EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of June 11, 2003, by and among (i) Luminent Mortgage Capital,
Inc., a Maryland corporation (the "Company"), (ii) Friedman, Billings, Xxxxxx &
Co., Inc., a Delaware corporation ("FBR") and, (iii) for purposes of Section 10
of this Agreement only, Seneca Capital Management, LLC, a California limited
liability company ("Seneca").
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. The Company, Seneca, and FBR entered into that certain
Purchase/Placement Agreement dated as of June 5, 2003 (the "Purchase Agreement")
in connection with the purchase and sale of 10,000,000 shares of common stock,
par value $0.001 per share, of the Company ("Common Stock").
B. In order to induce FBR to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights provided for in this
Agreement for the holders of Registrable Shares (as defined below).
C. The execution of this Agreement is a condition to the closing of
the transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
Additional Shares: Shares or other securities issued in respect
of the Shares by reason of or in connection with any stock dividend,
stock distribution, stock split, or similar issuance.
Agreement: As defined in the Introductory Paragraph of this
Agreement.
Affiliate: As to any specified Person, (i) any Person that
directly, or indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with, the specified Person
(ii) any executive officer, director, trustee or general partner of the
specified Person and (iii) any legal entity for which the specified
Person acts as an executive officer, director, trustee or general
partner. For purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly, or indirectly through one or more intermediaries,
of the power to direct or cause the direction of the management and
policies of such Person, whether by
contract, through the ownership of voting securities, partnership
interests or other equity interests or otherwise. An indirect
relationship shall include circumstances in which a Person's spouse,
children, parents, siblings or mother-, father-, sister- or
brother-in-law is or has been associated with a Person. Without limiting
the generality of the foregoing, for purposes of this Agreement, Seneca
and its Affiliates (as defined in the foregoing sentences of this
paragraph) are deemed to be Affiliates of the Company.
Business Day: With respect to any act to be performed hereunder,
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day
on which banking institutions in New York, New York are authorized or
obligated by applicable law, regulation or executive order to close.
Closing Time: June 11, 2003 or such other time or such other
date as FBR and the Company may agree.
Commission: The Securities and Exchange Commission.
Common Stock: As defined in Recital A hereof.
Company: As defined in the Introductory Paragraph of this
Agreement, and any successor thereto.
Controlling Person: As defined in Section 6(a) hereof.
End of Suspension Notice: As defined in Section 5(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission pursuant
thereto.
FBR: As defined in the Introductory Paragraph of this Agreement,
and any successor thereto.
Holder: Each record owner of any Registrable Shares from time to
time.
Indemnified Party: As defined in Section 6(c) hereof.
Indemnifying Party: As defined in Section 6(c) hereof.
IPO Registration Statement: As defined in Section 2 hereof.
Liabilities: As defined in Section 6(a) hereof.
Management Agreement: The Management Agreement dated as of June
11, 2003, by and between the Company and Seneca, as amended from time to
time.
Mandatory Shelf Registration Statement: As defined in Section
2(a) hereof.
NASD: The National Association of Securities Dealers, Inc.
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Participants: The directors, officers, stockholders, employees
and other parties associated with the Company or Seneca and certain
other individual accredited investors who purchased Shares directly from
the Company pursuant to the Purchase Agreement in accordance with
Regulation D.
Purchase Agreement: As defined in Recital A of this Agreement,
as amended from time to time.
Person: An individual, partnership, corporation, trust,
unincorporated organization, government or agency or political
subdivision thereof, or any other legal entity.
Proceeding: An action, claim, suit or proceeding (including
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or, to the knowledge of the Person
subject thereto, threatened.
Prospectus: The prospectus included in any Registration
Statement, including any preliminary prospectus, and all other
amendments and supplements to any such prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such prospectus.
Purchaser Indemnitee: As defined in Section 6(a) hereof.
Registrable Shares: Each of the Shares and any Additional
Shares, upon original issuance thereof, and at all times subsequent
thereto, including upon the transfer thereof by the original holder or
any subsequent holder, until, in the case of any such Shares or
Additional Shares, as applicable, the earliest to occur of
(i) the second anniversary of the initial effective date of
the Mandatory Shelf Registration Statement (subject to extension
pursuant to Section 5(c)),
(ii) the date on which it has been sold pursuant to a
Registration Statement or distributed to the public pursuant to Rule
144,
(iii) the date on which it is saleable, in the opinion of
counsel to the Company, without registration under the Securities Act
pursuant to subparagraph (k) of Rule 144,
(iv) the date on which it is saleable, without restriction,
pursuant to an available exemption from registration under the
Securities Act, or
(v) the date on which it is sold to the Company or its
subsidiaries.
Registration Expenses: Any and all expenses incident to the
performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, securities exchange, NASD registration,
listing, inclusion and filing fees, (ii) all fees and expenses incurred
in connection with compliance with international, federal or state
securities or blue sky laws (including, without limitation, any
registration, listing and filing fees and reasonable fees and
disbursements of counsel in connection with blue sky
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qualification of any of the Registrable Shares and the preparation of a
blue sky memorandum and compliance with the rules of the NASD), (iii)
all expenses of any Persons in preparing or assisting in preparing, word
processing, duplicating, printing, delivering and distributing any
Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements,
certificates and any other documents relating to the performance under
and compliance with this Agreement, (iv) all fees and expenses incurred
in connection with the listing or inclusion of any of the Registrable
Shares on any securities exchange or the Nasdaq Stock Market pursuant to
Section 4(n) of this Agreement, (v) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such
performance), and reasonable fees and disbursements of one counsel for
the selling Holders to review the Mandatory Shelf Registration
Statement, any Subsequent Shelf Registration Statement, and, if the
Company notifies the Holders pursuant to Section 2(b) hereof of its
intent to file an IPO Registration Statement within one year of the date
of this Agreement, the IPO Registration Statement, provided that such
fees and disbursements do not exceed an aggregate of $20,000, and (vi)
any fees and disbursements customarily paid in issues and sales of
securities (including the fees and expenses of any experts retained by
the Company in connection with any Registration Statement), provided,
however, that Registration Expenses shall exclude brokers' or
underwriters' discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Shares by a Holder
and the fees and disbursements of any counsel to the Holders other than
as provided for in subparagraph (v) above.
Registration Statement: Any Shelf Registration Statement or the
IPO Registration Statement (that covers the resale of any Registrable
Shares), including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre-and post-effective
amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference, if any, in such
registration statement.
Regulation D: Regulation D (Rules 501-508) promulgated by the
Commission under the Securities Act, as such rules may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission as a replacement thereto having substantially the same effect
as such regulation.
Regulation D Shares: Shares initially sold by the Company to the
Participants in accordance with the Purchase Agreement in accordance
with Regulation D and pursuant to the Subscription Agreement (as defined
in the Purchase Agreement).
Rule 144: Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
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Rule 144A: Rule 144A promulgated by the Commission pursuant to
the Securities Act, as such rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 174: Rule 174 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 415: Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 429: Rule 429 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.
Seneca: As defined in the Introductory Paragraph of the
Agreement, and any successor thereto.
Shares: As defined in the Purchase Agreement.
Shelf Registration Statement: The Mandatory Shelf Registration
Statement or any Subsequent Shelf Registration Statement.
Subsequent Shelf Registration Statement: As defined in Section
2(c) hereof.
Suspension Event: As defined in Section 5(b) hereof.
Suspension Notice: As defined in Section 5(b) hereof.
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Underwritten Offering: A sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
2. Registration Rights.
(a) Mandatory Shelf Registration. As set forth in Section 4 hereof,
the Company agrees to file with the Commission as soon as reasonably
practicable, but in no event later than one hundred twenty (120) days following
the Initial Closing Time, a shelf Registration Statement on Form S-11 or such
other form under the Securities Act then available to the Company providing for
the resale pursuant to Rule 415 from time to time by the Holders of any and all
Registrable Shares (including for the avoidance of doubt any Additional Shares
that are issued prior to the effectiveness of such shelf registration statement)
(including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre-and post-effective amendments, all
exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such registration statement, the
"Mandatory Shelf Registration Statement"). The Company shall use its
commercially reasonable efforts to cause such Shelf Registration Statement to be
declared effective by the Commission as soon as reasonably practicable following
such filing. Any Shelf Registration Statement shall provide for the resale from
time to time, and pursuant to any method or combination of methods legally
available (including, without limitation, an Underwritten Offering, a direct
sale to purchasers, a sale through brokers or agents, or a sale over the
internet) by the Holders of any and all Registrable Shares.
(b) IPO Registration. If the Company proposes to file a registration
statement on Form S-11 or such other form under the Securities Act providing for
the initial public offering of shares of Common Stock ( including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre-and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement, the "IPO Registration
Statement"), the Company will notify each Holder of the proposed filing and
afford each Holder an opportunity to include in such IPO Registration Statement
all or any part of the Registrable Shares then held by such Holder. Each Holder
desiring to include in any such IPO Registration Statement all or part of the
Registrable Shares held by such Holder shall, within twenty (20) days after
delivery of the above-described notice by the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such IPO Registration
Statement. Any election by any Holder to include any Registrable Shares in such
IPO Registration Statement will not affect the inclusion of such Registrable
Shares in the Shelf Registration Statement until such Registrable Shares have
been sold under the IPO Registration Statement; provided, however, that at such
time, the Company shall have the right to remove from the Shelf Registration
Statement the Registrable Shares sold pursuant to the IPO Registration
Statement.
(i) Right to Terminate IPO Registration. At any time, the
Company shall have the right to terminate or withdraw any IPO
Registration Statement referred to in this Section 2(b) whether or not
any Holder has elected to include Registrable Shares in such
registration.
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(ii) Underwriting. The Company shall advise the Holders of
the managing underwriters for the Underwritten Offering proposed under
the IPO Registration Statement. The right of any such Holder's
Registrable Shares to be included in any IPO Registration Statement
pursuant to this Section 2(b) shall be conditioned upon such Holder's
participation in such Underwritten Offering and the inclusion of such
Holder's Registrable Shares in the Underwritten Offering to the extent
provided herein. All Holders proposing to distribute their Registrable
Shares through such Underwritten Offering shall enter into an
underwriting agreement in customary form with the managing underwriters
selected for such underwriting and complete and execute any
questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of
such underwriting, and furnish to the Company such information in
writing as the Company may reasonably request for inclusion in the
Registration Statement; provided, however, that no Holder shall be
required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties
or agreements as are customary and reasonably requested by the
underwriters. Notwithstanding any other provision of this Agreement, if
the managing underwriters determine in good faith that marketing factors
require a limitation on the number of shares to be included, then the
managing underwriters may exclude shares (including Registrable Shares)
from the IPO Registration Statement and the Underwritten Offering and
any Shares included in the IPO Registration Statement and the
Underwritten Offering shall be allocated, first, to the Company, and
second, to each of the Holders requesting inclusion of their Registrable
Shares in such IPO Registration Statement on a pro rata basis based on
the total number of Registrable Shares then held by each such Holder
which is requesting inclusion. If any Holder disapproves of the terms of
any Underwritten Offering, such Holder may elect to withdraw therefrom
by written notice to the Company and the underwriter, delivered at least
ten (10) Business Days prior to the effective date of the IPO
Registration Statement. Any Registrable Shares excluded or withdrawn
from such Underwritten Offering shall be excluded and withdrawn from the
IPO Registration Statement.
(iii) Hold-Back Agreement. By electing to include Registrable
Shares in the IPO Registration Statement, if any, the Holder shall be
deemed to have agreed not to effect any sale or distribution of
securities of the Company of the same or similar class or classes of the
securities included in the Registration Statement or any securities
convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 or Rule 144A under the Securities
Act, during such periods as reasonably requested (but in no event for a
period longer than sixty (60) days following the effective date of the
IPO Registration Statement, provided each of Seneca and the executive
officers and directors of the Company that hold shares of Common Stock
of the Company or securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company are subject to the
same restriction for the entire time period required of the Holders
hereunder) by the representatives of the underwriters, if an
Underwritten Offering.
(iv) Shelf Registration not Impacted by IPO Registration
Statement. The Company's obligation to file any Shelf Registration
Statement shall not be affected by the filing or effectiveness of the
IPO Registration Statement.
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(c) Subsequent Shelf Registration for Additional Shares Issued after
Effectiveness of the Mandatory Shelf Registration Statement. If any Additional
Shares are issued or distributed to Holders after the effectiveness of the
Mandatory Shelf Registration Statement, or such Additional Shares were otherwise
not included in a prior Shelf Registration Statement, then the Company shall as
soon as practicable file an additional shelf registration statement (including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement, a "Subsequent Shelf
Registration Statement") covering such Additional Shares on behalf of the
Holders thereof in the same manner, and subject to the same provisions in this
Agreement as the Mandatory Shelf Registration Statement, provided that the
provisions of Section 2(a), 2(b), 9 or 10(a) hereof will not apply to any such
Subsequent Shelf Registration Statement.
(d) Expenses. The Company shall pay all Registration Expenses in
connection with the registration of the Registrable Shares pursuant to this
Agreement. Each Holder participating in a registration pursuant to this Section
2 shall bear such Holder's proportionate share (based on the total number of
Registrable Shares sold in such registration) of all discounts and commissions
payable to underwriters or brokers and all transfer taxes in connection with a
registration of Registrable Shares pursuant to this Agreement and any other
expense of the Holders not specifically allocated to the Company pursuant to
this Agreement relating to the sale or disposition of such Holder's Registrable
Shares pursuant to any Registration Statement.
3. Rules 144 and 144A Reporting.
With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Registrable Shares
to the public without registration, the Company agrees to, so long as any Holder
owns any Registrable Shares:
(a) at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public make and keep public information available, as those terms
are understood and defined in Rule 144(c) under the Securities Act;
(b) use its commercially reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required to be
filed by the Company under the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements);
(c) if the Company is not required to file reports and other
documents under the Securities Act and the Exchange Act, it will make available
other information as required by, and so long as necessary to permit sales of
Registrable Shares pursuant to, Rule 144A; and
(d) to furnish to any Holder promptly upon request a written
statement by the Company as to its compliance in all material respects with the
reporting requirements of Rule 144 (at any time after ninety (90) days after the
effective date of the first registration statement filed by the Company for an
offering of its securities 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
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of the Exchange Act), a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents of the Company, and take such
reasonable further actions consistent with this Section, 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.
4. Registration Procedures.
In connection with the obligations of the Company with respect to any
registration pursuant to this Agreement, the Company shall use its commercially
reasonable efforts to effect or cause to be effected the registration of the
Registrable Shares under the Securities Act to permit the resale of such
Registrable Shares by the Holder or Holders in accordance with the Holders'
intended method or methods of resale and distribution (which methods shall be
commercially reasonable), and the Company shall:
(a) prepare and file with the Commission, as specified in this
Agreement, a Shelf Registration Statement, which Shelf Registration Statement
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the Commission
to be filed therewith, and use its commercially reasonable efforts to cause such
Registration Statement to become effective as soon as practicable after filing
and to remain effective, subject to Section 5 hereof, until the date on which no
Holders hold Registrable Shares, provided, however, that the Company shall not
be required to cause any IPO Registration Statement to become effective;
provided, further, that if the Company has an effective Shelf Registration
Statement on Form S-11 under the Securities Act and becomes eligible to use Form
S-3 or such other short-form registration statement form under the Securities
Act, the Company may, upon thirty (30) Business Days prior written notice to all
Holders of Registrable Shares, register any Registrable Shares registered but
not yet distributed under the effective Shelf Registration Statement on such a
short-form Shelf Registration Statement and, once the short-form Shelf
Registration Statement is declared effective, de-register such shares under the
previous Registration Statement or transfer filing fees from the previous
Registration Statement (such transfer pursuant to Rule 429) unless any Holder of
Registrable Shares registered under the initial Shelf Registration Statement
notifies the Company within twenty (20) Business Days of receipt of the Company
notice that such a registration under a new Registration Statement and
de-registration of the initial Shelf Registration Statement would materially
interfere with its distribution of Registrable Shares already in progress, in
which case the Company shall delay the implementation of the short-form Shelf
Registration Statement and de-registration until not later than forty (40)
Business Days from the date that the Company provides the notice referenced
above to the Holder(s);
(b) subject to Section 4(i) hereof, (i) prepare and file with the
Commission such amendments and post-effective amendments to each such Shelf
Registration Statement as may be necessary to keep such Shelf Registration
Statement effective for the period described in Section 4(a) hereof, (ii) cause
each Prospectus contained therein to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 or any
similar rule that may be adopted under the Securities Act, and (iii) comply in
all material respects with the provisions of the Securities Act with respect to
the disposition of all securities covered by
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each Shelf Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the selling Holders
thereof;
(c) furnish to the Holders, 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 may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Shares; the Company consents to the use of such Prospectus,
including each preliminary Prospectus, by the Holders, if any, in connection
with the offering and sale of the Registrable Shares covered by any such
Prospectus;
(d) use its commercially reasonable efforts to register or qualify,
or obtain exemption from registration or qualification for, all Registrable
Shares by the time the applicable Registration Statement is declared effective
by the Commission under all applicable state securities or "blue sky" laws of
such domestic jurisdictions as FBR or any Holder covered by a Registration
Statement shall reasonably request in writing, keep each such registration or
qualification or exemption effective during the period such Registration
Statement is required to be kept effective pursuant to Section 4(a) and do any
and all other acts and things that may be reasonably necessary or advisable to
enable such Holder 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 (i) qualify generally to do business in any
jurisdiction or to register as a broker or dealer in such jurisdiction where it
would not otherwise be required to qualify but for this Section 4(d) and except
as may be required by the Securities Act, (ii) subject itself to taxation in any
such jurisdiction, or (iii) submit to the general service of process in any such
jurisdiction;
(e) use its commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be registered and approved by
such other domestic governmental agencies or authorities, if any, as may be
necessary to enable the Holders thereof to consummate the disposition of such
Registrable Shares;
(f) notify FBR and each Holder with Registrable Shares covered by a
Registration Statement promptly and, if requested by FBR or any such Holder,
confirm such advice in writing (i) when such Registration Statement has become
effective and when any post-effective amendments and supplements thereto become
effective, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose, (iii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to such Registration Statement or related
Prospectus or for additional information, and (iv) of the happening of any event
during the period such Registration Statement is effective as a result of which
such Registration Statement or the related Prospectus 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 (which information shall
be accompanied by an instruction to suspend the use of the Registration
Statement and the Prospectus until the requisite changes have been made);
(g) during the period of time referred to in Section 4(a) above, use
its commercially reasonable efforts to avoid the issuance of, or if issued, to
obtain the withdrawal of, any order
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enjoining or suspending the use or effectiveness of a Shelf Registration
Statement or suspending of the qualification (or exemption from qualification)
of any of the Registrable Shares for sale in any jurisdiction, as promptly as
practicable;
(h) upon request, furnish to each requesting Holder with Registrable
Shares covered by a Registration Statement, without charge, at least one
conformed copy of such Registration Statement and any post-effective amendment
or supplement thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(i) except as provided in Section 5, upon the occurrence of any
event contemplated by Section 4(f)(iv) hereof, use its commercially reasonable
efforts to promptly prepare a supplement or post-effective amendment to a Shelf
Registration Statement or the related Prospectus or any document incorporated
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 any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and,
upon request, promptly furnish to each requesting Holder a reasonable number of
copies each such supplement or post-effective amendment;
(j) if requested by the representative of the underwriters, if any,
or any Holders of Registrable Shares being sold in connection with an
Underwritten Offering, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such material information as the representative of the
underwriters, if any, or such Holders indicate relates to them or otherwise
reasonably request be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
(k) in the case of an Underwritten Offering, use its commercially
reasonable efforts to furnish or caused to be furnished to each Holder of
Registrable Shares covered by such Registration Statement and the underwriters a
signed counterpart, addressed to each such Holder and the underwriters, of: (i)
an opinion of counsel for the Company, dated the date of each closing under the
underwriting agreement, reasonably satisfactory to such Holder; and (ii) a
"comfort" letter, dated the effective date of such Registration Statement and
the date of each closing under the underwriting agreement, signed by the
independent public accountants who have certified the Company's financial
statements included in such Registration Statement (except to the extent that it
is not commercially reasonable to obtain a comfort letter with respect to
historical financial statements of the Company audited by independent public
accounts who at such time as the comfort letter is required no longer have a
relationship with the Company), covering substantially the same matters with
respect to such Registration Statement (and the Prospectus included therein) and
with respect to events subsequent to the date of such financial statements, as
are customarily covered in accountants' letters delivered to underwriters in
underwritten public offerings of securities and such other financial matters as
such Holder and the underwriters may reasonably request and customarily obtained
by underwriters in underwritten offerings;
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(l) enter into customary agreements (including in the case of an
Underwritten Offering, an underwriting agreement in customary form) and take all
other action in connection therewith in order to expedite or facilitate the
distribution of the Registrable Shares included in such Registration Statement
and, in the case of an Underwritten Offering, make representations and
warranties to the Holders of Registrable Shares covered by such Registration
Statement and to the underwriters in such form and scope as are customarily made
by issuers to underwriters in underwritten offerings and confirm the same to the
extent customary if and when requested;
(m) in connection with an Underwritten Offering, use its
commercially reasonable efforts to make available for inspection by
representatives of the Holders of the Registrable Shares and the representative
of any underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any special counsel or accountants retained by such
Holders or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company and cause the respective officers,
directors and employees of the Company to supply all information reasonably
requested by any such representatives, the representative of the underwriters,
counsel thereto or accountants in connection with a Shelf Registration
Statement; provided, however, that such records, documents or information that
the Company determines, in good faith, to be confidential and notifies such
representatives, representative of the underwriters, counsel thereto or
accountants are confidential shall not be disclosed by the representatives,
representative of the underwriters, counsel thereto or accountants unless (i)
the disclosure of such records, documents or information is necessary to avoid
or correct a misstatement or omission in a Registration Statement or Prospectus,
(ii) the release of such records, documents or information is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, or (iii)
such records, documents or information have been generally made available to the
public; provided further, that to the extent practicable, the foregoing
inspection and information gathering shall be coordinated on behalf of the
Holders and the other parties entitled thereto by one counsel designated by and
on behalf of the Holders and the other parties, which counsel the Company
determines in good faith is reasonably acceptable.
(n) use its commercially reasonable efforts (including, without
limitation, seeking to cure in the Company's listing or inclusion application
any deficiencies cited by the exchange or market) to list or include all
Registrable Shares on any securities exchange or the Nasdaq Stock Market;
(o) prepare and file in a timely manner all documents and reports
required by the Exchange Act and, to the extent the Company's obligation to file
such reports pursuant to Section 15(d) of the Exchange Act expires prior to the
expiration of the effectiveness period of the Registration Statement as required
by Section 4(a) hereof, the Company shall register the Registrable Shares under
the Exchange Act and shall maintain such registration through the effectiveness
period required by Section 4(a) hereof;
(p) provide a CUSIP number for all Registrable Shares, not later
than the effective date of the Registration Statement;
(q) (i) otherwise use its commercially reasonable efforts to comply
in all materials respects with all applicable rules and regulations of the
Commission, (ii) make generally available to its stockholders, as soon as
reasonably practicable, earnings statements covering at
12
least twelve (12) months that satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 (or any similar rule promulgated under the
Securities Act ) thereunder, no later than forty-five (45) days after the end of
each fiscal year of the Company and (iii) delay filing any Registration
Statement or Prospectus or amendment or supplement to such Registration
Statement or Prospectus to which any Holder of Registrable Shares covered by any
Registration Statement shall have reasonably objected on the grounds that such
Registration Statement or Prospectus or amendment or supplement does not comply
in all material respects with the requirements of the Securities Act, such
Holder having been furnished with a copy thereof at least two (2) Business Days
prior to the filing thereof, provided that the Company may file such
Registration Statement or Prospectus or amendment or supplement following such
time as the Company shall have made a good faith effort to resolve any such
issue with the objecting Holder and shall have advised the Holder in writing of
its reasonable belief that such filing complies in all material respects with
the requirements of the Securities Act;
(r) provide and cause to be maintained a registrar and transfer
agent for all Registrable Shares covered by any Registration Statement from and
after a date not later than the effective date of such Registration Statement;
(s) in connection with any sale or transfer of the Registrable
Shares (whether or not pursuant to a Registration Statement) that will result in
the security being delivered no longer being Registrable Shares, cooperate with
the Holders and the representative of the underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Shares to be sold, which certificates shall not bear any transfer restrictive
legends (other than as required by the Company's charter) and to enable such
Registrable Shares to be in such denominations and registered in such names as
the representative of the underwriters, if any, or the Holders may request at
least three (3) Business Days prior to any sale of the Registrable Shares; and
(t) upon effectiveness of the first registration statement filed by
the Company, the Company will take such actions and make such filings as are
necessary to effect the registration of the Common Stock under the Exchange Act
simultaneously with or immediately following the effectiveness of the
Registration Statement.
The Company may require the Holders to furnish to the Company such
information regarding the proposed distribution by such Holder as the Company
may from time to time reasonably request in writing or as shall be required to
effect the registration of the Registrable Shares and no Holder shall be
entitled to be named as a selling stockholder in any Registration Statement and
no Holder shall be entitled to use the Prospectus forming a part thereof if such
Holder does not provide such information to the Company. Each Holder further
agrees to furnish promptly to the Company in writing all information required
from time to time to make the information previously furnished by such Holder
not misleading.
Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 4(f)(iii) or
4(f)(iv) hereof, such Holder will immediately discontinue disposition of
Registrable Shares pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus. If so directed
by the Company, such Holder will deliver to the Company (at the reasonable
expense of
13
the Company) all copies in its 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.
5. Black-Out Period.
(a) Subject to the provisions of this Section 5 and a good faith
determination by a majority of the Board of Directors of the Company that it is
in the best interests of the Company to suspend the use of the Registration
Statement, following the effectiveness of a Registration Statement (and the
filings with any international, federal or state securities commissions), the
Company, by written notice to FBR and the Holders, may direct the Holders to
suspend sales of the Registrable Shares pursuant to a Registration Statement for
such times as the Company reasonably may determine is necessary and advisable
(but in no event for more than an aggregate of sixty (60) days in any twelve
(12)-month period commencing on the Closing Time or more than sixty (60) days in
any ninety (90)-day period), if any of the following events shall occur: (i) an
Underwritten Offering of primary shares by the Company where the Company is
advised by the representative of the underwriters for such Underwritten Offering
that the sale of Registrable Shares pursuant to the Registration Statement would
have a material adverse effect on the Company's primary offering; (ii) pending
negotiations relating to, or the consummation of, a transaction or the
occurrence of an event (x) that would require additional disclosure of material
information by the Company in the Registration Statement (or such filings) and
which has not been so disclosed, (y) as to which the Company has a bona fide
business purpose for preserving confidentiality, or (z) that renders the Company
unable to comply with Commission requirements, in each case under circumstances
that would make it impractical or inadvisable to cause the Registration
Statement (or such filings) to become effective or to promptly amend or
supplement the Registration Statement on a post-effective basis, as applicable;
or (iii) the Board of Directors of the Company shall have determined in good
faith that it is in the best interests of the Company to suspend the use of the
Registration Statement for reasons other than as set forth in subparagraphs (i)
and (ii) above. Upon the occurrence of any such suspension, the Company shall
use its commercially reasonable efforts to cause the Registration Statement to
become effective or to promptly amend or supplement the Registration Statement
on a post-effective basis or to take such action as is necessary to make resumed
use of the Registration Statement compatible with the Company's best interests,
as applicable, so as to permit the Holders to resume sales of the Registrable
Shares as soon as possible.
(b) In the case of an event that causes the Company to suspend the
effectiveness of a Registration Statement (a "Suspension Event"), the Company
shall give written notice (a "Suspension Notice") to the Holders to suspend
sales of the Registrable Shares and such notice shall state that such suspension
shall continue only for so long as the Suspension Event or its effect is
continuing and the Company is taking all reasonable steps to terminate
suspension of the effectiveness of the Registration Statement as promptly as
possible. The Holders shall not effect any sales of the Registrable Shares
pursuant to such 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
14
Registrable Shares pursuant to the Registration Statement (or such filings)
following further 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 FBR in the manner described above promptly following the conclusion
of any Suspension Event and its effect.
(c) Notwithstanding any provision herein to the contrary, if the
Company shall give a Suspension Notice pursuant to this Section 5, the Company
agrees that it shall extend the period of time during which the applicable
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from the date of the giving of the
Suspension Notice to and including the date when Holders shall have received the
End of Suspension Notice and copies of the supplemented or amended Prospectus
necessary to resume sales.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless (i) FBR and
each Holder, (ii) each Person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act), any of
the foregoing (any of the Persons referred to in this clause (ii) being
hereinafter referred to as a "Controlling Person"), and (iii) the respective
officers, directors, partners, employees, representatives and agents of FBR and
each Holder or any Controlling Person (any Person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Purchaser Indemnitee") from
and against any and all losses, claims, damages, judgments, actions, reasonable
out-of-pocket expenses, and other liabilities (the "Liabilities"), including,
without limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of outside counsel to any
Purchaser Indemnitee, joint or several, directly or indirectly related to, based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished to
such Purchaser Indemnitee any amendments or supplements thereto), or any
preliminary Prospectus or any other document prepared by the Company used to
sell the Registrable Shares, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such Liabilities arise out of or are based
upon (i) any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Purchaser Indemnitee furnished to the Company or any underwriter in writing
by such Purchaser Indemnitee expressly for use therein, or (ii) any untrue
statement contained in or omission from a preliminary Prospectus if a copy of
the Prospectus (as then amended or supplemented, if the Company shall have
furnished to or on behalf of the Holder participating in the distribution
relating to the relevant Registration Statement any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder to the Person
asserting any such Liabilities who purchased Shares, if such Prospectus (or
Prospectus as amended or supplemented) is required by law to be sent or given at
or prior to the written confirmation of the sale of such Shares to such Person
and the untrue statement contained in or omission from such preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented). The indemnity provided for herein shall remain in full
15
force and effect regardless of any investigation made by or on behalf of any
Purchaser Indemnitee.
(b) In connection with any Registration Statement in which a Holder
is participating, such Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, each Person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
and the respective partners, directors, officers, members, representatives,
employees and agents of such Person or Controlling Person to the same extent as
the foregoing indemnity from the Company to each Purchaser Indemnitee, but only
with reference to untrue statements or omissions or alleged untrue statements or
omissions made in reliance upon and in strict conformity with information
relating to such Purchaser Indemnitee furnished to the Company in writing by
such Purchaser Indemnitee expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary Prospectus.
The liability of any Purchaser Indemnitee pursuant to this paragraph shall in no
event exceed the net proceeds received by such Purchaser Indemnitee from sales
of Registrable Shares giving rise to such obligations. If the Holder elects to
include Registrable Shares in an Underwritten Offering, the Holder shall be
required to agree to such customary indemnification provisions as may reasonably
be required by the underwriter in connection with such Underwritten Offering.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to paragraph (a)
or (b) above, such Person (the "Indemnified Party"), shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party"), in
writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6, except to the extent the Indemnifying Party is materially
prejudiced by the failure to give notice), and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall assume
the defense of such proceeding and pay the reasonable fees and expenses actually
incurred by such counsel related to such proceeding. Notwithstanding the
foregoing, in any such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party, unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed in writing to the contrary, (ii)
the Indemnifying Party failed within a reasonable time after notice of
commencement of the action to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its
counsel do not pursue in a reasonable manner the defense of such action or (iv)
the named parties to any such action (including any impleaded parties), include
both such Indemnified Party and the Indemnifying Party, or any affiliate of the
Indemnifying Party, and such Indemnified Party shall have been reasonably
advised by counsel that, either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party or such affiliate of the Indemnifying Party or (y) a conflict
may exist between such Indemnified Party and the Indemnifying Party or such
affiliate of the Indemnifying Party, then the Indemnifying Party shall not have
the right to assume nor direct the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
shall not, in
16
connection with any one such action or separate but substantially similar or
related actions arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one (1) separate firm of attorneys
(in addition to any local counsel), for all such indemnified parties, which firm
shall be designated in writing by those indemnified parties who sold a majority
of the Registrable Shares sold by all such indemnified parties and any such
separate firm for the Company, the directors, the officers and such control
Persons of the Company as shall be designated in writing by the Company. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify any
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 6 is for any reason held to be unavailable to an Indemnified Party
in respect of any Liabilities referred to therein (other than by reason of the
exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Parties on the other in
connection with the statements or omissions that resulted in such Liabilities,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Indemnifying Parties and the Indemnified Party, as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and any Purchaser Indemnitees, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if such indemnified parties were treated as one entity for such purpose),
or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph 6(d) above. The amount paid or payable
by an Indemnified Party as a result of any Liabilities referred to paragraph
6(d) shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, in no event shall a Purchaser
Indemnitee be required to contribute any amount in excess of the amount by which
proceeds received by such Purchaser Indemnitee from sales of Registrable Shares
exceeds the amount of any damages that such Purchaser Indemnitee has otherwise
been required
17
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. For purposes of this Section 6, each Person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) FBR or a Holder shall have the same rights to contribution as FBR
or such Holder, as the case may be, and each Person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act) the Company, and each officer, director, partner, employee, representative,
agent or manager of the Company shall have the same rights to contribution as
the Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 6 or otherwise, except to the extent that any party is
materially prejudiced by the failure to give notice. 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.
(f) The indemnity and contribution agreements contained in this
Section 6 will be in addition to any liability which the indemnifying parties
may otherwise have to the indemnified parties referred to above. The Purchaser
Indemnitee's obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser
Indemnitees hereunder and not joint.
7. Market Stand-off Agreement.
Each Holder hereby agrees that it shall not, to the extent requested by
the Company or an underwriter of securities of the Company, directly or
indirectly sell, offer to sell (including without limitation any short sale),
grant any option or otherwise transfer or dispose of any Registrable Shares or
other shares of Common Stock of the Company or any securities convertible into
or exchangeable or exercisable for shares of Common Stock of the Company then
owned by such Holder (other than to donees or partners of the Holder who agree
to be similarly bound) within (60) days following either (x) the effective date
of the IPO Registration Statement of the Company filed under the Securities Act
or (y) the date of an Underwritten Offering by the Company pursuant to a shelf
registration statement of the Company filed under the Securities Act; provided,
however, that:
(a) with respect to the up to 60-day restriction that follows the
effective date of the IPO Registration Statement, such agreement shall not be
applicable to Registrable Shares sold pursuant to such IPO Registration
Statement;
(b) each of Seneca and all executive officers and directors of the
Company then holding shares of Common Stock or securities convertible into or
exchangeable or exercisable for shares of Common Stock of the Company 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 executive officer or director that entered into similar
agreements.
18
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 7 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.
8. Termination of the Company's Obligations.
The Company shall have no further obligations pursuant to this Agreement
at such time as no Registrable Shares are outstanding, provided, however, that
the Company's obligations under Sections 3, 6 and 10(b) through and including
10(m) of this Agreement shall remain in full force and effect following such
time.
9. Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority of the then
outstanding Registrable Shares, enter into any agreement with any holder or
prospective holder of any securities of the Company that would allow such holder
or prospective holder to include such securities in the IPO Registration
Statement, if any, filed pursuant to the terms hereof, unless under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of his securities
will not reduce the amount of Registrable Shares of the Holders that is
included.
10. Miscellaneous.
(a) Remedies. If (i) the Company or Seneca, on behalf of the
Company, does not initially file on our behalf the Mandatory Shelf Registration
Statement with the Commission within 120 days after the Closing Time, (ii) the
Company or Seneca, on behalf of the Company, fails to file, when required, any
documents or other materials required to be filed with the Commission in
furtherance of the Company's obligations pursuant to Sections 2(a) and 4(a)
hereof to maintain the effectiveness of the Mandatory Shelf Registration
Statement, or (iii) the Board of Directors of the Company determines to direct
the Holders to suspend sales of Registrable Shares under an effective Mandatory
Shelf Registration Statement for more than sixty (60) days during any twelve
(12) month period commencing on the Closing Time or for more than sixty (60)
days during any ninety (90) day period, then the Company and Seneca hereby agree
and acknowledge that the Incentive Management Compensation (as defined in the
Management Agreement) otherwise payable to Seneca under the Management Agreement
after the date of the occurrence of the event described in (i), (ii) or (iii)
above will be held by the Company in a segregated, interest-bearing account in
trust for Seneca's benefit, and will not be released to Seneca until such time
as the Company, or Seneca on behalf of the Company, (x) in the case of (i)
above, files the Mandatory Shelf Registration Statement with the Commission in
material compliance with the applicable Commission rules and regulations, (y) in
the case of (ii) above, makes all necessary filings to comply in all material
respects with Sections 2(a) and 4(a) hereof, or (z) in the case of (iii) above,
issues an End of Suspension Notice to the Holders. Notwithstanding any of the
foregoing, if the Commission for any reason is unable to accept filings on any
Business Day, for technical or other reasons (a "Force Majeure Delay"), then the
19
time periods referred to in clauses (i) and (ii) above shall be extended without
penalty to Seneca by one day for each day of the Force Majeure Delay until such
time as the Commission is able to accept filings.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, without the written consent of the Company and Holders
beneficially owning not less than fifty percent (50%) of the then outstanding
Registrable Shares; provided, however, that for purposes of this Agreement,
Registrable Shares that are owned, directly or indirectly, by an Affiliate of
the Company shall not be deemed to be outstanding. Notwithstanding the
foregoing, a waiver or consent to or departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of a Holder whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders may be given by such Holder; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(c) Notices. All notices and other communications, provided for or
permitted hereunder shall be made in writing by delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return
receipt requested, or by telegram
(i) if to a Holder, at the most current address given by the
transfer agent and registrar of the Shares to the Company; and
(ii) if to the Company or Seneca, at the offices of the
Company at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxx Xxxxxxxxxx, CPA; (facsimile (000) 000-0000),
with a copy to O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention Xxxxx X. Xxxxx, Esq.;
(facsimile (000) 000-0000).
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto and shall inure to the benefit of each Holder. The Company agrees that
the Holders (including, without limitation, Holders of Regulation D Shares)
shall be third party beneficiaries to the agreements made hereunder by FBR and
the Company, and each Holder shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to
protect its rights hereunder; provided, however, that such Holder fulfills all
of its obligations hereunder.
(e) 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.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
20
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT
SITTING IN NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties hereto that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(j) Registrable Shares Held by the Company or its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Shares is required hereunder, Registrable Shares held by the Company
or its Affiliates shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(k) Survival. This Agreement is intended to survive the consummation
of the transactions contemplated by the Purchase Agreement. The indemnification
and contribution obligations under Section 6 of this Agreement shall survive the
termination of the Company's obligations under Section 2 of this Agreement.
(l) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Agreement. All references made in
21
this Agreement to "Section" refer to such Section of this Agreement, unless
expressly stated otherwise.
(m) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
[Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LUMINENT MORTGAGE CAPITAL, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Managing Director
SENECA CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: C.O.O.
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