all respects with the requirements of Regulation S-T under the Securities Act, and
otherwise comply with its obligations under Section 2 hereof;
(ii) prepare and file with the Commission such amendments and post-effective amendments
to each Registration Statement as may be necessary under applicable law to keep such
Registration Statement effective for the applicable period; and cause each prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force) under the Securities Act and
comply with the provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder applicable to them with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof;
(iii) (1) notify each Holder of Registrable Shares, at least five Business Days after
filing, that a Registration Statement with respect to the Registrable Shares has been filed
and advising such Holders that the distribution of Registrable Shares will be made in
accordance with any method or combination of methods legally available by the Holders of any
and all Registrable Shares; (2) furnish to each Holder of Registrable Shares and to each
underwriter of an Underwritten Offering of Registrable Shares, if any, without charge, as
many copies of each prospectus, including each preliminary prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may reasonably
request, including financial statements and schedules in order to facilitate the public sale
or other disposition of the Registrable Shares; and (3) hereby consent to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders of
Registrable Shares in connection with the offering and sale of the Registrable Shares
covered by the prospectus or any amendment or supplement thereto;
(iv) use its commercially reasonable efforts to register or qualify the Registrable
Shares under all applicable state securities or “blue sky” laws of such jurisdictions as any
Holder of Registrable Shares covered by a Registration Statement and each underwriter of an
Underwritten Offering of Registrable Shares shall reasonably request by the time the
applicable Registration Statement is declared effective by the Commission, and do any and
all other acts and things which may be reasonably necessary or advisable to enable each such
Holder and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Shares owned by such Holder; provided, however, that the Company shall not be
required to (1) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4(a)(iv), or (2) take any action which would subject it to general service
of process or taxation in any such jurisdiction where it is not then so subject;
Exh. B-8
(v) notify promptly each Holder of Registrable Shares under a Registration Statement
and, if requested by such Holder, confirm such advice in writing promptly at the address
determined in accordance with Section 8(e) of this Agreement (1) when a Registration
Statement has become effective and when any post-effective amendments and supplements
thereto become effective, (2) of any request by the Commission or any state securities
authority for post-effective amendments and supplements to a Registration Statement and
prospectus or for additional information after the Registration Statement has become
effective, (3) of the issuance by the Commission or any state securities authority of any
stop order suspending the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (4) if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Shares covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering cease to be true and
correct in all material respects, (5) of the happening of any event or the discovery of any
facts during the period a Registration Statement is effective as a result of which such
Registration Statement or any document incorporated by reference therein contains any 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 or, in the case of the
prospectus, contains any 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, in light of
the circumstances under which they were made, not misleading (which information shall be
accompanied by an instruction to suspend the use of the Registration Statement and the
prospectus (such instruction to be provided in the same manner as a Suspension Notice) until
the requisite changes have been made, at which time notice of the end of suspension shall be
delivered in the same manner as an End of Suspension Notice), (6) of the receipt by the
Company of any notification with respect to the suspension of the qualification of the
Registrable Shares, for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (7) of the filing of a post-effective amendment to such
Registration Statement;
(vi) furnish Selling Holders’ Counsel, if any, copies of any comment letters relating
to the selling Holders received from the Commission or any other request by the Commission
or any state securities authority for amendments or supplements to a Registration Statement
and prospectus or for additional information relating to the selling Holders;
(vii) make every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible moment;
(viii) furnish to each Holder of Registrable Shares, and each underwriter, if any,
without charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless requested);
(ix) cooperate with the selling Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold and not bearing any
restrictive legends; and enable such Registrable Shares to be in such denominations and
registered in such names as the selling Holders or the underwriters, if any, may reasonably
request at least three Business Days prior to the closing of any sale of Registrable Shares;
(x) upon the occurrence of any event or the discovery of any facts, as contemplated by
Sections 4(a)(v)(5) and 4(a)(v)(6) hereof, as promptly as practicable after
the occurrence of such an event, use its best efforts to prepare a supplement or
post-effective amendment to the Registration Statement or the related prospectus or any
document incorporated
Exh. B-9
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Shares, such prospectus will not
contain at the time of such delivery any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or will remain so qualified, as
applicable. At such time as such public disclosure is otherwise made or the Company
determines that such disclosure is not necessary, in each case to correct any misstatement
of a material fact or to include any omitted material fact, the Company agrees promptly to
notify each Holder of such determination and to furnish each Holder such number of copies of
the prospectus as amended or supplemented, as such Holder may reasonably request;
(xi) within a reasonable time prior to the filing of any Registration Statement, any
prospectus, any amendment to a Registration Statement or amendment or supplement to a
prospectus, provide copies of such document to the Selling Holders’ Counsel, if any, on
behalf of such Holders, and make representatives of the Company as shall be reasonably
requested by the Holders of Registrable Shares available for discussion of such document;
(xii) obtain a CUSIP number for the Registrable Shares not later than the effective
date of a Registration Statement, and provide the Company’s transfer agent with printed
certificates for the Registrable Shares, in a form eligible for deposit with the Depositary,
in each case, to the extent necessary or applicable;
(xiii) enter into agreements (including underwriting agreements) and take all other
customary appropriate actions in order to expedite or facilitate the disposition of such
Registrable Shares whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration:
(A) make such representations and warranties to the Holders of such Registrable
Shares and the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in similar Underwritten Offerings as may be
reasonably requested by them;
(B) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably satisfactory
to any managing underwriter(s) and their counsel) addressed to the underwriters, if
any (and in the case of an underwritten registration, each selling Holder), covering
the matters customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by the underwriter(s);
(C) obtain “comfort” letters and updates thereof from the Company’s independent
registered public accounting firm (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements are, or are required to be,
included in the Registration Statement) addressed to the underwriter(s), if any, and
use reasonable efforts to have such letter addressed to the selling Holders in the
case of an underwritten registration (to the extent consistent with Statement on
Auditing Standards No. 72 of the American Institute of Certified Public Accounts),
such letters to be in customary form and covering matters of the type customarily
covered in “comfort” letters to underwriters in connection with similar Underwritten
Offerings;
(D) enter into a securities sales agreement with the Holders and an agent of
the Holders providing for, among other things, the appointment of such agent for
Exh. B-10
the
selling Holders for the purpose of soliciting purchases of Registrable Shares, which
agreement shall be in form, substance and scope customary for similar offerings;
(E) if an underwriting agreement is entered into, cause the same to set forth
indemnification provisions and procedures substantially equivalent to the
indemnification provisions and procedures set forth in Section 5 hereof with
respect to the underwriters and all other parties to be indemnified pursuant to said
Section or, at the request of any underwriters, in the form customarily provided to
such underwriters in similar types of transactions; and
(F) deliver such documents and certificates as may be reasonably requested and
as are customarily delivered in similar offerings to the Holders of a majority in
principal amount of the Registrable Shares being sold and the managing underwriters,
if any;
(xiv) make available for inspection by any underwriter participating in any disposition
pursuant to a Registration Statement, Selling Holders’ Counsel and any accountant retained
by a majority in principal amount of the Registrable Shares being sold, all financial and
other records, pertinent corporate documents and properties or assets of the Company
reasonably requested by any such persons, and cause the respective officers, directors,
employees, and any other agents of the Company to supply all information reasonably
requested by any such representative, underwriter, counsel or accountant in connection with
a Registration Statement, and make such representatives of the Company available for
discussion of such documents as shall be reasonably requested by the Company; provided,
however, that the Selling Holders’ Counsel, if any, and the representatives of any
underwriters will use commercially reasonable efforts, to the extent reasonably practicable,
to coordinate the foregoing inspection and information gathering and to not materially
disrupt the Company’s business operations;
(xv) a reasonable time prior to filing any Registration Statement, any prospectus
forming a part thereof, any amendment to such Registration Statement, or amendment or
supplement to such prospectus, provide copies of such document to the underwriter(s) of an
Underwritten Offering of Registrable Shares; within five Business Days after the filing of
any Registration Statement, provide copies of such Registration Statement to Selling
Holders’ Counsel; make such changes in any of the foregoing documents prior to the filing
thereof, or in the case of changes received from Selling Holders’ Counsel by filing an
amendment or supplement thereto, as the underwriter or underwriters, or in the case of
changes received from Selling Holders’ Counsel relating to the selling Holders or the plan
of distribution of Registrable Shares, as Selling Holders’ Counsel, reasonably requests; not
file any such document in a form to which any underwriter shall not have previously been
advised and furnished a copy of or to which the Selling Holders’ Counsel, if any, on behalf
of the Holders of Registrable Shares, or any underwriter shall reasonably object; not
include in any amendment or supplement to such documents any information about the selling
Holders or any change to the plan of distribution of Registrable Shares that would limit the
method of distribution of the Registrable Shares unless Selling Holders’ Counsel has been
advised in advance and has approved such information or change; and make the representatives
of the Company available for discussion of such document as shall be reasonably requested by
the Selling Holders’ Counsel, if any, on behalf of such Holders, Selling Holders’ Counsel or
any underwriter;
(xvi) furnish to each Holder, if it has a due diligence defense under the Securities
Act, and to each underwriter, if any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) if eligible
under
Exh. B-11
SAS 72, a comfort letter or comfort letters from the Company’s independent public
accountants, each in customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as the Holders of a majority of
the Registrable Shares included in such offering or the managing underwriter or underwriters
therefor reasonably requests;
(xvii) use its best efforts to cause all Registrable Shares to be listed on any
national securities exchange;
(xviii) otherwise comply with all applicable rules and regulations of the Commission
and make available to its security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
(xix) cooperate and assist in any filings required to be made with the FINRA and in the
performance of any due diligence investigation by any underwriter and its counsel (including
any “qualified independent underwriter” that is required to be retained in accordance with
the rules and regulations of the FINRA); and
(xx) the Company may (as a condition to a Holder’s participation in a Shelf
Registration or Piggyback Registration) require each Holder of Registrable Shares to furnish
to the Company such information regarding the Holder and the proposed distribution by such
Holder of such Registrable Shares as the Company may from time to time reasonably request in
writing.
Each Holder agrees that, upon receipt of any notice from the Company of the happening of any
event or the discovery of any facts of the type described in Section 4(a)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Shares pursuant to a Registration
Statement relating to such Registrable Shares until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(a)(v) hereof, and, if so
directed by the Company, such Holder will deliver to the Company (at the Company’s expense) all
copies in such Holder’s possession, other than permanent file copies then in such Holder’s
possession, of the prospectus covering such Registrable Shares current at the time of receipt of
such notice.
Section 5. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and hold harmless
each Holder, and the respective officers, directors, partners, employees, representatives and
agents of any such Person, and each Person (a “Controlling Person”), if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any of
the foregoing Persons, as follows:
(i) against any and all loss, liability, claim, damage, judgment, actions, other
liabilities and expense whatsoever (the “Liabilities”), as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto) pursuant to which
Registrable Shares were registered under the Securities Act, including all documents
incorporated therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom at such date of a material fact
Exh. B-12
necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all Liabilities, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 5(d) below) any such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by any indemnified party), reasonably incurred 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 statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any Liabilities to the extent
arising out of any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the Company by the Holder
expressly for use in a Registration Statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto).
(b) Indemnification by the Holders. Each Holder severally, but not jointly, agrees to
indemnify and hold harmless the Company and the other selling Holders, and each of their respective
officers, directors, partners, employees, representatives and agents, and each of their respective
Controlling Persons, against any and all Liabilities described in the indemnity contained in
Section 5(a) hereof, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement (or any amendment
thereto) or any prospectus included therein (or any amendment or supplement thereto) in reliance
upon and in conformity with written information with respect to such Holder furnished to the
Company by such Holder expressly for use in the Registration Statement (or any amendment thereto)
or such prospectus (or any amendment or supplement thereto); provided, however, that no such Holder
shall be liable for any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Shares pursuant to such Registration Statement.
(c) Notices of Claims, etc. Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding commenced against it
in respect of which indemnity may be sought hereunder, but failure so to 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 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 party or parties be liable
for the 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 governmental agency or body, commenced or
threatened, or any claim whosoever in respect of which indemnification or contribution could be
sought
Exh. B-13
under this Section 5 (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) Indemnification Payments. If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Section 5(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
(e) Contribution. If the indemnification provided for in this Section 5 is
for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of
any Liabilities referred to therein, then each indemnifying party shall contribute to the aggregate
amount of such Liabilities incurred by such indemnified party, as incurred, in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions which resulted in such Liabilities, as
well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the Holders 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 the Holders and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 5 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 in this
Section 5. The aggregate amount of Liabilities incurred by an indemnified party and
referred to above in this Section 5 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.
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.
For purposes of this Section 5, each Person, if any, who controls the a Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as a Holder, and each director 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 Exchange Act shall have the same rights to contribution as the Company.
Section 6. Market Stand-Off Agreement. Each Holder hereby agrees that it shall not,
directly or indirectly sell, offer to sell (including without limitation any short sale), pledge,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right
Exh. B-14
or warrant for the sale of or otherwise dispose of or transfer any
Registrable Shares or other Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock then owned by such Holder (other than to permitted transferees of the
Holder who agree to be similarly bound) for up to 90 days following the date of an underwriting
agreement with respect to an underwritten public offering of the
Company’s securities or such shorter period as the managing
underwriters shall agree to; provided,
however, that:
(a) the restrictions above shall not apply to Registrable Shares sold on the Holder’s behalf
to the public in an Underwritten Offering pursuant to such Registration Statement;
(b) all officers and directors of the Company then holding Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock enter into similar agreements for
not less than the entire time period required of the Holders hereunder; and
(c) the Holders shall be allowed any concession or proportionate release allowed to any (i)
officer, (ii) director, (iii) other holder of the Company’s Common Stock that entered into similar
agreements (with such proportion being determined by dividing the number of shares being released
with respect to such officer, director or other holder of the Company’s Common Stock by the total
number of issued and outstanding shares held by such officer, director or holder).
In order to enforce the foregoing covenant, the Company shall have the right to place
restrictive legends on the certificates representing the securities subject to this
Section 6 and to impose stop transfer instructions with respect to the Registrable Shares
and such other securities of each Holder (and the securities of every other Person subject to the
foregoing restriction) until the end of such period.
Section 7. Termination; Survival. The rights of each Holder under this Agreement
shall terminate upon the date that all of the Registrable Shares cease to be Registrable Shares.
Notwithstanding the foregoing, the obligations of the parties under Sections 5 and
6 of this Agreement shall remain in full force and effect following such time.
Section 8. Miscellaneous.
(a) Covenants Relating To Rule 144. For so long as the Company is subject to the
reporting requirements of Section 13 or 15 of the Securities Act, the Company covenants that it
will file the reports required to be filed by it under the Securities Act and Section 13(a) or
15(d) of the Exchange Act and the rules and regulations adopted by the Commission thereunder. If
the Company ceases to be so required to file such reports, the Company covenants that it will upon
the request of any Holder of Registrable Shares (a) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under
the Securities Act and it will take such further action as any Holder of Registrable Shares may
reasonably request, and (c) take such further action that is reasonable in the circumstances, in
each case to the extent required from time to time to enable such Holder to sell its Registrable
Shares without registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time,
(ii) Rule 144A under the Securities Act, as such rule may be amended from time to time, or
(iii) any similar rules or regulations hereafter adopted by the Commission. Upon the request of
any Holder of Registrable Shares, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements (at any time after 90 days after the effective date
of the first Registration Statement filed by the Company for an offering of its Common Stock to the
general public) and of the Securities Act and the Exchange Act (at any time after it has become
subject to the reporting requirements of the Exchange Act), a copy of the most recent annual and
quarterly report(s) of the Company, and such other reports, documents or stockholder communications
of the Company, and take
Exh. B-15
such further actions consistent with this Section 8(a), as a
Holder may reasonably request in availing itself of any rule or regulation of the Commission
allowing a Holder to sell any such Registrable Shares without registration.
(b) No Inconsistent Agreements. The Company has not entered into and the Company will
not after the date of this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Shares pursuant to this Agreement or otherwise conflicts with
the provisions of this Agreement. The rights granted to the Holders hereunder do not and will not
for the term of this Agreement in any way conflict with the rights granted to the holders of the
Company’s other issued and outstanding securities under any such agreements.
(c) Expenses. All Registration Expenses incurred in connection with any Registration
Statement shall be borne by the Company, whether or not any Registration Statement related thereto
becomes effective.
(d) Amendments and Waivers. The provisions of this Agreement may be amended or waived
at any time only by the written agreement of the Company and the Holders of a majority of the
Registrable Shares; provided, however, that the provisions of this Agreement may not be amended or
waived without the consent of the Holders of all the Registrable Shares adversely affected by such
amendment or waiver if such amendment or waiver adversely affects a portion of the Registrable
Shares but does not so adversely affect all of the Registrable Shares; provided, further, that the
provisions of the preceding provision may not be amended or waived except in accordance with this
sentence. Any waiver, permit, consent or approval of any kind or character on the part of any such
Holders of any provision or condition of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in writing. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder of Registrable Shares and the
Company.
(e) Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, registered first-class mail, facsimile or any courier
guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the provisions of this
Section 8(e) and (b) if to the Company, to Provident Mortgage Capital Associates, Inc.,
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, Attention: Xxxx Xxxxxxxxxx (facsimile:
650-652-1350).
All such notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; two Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt is acknowledged, if sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party) and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
(f) Successor and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent
Holders; provided, however, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Management
Agreement. If any transferee
of any Holder shall acquire Registrable Shares, in any manner, whether by operation of law or
otherwise, such Registrable Shares shall be held subject to all of the terms of this Agreement, and
by taking and holding such Registrable Shares such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement, and, if
applicable, the Management Agreement, and such person shall be entitled to
receive the benefits hereof.
(g) Specific Enforcement. Without limiting the remedies available to the Holders, the
Company acknowledges that any failure by the Company to comply with its obligations under
Exh. B-16
Section 2 hereof may result in material irreparable injury to the Holders for which there
is no adequate remedy at law, that it would not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, a Holder may obtain such relief as may be
required to specifically enforce the Company’s obligations under Section 2 hereof.
(h) Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(k) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
[SIGNATURE PAGE FOLLOWS]
Exh. B-17
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of
the date first written above.
| PROVIDENT MORTGAGE CAPITAL | ||||||
| ASSOCIATES, INC., | ||||||
| a Maryland corporation | ||||||
| By: | ||||||
Name:
|
||||||
| Title: | ||||||
| PMF ADVISORS, LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | ||||||
Name:
|
||||||
| Title: | ||||||
SCHEDULE 1
HOLDERS
| Number of Shares of | ||||
| Name of the Holder | Common Stock Held | Address of the Holder | ||
PMF Advisors, LLC
|
0000 Xxxxxxxx Xxxxxxx | |||
| Xxxxx 000 | ||||
| Xxxxxxxxxx, Xxxxxxxxxx 00000 |
Sch. 1-1
