EXHIBIT 99(J)
RIGHTS AGENT AGREEMENT
This Rights Agent Agreement (the "Rights Agent Agreement" or "this
Agreement") is entered into, on the date last shown below, by and among
SDNB FINANCIAL CORP., a California corporation (the "Company"), TORREY
PINES SECURITIES, INC., a California corporation (the "Rights Agent"), and
such Participating Agents (as defined in Section C of Article II hereof)
who expressly adopt this Agreement and agree to be bound hereby.
PREFACE
SDNB Financial Corp. is a bank holding company incorporated under the
laws of the State of California and registered under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). The Company is offering (the
"Offering") up to 769,582 shares of its Common Stock, no par value (the
"Shares"), to holders of record of its Common Stock on May 5, 1995 (the
"Record Date"), pursuant to transferrable subscription rights (the "Basic
Subscription Rights" and, together with the "Oversubscription Rights",
hereinafter referred to as the "Subscription Rights") (the Shares and the
Subscription Rights are collectively referred to herein as the
"Securities"). The Shares are being offered at a price of $4.34 per share
(the "Subscription Price"). Holders of the Subscription Rights, including
transferees of shareholders (collectively, the "Rights Holders"), will be
able to exercise their Subscription Rights until 5:00 p.m., New York time,
on September 21, 1995 (such date as it may be extended by the Company, at
its option, to a date not later than October 12, 1995, being the "Expiration
Date").
In connection with the Offering, two (2) limited partnerships of which
WHR Management Corp. is the general partner (collectively referred to as
"WHR") have entered into an agreement with the Company whereby WHR is
obligated to purchase an additional 255,193 shares of the Company's common
stock at $4.34 per share in the event the Offering is fully subscribed, or
such lesser amount, so that after such purchase WHR will hold an aggregate
of 24.9% of the outstanding Common Stock of the Company, taking into
account the Shares issued in the Subscription Offering and the shares of
Common Stock issued immediately thereafter to WHR (the "WHR Share Purchase
Commitment").
The Company is making the Offering pursuant to its registration
statement on Form S-3, including all amendments and exhibits thereto, filed
with the Securities and Exchange Commission (the "Commission") pursuant to
the Securities Act of 1933, as amended (the "Act"). Said registration
statement first became effective on May 30, 1995, at which time the
Offering commenced. The Company's current prospectus is dated May 5, 1995,
and was supplemented on July 6, 1995. The terms used in this Agreement,
unless otherwise defined herein or otherwise required by the context within
which they are used, shall have same meaning as set forth in such
prospectus.
In consideration of the representations, warranties, and agreements
set forth herein, the parties hereto agree as follows:
I
A. Representations, Warranties, and Agreements of the Company. In
order to induce the Rights Agents to enter into this Agreement, the Company
represents and warrants to and agrees for itself with the Rights Agent
that:
1. (a) A registration statement on Form S-3 (File No. 33-58379)
with respect to the Securities, including the related form of prospectus
initially filed on April 3, 1995, and post-effective amendment nos. 1, 2,
and 3 thereto, filed on May 25, 1995, July 21, 1995, and August 9, 1995,
respectively, have been prepared by the Company in conformity with the
requirements of the Act and the applicable rules and regulations
promulgated by the Commission thereunder (the "Rules and Regulations") and
have been filed with and declared effective by the Commission and
post-effective amendment No. 4, filed on September 6 1995, and any other
amendments to such registration statement required prior to the date hereof
have been filed with the Commission and have been similarly prepared.
Copies of the registration statement and each amendment thereto, including
the related form of prospectus, have been delivered to the Rights Agent.
The Company will provide the Rights Agent copies of any proposed amendments
to the registration statement or to any form of prospectus before filing
them with the Commission, and the Company will not at any time hereafter
file any amendments to the registration statement or to any form of
prospectus if the Rights Agent shall provide the Company, within one day
after receipt of a copy of such proposed amendment or prospectus,
reasonable objections thereto in writing. The registration statement and
the prospectus relating to the Offering, in the forms in which they are
effective as of the Effective Date (as defined in Article VII) of this
Agreement, and as such registration statement and prospectus may be
hereafter appropriately amended, are herein respectively referred to as the
"Registration Statement" and the "Prospectus."
(a) The Company has filed all reports and other documents
required to be filed by it with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and each such
report or other document contained, at the time it was filed, such
information as was required to be included in such report or other
document and all such information was correct and complete in all
material respects. The Company has made all reports to shareholders
required by law to be made by the Company and each such report was
correct and complete in all material respects. To the Company's
best knowledge, except as disclosed in the Registration Statement, no
event has occurred that required an amendment to any report or document
referred to in this Subparagraph (b) that has not been filed or
distributed as required.
2. The Commission has not issued any order preventing or suspending
the use of any prospectus. Each prospectus has complied in all material
respects with the requirements of the Act and the Rules and Regulations,
and no prospectus has included an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein
not misleading. When the Registration Statement became effective and at
all times thereafter up to and at the Closing Date (as defined in Article
VI hereof): (a) the Registration Statement and the Prospectus, and any
amendments or supplements thereto, will contain all statements and
information that are required to be included therein in accordance with the
Act and the Rules and Regulations and will comply in all material respects
with the requirements of the Act and the Rules and Regulations; and (b)
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, will include an 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;
provided, however, that the Company makes no representations or warranties
as to information contained in or omitted from the Registration Statement
or the Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company by the
Rights Agent specifically for use in the preparation thereof.
3. The Company has been duly incorporated and is now and, at the
Closing Date, will be validly existing as a corporation in good standing
under the laws of the State of California, with full power and authority
(corporate and other) to own, lease, and operate its properties and to
conduct its business as described in the Prospectus. The Company is now
and, at the Closing Date, will be duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except those jurisdictions where the failure
to be qualified would not have a material adverse effect on the business or
financial condition of the Company. The Company now holds and, at the
Closing Date, will hold all licenses, certificates, covenants, approvals,
and permits from state, federal, and other regulatory authorities, or
orders of any court, regulatory body, administrative agency, or other
governmental body, that are required to be obtained by the Company in
connection with, or are necessary for, the conduct of its business, except
those permits which, if not held by the Company, would not have a material
adverse effect on the Company. The Company has not received any notice of
proceedings relating to revocation or modification of any qualification,
license, certificate, consent, approval, or order referred to in this
Section 3. The Company is not in violation of its Articles of
Incorporation or Bylaws or in material default in the performance or
observance of any material bond, debenture, note, or other evidence of
indebtedness or in any lease, contract, or other agreement or instrument to
which the Company is a party or by which it or any of its properties may be
bound, nor is it in violation of any statute, law, order, rule, regulation,
writ, injunction, or court (domestic or foreign) having jurisdiction over
the Company or any of its properties, the result of which default would
have a material adverse effect on the Company.
4. This Rights Agent Agreement has been duly authorized, executed,
and delivered by the Company and is binding upon the Company in accordance
with its terms, except: (a) as the availability of the remedy of specific
enforcement, of injunctive relief, or of other equitable relief may be
subject to the discretion of the court before which any proceedings
therefore may be brought; or (b) as the enforceability of the rights and
remedies created hereby are subject to bankruptcy, insolvency,
reorganization, moratorium, and similar laws of general application
relating to or affecting the rights and remedies of creditors and secured
parties. The issuance and delivery of the Securities and the Rights Agent
Warrants (as defined in Section B.5 of Article II hereof), the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under: (a)
any contract, indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note, or other evidence of indebtedness or any lease, contract,
or other agreement or instrument to which the Company is a party or by
which it or any of its properties may be bound; (b) the Company's Articles
of Incorporation or Bylaws; or (c) any statute, law, order, rule,
regulation, writ, injunction, or decree of any court (foreign or domestic)
or governmental agency or body having jurisdiction over the Company or its
properties. No consent, approval, authorization, or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated herein, except as may be required under
the Act or under applicable state or other securities laws.
5. Coopers & Lybrand, L.L.P., Certified Public Accountants, who have
examined the financial statements incorporated by reference into the
Registration Statement and the Prospectus, are independent public
accountants within the meaning of the Act and the Rules and Regulations.
The financial statements incorporated by reference into the Registration
Statement and the Prospectus fairly present the consolidated financial
position, results of operations, stockholders' equity, and cash flows of
the Company at the respective dates and for the respective periods to which
they apply and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved.
The financial statement schedules, if any, incorporated by reference into
the Registration Statement and the Prospectus present fairly the
information required to be stated therein.
6. The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in the stabilization or the manipulation of the price
of the Securities or of the Common Stock of the Company.
B. Representations and Warranties of the Company and the Rights
Agent. The Company and the Rights Agent each represents and warrants to
the other that, except as set forth in this Rights Agent Agreement, no
person is entitled, directly or indirectly, to compensation from it for
services as a finder in connection with the Offering.
C. Representations, Warranties, and Agreements of the Rights Agent
and the Participating Agents.
1. By the Rights Agent. In order to induce the Company to enter
into this Agreement, the Rights Agent represents and warrants and agrees
for itself with Company that:
(a) The Rights Agent has been duly incorporated and is now and, at
the Closing Date, will be validly existing as a corporation in good
standing under the laws of the State of California, with full power and
authority (corporate and other) to own, lease, and operate its properties
and to conduct its business as described in this Agreement. The Rights
Agent is now and, at the Closing Date, will be duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except those
jurisdictions where the failure to be qualified would not have a material
adverse effect on the business or financial condition of the Rights Agent.
The Rights Agent now holds and, at the Closing Date, will hold all
licenses, certificates, covenants, approvals, and permits from state,
federal, and other regulatory authorities, or orders of any court,
regulatory body, administrative agency, or other governmental body, that
are required to be obtained by the Rights Agent in connection with, or are
necessary for, the conduct of its business, except those permits which, if
not held by the Rights Agent, would not have a material adverse effect on
the Rights Agent. The Rights Agent has not received any notice of
proceedings relating to revocation or modification of any qualification,
license, certificate, consent, approval, or order referred to in this
Subparagraph (a). The Rights Agent is not in violation of its Articles of
Incorporation or Bylaws or in material default in the performance or
observance of any material bond, debenture, note, or other evidence of
indebtedness or in any lease, contract, or other agreement or instrument to
which the Rights Agent is a party or by which it or any of its properties
may be bound, nor is it in violation of any statute, law, order, rule
regulation, writ, injunction, or court (domestic or foreign) having
jurisdiction over the Rights Agent or any of its properties, the result of
which default would have a material adverse effect on the Rights Agent.
(b) This Rights Agent Agreement has been duly authorized, executed,
and delivered by the Rights Agent and is binding upon the Rights Agent in
accordance with its terms except: (i) as the availability of the remedy of
specific enforcement, of injunctive relief, or of other equitable relief
may be subject to the discretion of the court before which any proceedings
therefore may be brought; or (ii) as the enforceability of the rights and
remedies created hereby are subject to bankruptcy, insolvency,
reorganization, moratorium, and similar laws of general application
relating to or affecting the rights and remedies of creditors and secured
parties. The Rights Agent's participation in the Offering, its receipt of
compensation therefor (including the Rights Agent Warrants) in the manner
contemplated in this Agreement, and the execution, delivery, and
performance of this Agreement will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under: (i) any
contract, indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note, or other evidence of indebtedness, lease, contract, or
other agreement or instrument to which the Rights Agent is a party or by
which it or any of its properties may be bound; (ii) the Rights Agent's
Articles of Incorporation or Bylaws; or (iii) any statute, law, order,
rule, regulation, writ, injunction, or decree of any court (foreign or
domestic) or governmental agency or body having jurisdiction over the
Rights Agent or its properties. No consent, approval, authorization, or
order of any court or governmental agency or body is required for the
consummation by the Rights Agent of the transactions contemplated herein,
except as may be required under the Act or under applicable state or other
securities laws.
(c) The information furnished by the Rights Agent or its counsel for
inclusion in the Registration Statement and the Prospectus, and in any
amendment or supplement thereto, is true and accurate in all material
respects and no material information has been omitted therefrom that would
be necessary in order to make the statements in the Registration Statement
or the Prospectus prepared in reliance on such information, in light of the
circumstances under which they were made, not misleading.
(d) The Rights Agent has not taken and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in the stabilization or the manipulation of the price
of the Securities or of the Common Stock of the Company.
(e) The Rights Agent is registered as a broker-dealer in securities
with the Commission and with applicable state securities commissions, is in
full and current compliance in all material respects with the rules and
regulations of the Commission and such state securities commissions, and is
a member in good standing of and in full and current compliance in all
material respects with the rules of the National Association of Securities
Dealers, Inc. (the "NASD").
(f) No proceeding is pending or, to the knowledge of the Rights
Agent, threatened against the Rights Agent or any director or officer
thereof in any court of competent jurisdiction, or before the Commission,
any state securities commission, or the NASD, concerning the Rights Agent's
activities as a broker and/or dealer. The Rights Agent has provided the
Company with a copy of its most recent report on Form BD, as amended, filed
with the Commission, the NASD, and various state securities commissions and
represents that such report contains a complete and accurate description of
all lawsuits, disciplinary proceedings, injunctive actions, administrative
actions, and other matters of a similar nature involving the Rights Agent
and its "control affiliates," as that term is defined on Form BD. The
Rights Agent will immediately advise the Company by telephone or telegraph
(and confirm in writing) of the initiation or threat of initiation of any
such actions or proceedings, any requests by such persons for additional
information, or of the initiation or threat of any steps or proceedings
which would impair or prevent the right to offer any of the Securities
proposed to be offered pursuant to this Agreement or the issuance of any
"stop orders" or any other prohibition impairing or preventing the
Offering.
(g) The Rights Agent will solicit the exercise of Subscription Rights
and the purchase of unsubscribed Shares only in those states which are
identified in Exhibit "A" hereto, which exhibit is attached hereto and by
this reference incorporated herein, as those states in which the
Shareholders of the Company reside and in which the Offering has either
been qualified for sale under, or is exempt from the registration
requirements of, the applicable statutes and regulations of such states.
Also, the Rights Agent may offer the Securities in any other state if: (i)
the transaction is exempt from the registration requirements of the
applicable statutes and regulations of that state; (ii) the Company's
counsel has been notified in writing of the proposed sale in such other
state; and (iii) the Company's counsel consents to the proposed sale in
such other state.
(h) The Rights Agent will not publish, issue, or circulate or
authorize the publication, issuance, or circulation of any circular,
notice, or advertisement regarding the Securities which shall not have
previously been approved by the Company and its counsel.
(i) The Rights Agent shall confirm sales to customers only in those
states in which it is licensed to do so as a securities broker or dealer
and shall ensure that all Participating Agents (as defined in Section C of
Article II hereof) similarly confirm sales to customers only in states in
which they are duly licensed to do so.
(j) The Rights Agent will instruct each Holder on behalf of whom the
Rights Agent solicits the exercise of, or on behalf of whom the Rights
Agent exercises, Subscription Rights that payment for the aggregate
Subscription Price attributable to any Subscription Rights so solicited or
exercised must be made by bank certified check or cashier's check, payable
to the order of the Subscription Agent.
(k) The Rights Agent will transmit to the Subscription Agent any
funds received from a Holder by 12:00 p.m., New York time, on the business
day following the date of the Rights Agent's receipt of such funds.
(l) If the Offering is terminated, the Rights Agent will be entitled
only to be reimbursed for its out-of-pocket expenses.
(m) The Rights Agent shall promptly provide the Company with an
executed copy of each Participating Agent Agreement (as hereinafter
defined), if any.
(n) During the duration of the Offering, the Rights Agent will
promptly notify the Company of any acquisition by the Rights Agent, any
Participating Agent, or any associated or affiliated person of the Rights
Agent or any Participating Agent, of any unregistered securities of the
Company. Such notification shall set forth complete details of any such
acquisition, including, but not limited to, the date of acquisition, the
acquisition price, and the amount of unregistered securities so acquired.
(o) During the duration of the Offering, the Rights Agent will
promptly notify the Company of any contractual or other relationship
between any Participating Agent and the Company.
(p) The Rights Agent will comply with the provisions of Sections 8,
24, 25, and 36 of Article III of the Rules of Fair Practice of the NASD.
(q) The Rights Agent is not directly or indirectly affiliated or
associated with any beneficial owner of any unregistered security of the
Company acquired within the 12 month period prior to April 3, 1995, the
initial filing date of the Registration Statement relating to the Offering.
(r) The Rights Agent does not have any direct or indirect affiliation
or association with any officer, director, or five percent (5%) or greater
shareholder of the Company.
(s) Neither the Rights Agent nor any associated person, parent, or
affiliate of the Rights Agent has a "Conflict of Interest" with the Company
within the meaning of Section 2(g) of Schedule E to the NASD By-Laws.
2. By Each Participating Agent. By agreeing to participate in the
Offering, each Participating Agent (as defined in Section C of Article II
hereof), if any, solely on behalf of and with respect to itself, represents
and warrants and agrees for itself with the Company that:
(a) The Participating Agent has not taken and will not take, directly
or indirectly, any action designed to, or that might reasonably be expected
to, cause or result in the stabilization or the manipulation of the price
of the Securities or of the Common Stock of the Company.
(b) The Participating Agent is registered as a broker-dealer in
securities with the Commission and with applicable state securities
commissions, is in full and current compliance in all material respects
with the rules and regulations of the Commission and such state securities
commissions, and is a member in good standing of and in full and current
compliance in all material respects with the rules of the NASD.
(c) No proceeding is pending or, to the knowledge of the
Participating Agent, threatened against the Participating Agent or any
director or officer thereof in any court of competent jurisdiction, or
before the Commission, any state securities commission, or the NASD,
concerning the Participating Agent's activities as a broker and/or dealer.
The Participating Agent has provided the Company with a copy of its most
recent report on Form BD, as amended, filed with the Commission, the NASD,
and various state securities commissions, and represents that such report
contains a complete and accurate description of all lawsuits, disciplinary
proceedings, injunctive actions, administrative actions, and other matters
of a similar nature involving the Participating Agent and its "control
affiliates," as that term is defined on Form BD. The Participating Agent
will immediately advise the Company by telephone or telegraph (and confirm
in writing) of the initiation or threat of initiation of any such actions
or proceedings, any requests by such persons for additional information, or
of the initiation or threat of any steps or proceedings which would impair
or prevent the right to offer any of the Securities proposed to be offered
pursuant to this Agreement or the issuance of any "stop orders" or any
other prohibition impairing and preventing the Offering.
(d) The Participating Agent will participate in the Offering subject
to and in accordance with the terms of this Rights Agent Agreement and the
Prospectus, the Act, the Exchange Act, the Rules of Fair Practice of the
NASD, and any applicable state securities laws and regulations.
(e) The Participating Agent will solicit the exercise of Subscription
Rights or the purchase of unsubscribed Shares only in those states which
are identified in Exhibit "A" hereto as those states in which the
Shareholders of the Company reside and in which the Offering has either
been qualified for sale under, or is exempt from the registration
requirements of, the applicable statutes and regulations of such states.
Also, the Participating Agent may offer the Securities in any other state
if: (i) the transaction is exempt from the registration requirements of the
applicable statutes and regulations of that state; (ii) the Company's
counsel has been notified in writing of the proposed sale in such other
state; and (iii) the Company's counsel consents to the proposed sale in
such other state.
(f) The Participating Agent will not publish, issue, or circulate or
authorize the publication, issuance, or circulation of any circular,
notice, or advertisement regarding the Securities which shall not have
previously been approved by the Company and its counsel.
(g) The Participating Agent shall confirm sales to customers only in
those states in which it is licensed to do so as a securities broker or
dealer and shall ensure that all selected dealers similarly confirm sales
to customers only in states in which they are duly licensed to do so.
(h) The Participating Agent will instruct each Holder on behalf of
whom the Participating Agent solicits the exercise of, or on behalf of whom
the Participating Agent exercises, Subscription Rights that payment for the
aggregate Subscription Price attributable to any Subscription Rights so
solicited or exercised must be made by bank certified check or cashier's
check, payable to the order of the Subscription Agent.
(i) The Participating Agent will transmit to the Subscription Agent
any funds received from a Holder by 12:00 p.m., New York time, on the
business day following the date of the Participating Agent's receipt of
such funds.
(j) If the Offering is terminated, the Participating Agent will be
entitled only to be reimbursed for its out-of-pocket expenses.
(k) During the duration of the Offering, the Participating Agent will
promptly notify the Rights Agent of any acquisition by the Participating
Agent or any associated or affiliated person of the Participating Agent, of
any unregistered securities of the Company. Such notification shall set
forth complete details of any such acquisition, including, but not limited
to, the date of acquisition, the acquisition price, and the amount of
unregistered securities so acquired.
(l) During the duration of the Offering, the Participating Agent will
promptly notify the Rights Agent of any contractual or other relationship,
other than the relationship evidenced hereby, between the Participating
Agent and the Company.
(m) The Participating Agent will comply with the provisions of
Sections 8, 24, 25, and 36 of Article III of the Rules of Fair Practice of
the NASD.
(n) The Participating Agent is not directly or indirectly affiliated
or associated with any beneficial owner of any unregistered security of the
Company acquired within the 12 month period prior to April 3, 1995, the
initial filing date of the Registration Statement on Form S-3 relating to
the Offering.
(o) The Participating Agent does not have any direct or indirect
affiliation or association with any officer, director, or five percent (5%)
or greater shareholder of the Company.
(p) Neither the Participating Agent nor any associated person,
parent, or affiliate of the Participating Agent has a "Conflict of
Interest" with the Company within the meaning of Section 2(g) of Schedule E
to the NASD By-Laws.
II
Engagement of the Rights Agent. In reliance upon the foregoing
representations, warranties, and agreements, and subject to the terms and
conditions of this Agreement, the Rights Agent is engaged on the following
terms:
A. Scope of Engagement. Subject to the provisions of this Agreement
and commencing with the Effective Date of this Agreement, the Rights Agent
agrees to serve as independent consultant to the Company to solicit the
exercise by third parties of the Subscription Rights and the purchase by
third parties of unsubscribed Shares in California and in those states
set forth in Exhibit "A." The solicitation of the exercise by third
parties of the Subscription Rights and the purchase by third parties of
unsubscribed Shares shall be made pursuant to the terms of this Rights
Agent Agreement and the Prospectus, and in accordance with the Act, the
Exchange Act, the Rules of Fair Practice of the NASD, any applicable
securities laws and regulations of the states enumerated in Exhibit "A",
and any other applicable state securities laws and regulations. Subject to
the terms and conditions of this Agreement, the Rights Agent agrees to
accept such agency and to use its best efforts during the term of this
Agreement to solicit the exercise of the Subscription Rights and the
purchase of unsubscribed Shares at the Subscription Price ($4.34 per
share). The Rights Agent shall deliver a copy of the Prospectus, together
with any supplement thereto furnished by the Company, to each prospective
subscriber or purchaser, and the Rights Agent is hereby authorized to
use only such documents and sales literature as are prepared by, or
otherwise authorized in writing by, the Company and furnished to the Rights
Agent from time to time. The Rights Agent is not authorized to engage in
any other type of solicitation activity in connection with the Offering
other than as expressly set forth in this Agreement or to make use of
any offering material or sales representations or furnish any information
other than that contained in the Prospectus or in any sales literature
authorized by the Company.
B. Commissions. As compensation for its services hereunder, the
Company shall compensate the Rights Agent as follows:
1. The Rights Agent shall be paid on the Closing Date a commission
equal to 5% of: (a) the aggregate Subscription Price attributable to
Subscription Rights validly exercised through the Rights Agent or any
Participating Agent engaged by the Rights Agent, other than Excluded
Subscriptions (hereinafter defined); or (b) any unsubscribed Shares
purchased by the Rights Agent prior to the Closing Date pursuant to the
Standby Purchase Commitment (as defined in Article VI hereof). For
purposes of this Rights Agent Agreement, "Excluded Subscriptions" shall
mean any and all Subscription Rights exercised: (a) from the commencement
of the Offering through July 21, 1995; (b) by the Company's 401(k) Plan; or
(c) by an officer or director of the Company.
2. Upon the valid exercise of the WHR Share Purchase Commitment, the
Rights Agent shall be paid a commission equal to 2% of the aggregate
purchase price in connection with the sale of any additional shares to WHR
pursuant to the valid exercise of the WHR Share Purchase Commitment.
3. The Rights Agent shall be paid on the Effective Date of this
Agreement a nonaccountable expense allowance equal to Five Thousand
Dollars ($5,000).
4. The Rights Agent shall be paid on the Closing Date an additional
nonaccountable expense allowance equal to Five Thousand
Dollars ($5,000) if the Minimum Subscriptions (hereinafter defined) shall
have been achieved. For purposes of this Rights Agent Agreement, "Minimum
Subscriptions" shall mean that a minimum of 100,000 Subscription Rights,
not including any Excluded Subscriptions, shall have been validly
exercised.
5. If the Minimum Subscriptions shall have been achieved, the
Company shall issue to the Rights Agent at the Closing Date, for an
aggregate price of $10.00, warrants to purchase Common Stock of the
Company (the "Rights Agent Warrants" or the "Warrants"). The Warrants
shall: (a) provide for the purchase of a number of shares of Common Stock
equal to 0.05 multiplied by the difference between (x) the number of Shares
subscribed for in the Offering less (y) the number of shares subscribed for
pursuant to the Excluded Subscriptions; (b) be exercisable at a price of
$4.34 per share; (c) be exercisable for a period of two (2) years following
the Closing Date; and (d) shall include such other terms and conditions as
are set forth in the form of Rights Agent Warrant Purchase Agreement
attached hereto as Exhibit "B" and by this reference incorporated herein.
It is specifically understood that the fairness of the amount,
price, and terms of the Rights Agent Warrants must be passed upon by the
Corporate Financing Department of the NASD and, accordingly, the Rights
Agent shall agree and consent to the modification of one or more of the
foregoing terms and conditions (including, without limitation, the exercise
price and the term of exercise of the Warrants) as required by the
Corporate Financing Department if legal counsel for the Rights Agent is
allowed to first discuss such proposed changes with the Corporate Financing
Department and such counsel determines that the modification is mandatory.
C. Engagement of Participating Agents. The Rights Agent may engage
one or more broker-dealer firms to participate in the Offering of the
Securities (each a "Participating Agent") subject to the prior approval of
such person's participation by the Rights Agent, the Company, and, as
applicable, the NASD and such person's express adoption and agreement to
become bound by the terms of this Agreement as evidenced by such person's
execution and delivery to, and the acceptance by, the Rights Agent of a
Participating Agent Agreement in the form attached hereto as Exhibit "C"
and by this reference incorporated herein. The Rights Agent shall not
permit any prospective Participating Agent to participate in the Offering
if the Rights Agent has any reason to believe that the representations and
warranties of such person set forth in this Agreement or the Participating
Agent Agreement are untrue. The Rights Agent shall compensate the
Participating Agent in accordance with the terms of the Participating Agent
Agreement.
D. Further Agreements of the Rights Agent. The Rights Agent
represents, warrants, and agrees with the Company that, in connection with
the Offering and the transactions contemplated hereby, it has complied and
will comply with all applicable laws, rules, and regulations (including,
without limitation, the Act, the Exchange Act, the BHCA, the rules and
regulations promulgated under those laws, and the provisions of Rule 10b-6
under the Exchange Act with regard to trading of the Securities). For the
purposes of the foregoing sentence, the Rights Agent agrees that, in
addition to the Subscription Rights and the Shares, other securities of the
Company or securities of a guarantor of the Securities or any other right
or option to purchase or otherwise acquire any securities of the Company
shall be considered securities of the same class and series as the
Securities.
III
Further Agreements of the Company. The Company agrees with the Rights
Agent that:
A. The Company will use its best efforts to cause the Registration
Statement to continue to be effective and will advise the Rights Agent
promptly and, if requested by the Rights Agent, will confirm such advice in
writing: (i) when any amendment to the Registration Statement or to the
Prospectus becomes effective; (ii) of any request by the Commission or
other governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii)
of the issuance by the Commission or other governmental authority of any
"stop order" suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; and (iv) within the
period of time referred to in Section G below, of the happening of any
event that makes any statement of material fact made in the Registration
Statement or the Prospectus untrue or that requires the making of any
additions to statements of material fact in the Registration Statement or
the Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If at any time
the Commission or other governmental authority issues any "stop order" or
any similar order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of that order at the earliest possible moment.
B. Prior to the Closing Date, counsel for the Rights Agent shall
have access to the Articles of Incorporation and the Bylaws of the Company,
any amendments thereto, all resolutions authorizing the issuance of the
Securities, and all material contracts to which the Company is a party.
There shall also be made available for inspection by attorneys for the
Rights Agent minutes of all meetings of incorporators, directors, and
stockholders of the Company from the date of incorporation of the Company
to the Closing Date. The Rights Agent shall be provided at or before the
Closing Date with certified copies of those of the above documents as it
reasonably requests, as well as with such assurances of the organization
and good standing of the Company as it reasonably requests.
C. Promptly after the Effective Date and thereafter from time to
time for such period as, in the opinion of counsel for the Rights Agent,
the Prospectus is required by law to be delivered in connection with sales
by an underwriter or dealer, the Company will deliver to the Rights Agent
without charge as many copies of the Prospectus (and of any amendments or
supplements thereto) as the Rights Agent may reasonably request. The
Company consents to the use of the Prospectus (and of any amendments or
supplements thereto) in accordance with the provisions of the Act and the
Rules and Regulations and with the securities laws and regulations of the
jurisdictions in which the Securities are offered by the Rights Agent and
by all dealers to which Securities may be sold, both in connection with the
Offering or sale of the Securities and for such period of time thereafter
as the Prospectus is required by law to be delivered in connection with
offers and sales of the Securities. If during this period of time any
event occurs which, in the judgment of the Company, should be set forth in
the Prospectus in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with the Act or
the Rules and Regulations or any other law or regulation, the Company will
promptly prepare and file with the Commission an appropriate amendment or
supplement thereto and will furnish to the Rights Agent, without charge, a
reasonable number of copies thereof.
D. The Company will use its best efforts to register or qualify the
Securities under the securities laws of such jurisdictions as the Rights
Agent may reasonably request and will file such consents to service of
process or other documents as may be necessary to effect such registration
or qualification and continue the same in effect for so long a period as
the Rights Agent may reasonably request; provided, however, that in no
event shall the Company be required to qualify to do business in any
jurisdiction in which it is not now so qualified. Public offerings will be
made only in those states which shall have approved the Offering or for
which there exists an exemption from registration of the Securities offered
or sold in the Offering. The Company, at its expense, will use its counsel
to prepare such filings and qualifications.
E. During the two-year period following the Closing Date, the
Company will furnish to the Rights Agent: (i) as soon as available, a copy
of each document or report of the Company mailed to stockholders or filed
with the Commission or any state securities administration or commission,
any national securities exchange upon which any Securities of the Company
become listed, or the NASD; and (ii) from time to time, such other
information concerning the business and financial condition of the Company
as the Rights Agent may reasonably request.
F. Except as contemplated herein or as described in the Prospectus,
the Company will not, for a period of 90 days after the Effective Date,
offer or sell, contract to sell, or otherwise dispose of any of its Common
Stock or Securities convertible into, or exercisable to purchase, its
Common Stock without the prior written consent (which consent will not be
unreasonably withheld or delayed) of the Rights Agent. The Company will
obtain commitments, prior to the execution and delivery of this Rights
Agent Agreement, from those of the Company's officers and directors and
beneficial holders of more than five percent (5%) of the Company's
outstanding common stock (other than street name holders and institutional
investors), who were such at the Record Date, providing that such persons
will not, for a period of 90 days after the Effective Date, offer to sell,
sell, contract to sell or otherwise dispose of any Shares of Common Stock
of the Company owned by them or with respect to which they have the power
of disposition otherwise than: (i) as a gift or gifts, provided the donee
or donees thereof agree to be bound by this restriction; or (ii) with the
Rights Agent's prior consent (which consent will not be reasonably withheld
or delayed).
G. The Company will use its best efforts to obtain and maintain the
qualification of the Subscription Rights and the Shares for quotation on
the NASDAQ National Market System ("NASDAQ/NMS").
H. The Company will refer to the Rights Agent all inquiries and
requests by persons desiring to purchase the Securities.
I. The Company shall at all times from the Effective Date through
the Closing Date remain in compliance with and in good standing under the
Federal Deposit Insurance Corporation Improvement Act, the BHCA, and the
rules and regulations promulgated thereunder. The Company has taken all
necessary and appropriate steps to continue such compliance and good
standing and shall, on a timely basis, and at all times during the term of
this Rights Agent Agreement, prepare and make such filings and otherwise
take such action as may be required or deemed necessary and appropriate to
maintain such compliance and good standing, except to the extent that the
failure to comply therewith would not have a material adverse effect on the
Company.
IV
Indemnity and Contribution Provisions. The Company, the Rights Agent,
and each Participating Agent hereby agree to the following indemnity
provisions:
A. The Company agrees to indemnify and hold harmless the Rights
Agent, any Participating Agent, and any person who controls the Rights
Agent or any member of the selling group within the meaning of the Act, and
each of their directors, officers, employees, and agents, against losses,
claims, damages, or liabilities, joint and several, to which any such
Rights Agent, or any director, officer, employee, or agent, may become
subject under the Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Subject to Section C of this Article IV, the Company agrees to
reimburse any legal or other expenses reasonably incurred by such Rights
Agent or Participating Agent, each member of the selling group, and such
controlling person, and each of their directors, officers, employees, and
agents, in connection with the investigation or the defense of any such
loss, claim, damage, liability, or action; provided, however, that the
Company will not be liable under this Article IV, Section A, if such loss,
claim, or liability arises out of or is based on an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Rights Agent or any
Participating Agent specifically for use in preparation thereof. A person
who controls the Rights Agent, or any Participating Agent, or any of their
directors, officers, employees, or agents, will be covered by the indemnity
agreement in this Article IV, Section A, for all such losses, claims,
damages, liabilities, and expenses irrespective of whether they are based
on Section 15 of the Act. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
B. The Rights Agent and each Participating Agent agrees, jointly and
severally, to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration Statement, and
any person who controls the Company within the meaning of the Act, against
any losses, claims, damages, or liabilities to which the Company or any
such director, officer, or controlling person may become subject, under the
Act or otherwise, if such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of material fact contained in the Prospectus or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case if, but only if, such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Prospectus in reliance upon and in conformity with
written information concerning the Rights Agent or any Participating Agent
furnished to the Company by or on behalf of the Rights Agent or such
Participating Agent specifically for use in the preparation thereof.
Subject to Section C of this Article IV, the Rights Agent and each
Participating Agent agrees, jointly and severally, to reimburse any legal
or other expense reasonably incurred by the Company or such director,
officer, or controlling person in connection with the investigation or the
defense of any such loss, claim, damage, liability, or action. This
indemnity agreement will be in addition to any liability which such person
may otherwise have.
C. Promptly after receipt by an indemnified party under this Article
IV of notice of the commencement of any action, the indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under this Article IV, notify the indemnifying party in writing of the
commencement thereof; but the omission to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under this Article IV. In case any such action is
brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof
with counsel who shall be reasonably satisfactory to such indemnified
party; and after notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Article IV
for any legal or other expense subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation. In any such action, any indemnified party shall have the
right to retain its own counsel, but the fees and expense 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 to
the retention of such counsel; or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
legal defenses or interests between them. The indemnifying party shall not
be liable for any settlement of any proceeding or claim effected without
its written consent; but if settled with such consent or if there is a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
D. If the indemnification provided for in Section A or B of this
Article IV is for any reason, other than as specified in such sections,
held by a court to be unavailable and the Company or the Rights Agent or
any Participating Agent has been required to pay damages as a result of a
determination by a court that the Prospectus contains an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, then
the Company shall contribute to the damages paid by the Rights Agent and
the Participating Agent and such persons shall contribute to the damages
paid by the Company (but in each case only to the extent that such damages
arise out of or are based upon such untrue statement or omissions): (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Rights Agent and the Participating
Agent on the other from the offering of the Securities; or (ii) if the
allocations provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect the relative fault of
the Company and the Rights Agent and the Participating Agents in connection
with statements or omissions which resulted in such damages, as well as any
other relevant equitable considerations. The relative benefits received by
the Company and the Rights Agent and the Participating Agents shall be
deemed to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Company bears to the
total commissions received by the Rights Agent and the Participating Agents
as set forth in the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Company or the Rights Agent and the
Participating Agents and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. For purposes of this Article IV, Section D, the term "damages"
shall include any legal or other expenses reasonably incurred by the
Company or the Rights Agent or any Participating Agents in connection with
investigation or defending any action or claim which is the subject of the
contribution provisions of this Article IV, Section D. Notwithstanding the
provisions of this Article IV, Section D, the Rights Agent shall not be
required to contribute any amount in excess of the amount by which the
total Rights Agent compensation received by it under this Rights Agent
Agreement exceeds the amount of any damages which the Rights Agent has
otherwise been required to pay by reason of any such untrue statements or
omissions. No person adjudged guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Act shall be entitled to
contribution from any person who was not adjudged guilty of such fraudulent
misrepresentation. Under this Article IV, Section D, the obligations of
the Rights Agent or any Participating Agent to contribute are several in
proportion to their respective Rights Agent obligations and not joint.
E. The agreements contained in this Article IV and the
representations and warranties of the Company and the Rights Agent or any
Participating Agent in this Rights Agent Agreement shall remain operative
and in full force and effect regardless of: (i) any investigation made by
or on behalf of: (a) the Rights Agent or any person controlling the Rights
Agent; or (b) the Company, any of its directors or officers, or any person
controlling Company or any of its directors or officers; (ii) acceptance of
any Securities and payment therefor hereunder; and (iii) any termination of
this Rights Agent Agreement. A successor of the Rights Agent or of the
Company, or any director or officer thereof, or any person controlling the
Rights Agent or the Company shall be entitled to the benefits of the
agreements contained in this Article IV.
V
A. Conditions to the Company's Obligations. The several obligations
of the Company to compensate the Rights Agent in the manner contemplated
herein are subject to the accuracy of, and compliance with, the
representations, warranties, and agreements of the Rights Agent and each
Participating Agent contained herein at and as of the Closing Date and to
the following further conditions:
1. The Corporate Financing Department of the NASD shall have
approved the participation in the Offering by the Rights Agent and, as
applicable, any Participating Agent, in the manner contemplated in this
Agreement.
2. The Rights Agent shall have complied in all material respects
with all agreements and satisfied all conditions on its part to be
performed at or prior to the Closing Date, including, without limitation,
those contained in Section D of Article II.
3. The representations and warranties of the Rights Agent set forth
in this Rights Agent Agreement shall be accurate in all material respects
as though expressly made at, and as of, all times from the Effective Date
through the Closing Date, including, without limitation, those contained in
Section D of Article II.
4. At the Closing Date, counsel for the Company shall have been
furnished with all such documents and certificates as such counsel may
reasonably request for the purpose of: (a) enabling such counsel to pass
upon the qualification of the Rights Agent or any Participation Agent to
participate in the Offering in the manner contemplated in this Agreement
and the matters referred to in Section C.1(b) of Article I hereof; and (b)
to evidence the accuracy and completeness of any of the representations,
warranties, or statements of the Rights Agent or any Participating Agent,
the performance of any of the covenants of the Rights Agent or any
Participating Agent, or the fulfillment of any of the conditions herein
contained. All proceedings taken by the Rights Agent or any Participating
Agent at or prior to the Closing Date in connection with the participation
by the Rights Agent or any Participating Agent in the Offering in the
manner contemplated in this Agreement shall be reasonably satisfactory in
form and substance to the Company and its counsel. Notwithstanding the
foregoing, the Company shall have received at the Closing Date a
certificate, dated as of the Closing Date and signed by the President and
by the Treasurer of the Rights Agent, as to: (a) the fulfillment of the
conditions set forth in this Section A of Article V; (b) the accuracy, to
the best of their knowledge, in all material respects, of the
representations and warranties of the Rights Agent and each Participating
Agent contained in Sections B and C of Article I hereof on and as of the
Closing Date; and (c) the effect that, to the best of their knowledge, all
of the agreements contained in this Agreement and required to be performed
or complied by the Rights Agent at or prior to the Closing Date shall have
been performed or complied with in all material respects.
5. Subsequent to the Effective Date and prior to the Closing Date,
there shall not have occurred any change or any development involving a
prospective change in or affecting the Rights Agent's or any Participating
Agent's participation in the Offering not contemplated by the Prospectus
which materially adversely affects the accuracy or adequacy of the
disclosure in the Prospectus.
B. Conditions to the Rights Agent's Obligations. The several
obligations of the Rights Agent to provide the services required herein,
including its best efforts to sell unsubscribed Shares pursuant to the
Standby Purchase Commitment, are subject to the accuracy of, and compliance
with, the representations, warranties, and agreements of the Company
contained herein at and as of the Closing Date and to the following further
conditions:
1. Post-Effective Amendment No. 4 to the Registration Statement
shall have become effective in accordance with the requirements of the Act
and of the Rules and Regulations thereunder and the Corporate Financing
Department of the NASD shall have approved the participation of the Rights
Agent in the Offering.
2. No "stop order" suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been taken or to the knowledge of the Company shall be contemplated by
the Commission at or prior to the Closing Date.
3. There shall not have been any change in the capital stock of the
Company as described in the Prospectus under the caption "Description of
Capital Stock and Rights of Shareholders."
4. There shall not have been, since the respective dates as of which
information is given in the Registration Statement, any material adverse
change in the condition (financial or other), earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary
course of business.
5. No action, suit, or proceeding at law or in equity shall be
pending or, to the knowledge of the Company's management, threatened
against the Company that would be required to be set forth in the
Prospectus other than as set forth therein and no proceedings shall be
pending or, to the knowledge of the Company's management, threatened
against the Company before or by any federal, state, or other commission,
board, or administrative agency wherein an unfavorable decision, ruling, or
finding could materially adversely affect the condition (financial or
other), earnings, business affairs, or business prospects of the Company,
other than as set forth in the Prospectus.
6. The Company shall have complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date.
7. The other representations and warranties of the Company set forth
in this Rights Agent Agreement shall be accurate in all material respects
as though expressly made at, and as of, all times from the Effective Date
through the Closing Date.
8. The Company shall not have any material liabilities or
obligations, direct or contingent (not in the ordinary course of business),
other than those reflected in the Prospectus.
9. At the Closing Date, counsel for the Rights Agent shall have been
furnished with all such documents and certificates as such counsel may
reasonably request for the purpose of: (a) enabling such counsel to pass
upon the issuance and sale of the Securities as herein contemplated and the
matters referred to in Section A.4 of Article I hereof; and (b) to evidence
the accuracy and completeness of any of the representations, warranties, or
statements of the Company, the performance of any of the covenants of the
Company, or the fulfillment of any of the conditions herein contained. All
proceedings taken by the Company at or prior to the Closing Date in
connection with the authorization, issuance, and sale of the Securities as
herein contemplated shall be reasonably satisfactory in form and substance
to the Rights Agent and its counsel. Notwithstanding the foregoing, the
Rights Agent shall have received at the Closing Date a certificate, dated
as of the Closing Date and signed by the Chief Executive Officer and by the
Chief Financial Officer of the Company, as to: (a) the fulfillment of the
conditions set forth in this Section B of Article V; (b) the accuracy, to
the best of their knowledge, in all material respects, of the
representations and warranties of the Company contained in Sections A and B
of Article I hereof on and as of the Closing Date; and (c) to the effect
that, to the best of their knowledge, all of the agreements contained in
this agreement and required to be performed or complied with by the Company
at or prior to the Closing Date shall have been performed or complied with
in all material respects.
10. Subsequent to the Effective Date and prior to the Closing Date,
there shall not have occurred any change or any development involving a
prospective change in or affecting the business or properties of the
Company not contemplated by the Prospectus which materially adversely
affects the accuracy or adequacy of the disclosure in the Prospectus, or
materially adversely affects the market for the Securities.
11. The Rights Agent shall have received at the Closing Date a signed
opinion, dated as of the Closing Date, in form and substance satisfactory
to the Rights Agent and its counsel, from Arnold & Porter, special counsel
for the Company, to the effect that:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of California;
(b) The Securities to be issued upon completion of this Offering have
been or will be duly authorized, legally and validly issued, and are, or
will be, fully paid and nonassessable;
(c) The holders of the Company's Common Stock do not have any
preemptive rights to subscribe to any additional issuances of the Company's
Common Stock, other than pursuant to the Subscription Rights or the WHR
Share Purchase Commitment;
(d) The Securities are registered in accordance with the requirements
of the Act, all requirements of the Act prerequisite to the Offering have
been complied with in all material respects, the Registration Statement
(except for the financial statements and other financial data incorporated
by reference into or included therein as to which such counsel need express
no opinion) complies as to form in all material respects with the
requirements of the Act and the Rules and Regulations, and, to the best of
such counsel's knowledge, such counsel has no reason to believe that the
Registration Statement or any other document filed with the Commission
contains any untrue statements of material facts or omits to state material
facts necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading; and
(e) This Agreement and the Rights Agent Warrants which are described
herein have been duly authorized and, when executed by the Company, will
constitute valid and binding agreements of the Company enforceable in
accordance with their terms, except: (i) as the availability of the remedy
of specific enforcement, of injunctive relief or of other equitable relief
may be subject to the discretion of the court before which any proceeding
therefore may be brought; or (ii) as the enforceability of the rights and
remedies created hereby are subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating
to or affecting the rights and remedies of creditors and secured parties.
Such opinion shall be to such further effect with respect to
other legal matters relating to this Rights Agent Agreement and the sale of
the Securities as counsel for the Rights Agent may reasonably request. In
rendering such opinion, counsel may rely as to matters of fact, to the
extent appropriate, upon certificates and representations of responsible
officers of the Company, of public officials, and of other third parties
reasonably satisfactory to Rushall & McGeever, legal counsel to the Rights
Agent.
VI
Standby Purchase Commitment. In connection with the Offering, the
Rights Agent shall have the right to purchase, for the account of one or
more of its customers, any Shares not subscribed for as of the Expiration
Date of the Offering by delivering to the Company by 12:00 p.m., New York
time, on the eighth business day following the Expiration Date (the
"Closing Date") good funds for such Shares (the "Standby Purchase
Commitment"). Such purchase shall be at the Subscription Price of $4.34 per
Share. The purchase of unsubscribed Shares pursuant to the Standby
Purchase Commitment may be made only by the Rights Agent on behalf of
third parties; provided, however, that the number of unsubscribed Shares so
purchased by the Rights Agent may reflect third party commitments to
purchase such unsubscribed Shares obtained by a Participating Agent. The
Company shall modify the Offering and the Prospectus to provide for the
appointment of the Rights Agent and the terms and conditions of the
Rights Agent's services.
VII
Effective Date of this Agreement. This Agreement will become
effective at 9:00 a.m., California time, on the first full business day
after Post-Effective Amendment No. 4 to the Registration Statement has
become effective (the "Effective Date"), unless prior to such time the
Rights Agent received written notice from the Company that it elects that
this Agreement shall not become effective or the Rights Agent gives notice
to the Company that the Rights Agent elects that this Agreement shall not
become effective; provided, however, that the provisions of this Article
and of Article IV hereof shall at all times be effective.
VIII
Cancellation of this Agreement. This Rights Agent Agreement and all
obligations of the Rights Agent or of the Company hereunder may be
cancelled at, or any time prior to, the Closing Date by the Rights Agent or
by the Company without liability on the part of the cancelling party to the
other parties to this Agreement except as set forth in this Article VIII,
if on or prior to the Closing Date: (a) trading on the New York Stock
Exchange, the American Stock Exchange, or the NASDAQ/NMS shall have been
wholly suspended; (b) minimum or maximum prices for trading shall have been
fixed or maximum ranges for prices for securities shall have been required
by the New York Stock Exchange, the American Stock Exchange, or the
NASDAQ/NMS, the NASD, or by order of the Commission or any other
governmental authority having jurisdiction; (c) a banking moratorium shall
have been declared by federal or state authorities; (d) the Dow Jones
Industrial Average shall have fallen by either 15 percent or more or 300
points from its closing price on the day immediately preceding the date
that the Registration Statement is declared effective by the Commission; or
(e) an outbreak of major hostilities in which the United States is involved
or a declaration of war by Congress shall have occurred since the execution
of this Agreement the effect of which, in the judgment of the cancelling party,
makes it impractical or inadvisable to proceed with the completion of the
sale of or any payment for the Securities. Notice of cancellation shall be
given by the cancelling party to the other parties to this Agreement by
telephone or telegraph and shall be subsequently confirmed by letter.
Within five business days after the date on which the cancelling party
first provides notice of such cancellation to the other parties, the
cancelling party will return all compensation received from any other party
under this Agreement, and shall forfeit its right to receive any other
compensation under this Agreement other than out-of-pocket expenses not
previously reimbursed.
IX
Certain Agreements Relating to Expenses.
A. By the Company. The Company will pay all costs and expenses
incident to the performance by the Company of its obligations hereunder,
including: (a) the preparation, printing, and filing of the Registration
Statement (including exhibits and amendments thereto) and the Prospectus
(including amendments and supplements thereto); (b) the preparation,
printing, and issuance of certificates for the Securities, including any
stamp taxes payable in connection with the original issuance of the
Securities; (c) the registration or qualification and fees of the Company's
counsel with respect to the matters referred to in Section H of Article III
hereof; (d) the fees and expenses of the Company's accountants and the fees
and expenses of counsel for the Company; and (e) furnishing such copies of
the Prospectus and all amendments or supplements to the Prospectus as may
be reasonably requested for use by the Rights Agent and the Participating
Agents in connection with the offering and sale of the Securities
(including postage, air freight charges, and charges for counting and
packaging).
B. By the Rights Agent. The Rights Agent will bear all costs and
expenses incident to the performance by the Rights Agent of its obligations
hereunder, other than the expenses set forth in Section A of this Article
IX, including the fees and expenses of its legal counsel.
X
Miscellaneous.
A. Notices. Except as otherwise provided in Sections C.1(f) or
C.2(c) of Article I, Section A of Article III, and Sections A and B of
Article VIII, notice given pursuant to any of the provisions of this Rights
Agent Agreement shall be in writing and shall be delivered personally, by
first class, certified, or registered mail, by facsimile transmission, or
by Federal Express or any other reputable overnight courier service,
addressed as set forth below (or in each case to such other address as the
person to be notified may have requested in writing):
1. If to the Company:
SDNB Financial Corp.
1420 Kettner Boulevard
San Diego, California 92101
Attention: Howard W. Brotman
Senior Vice President and Chief Financial Officer
With a copy to:
Theodore G. Johnsen, Esq.
Arnold & Porter
777 South Figueroa Street, 44th Floor
Los Angeles, California 90017
2. If to the Rights Agent:
Torrey Pines Securities, Inc.
140 Marine View Drive, Suite 110
Solana Beach, California 92075
Attention: Jack C. Smith
President
With a copy to:
Bruce J. Rushall, Esq.
RUSHALL & McGEEVER
2111 Palomar Airport Road, Suite 200
Carlsbad, California 92009
B. Successors and Assigns. This Rights Agent Agreement has been and
is made solely for the benefit of the Rights Agent, the Company, the
controlling persons, directors, and officers referred to in Article IV
hereof, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Rights Agent
Agreement. The terms "successor" and "successor and assigns" as used in
this Rights Agent Agreement shall not include a purchaser from any Rights
Agent of any of the Securities in his, her, or its status as such
purchaser.
C. Counterparts. This Rights Agent Agreement may be executed in any
number of counterparts, each of which, when taken together, shall be deemed
the fully executed agreement between the parties.
D. Applicable Law. This Rights Agent Agreement shall be governed by
and construed in accordance with the laws of the State of California,
without reference to conflict of laws or principles thereunder.
E. Venue. All disputes relating to this Rights Agent Agreement
shall be tried before the court of appropriate jurisdiction of the State of
California located in San Diego County, California to the exclusion of all
other courts that might have jurisdiction.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
and as of the __________ day of September, 1995, which Agreement shall be
effective on the Effective Date set forth in Article VII above.
COMPANY:
SDNB FINANCIAL CORP., By:
a California corporation Howard W. Brotman,
Senior Vice President
RIGHTS AGENT:
TORREY PINES SECURITIES, INC.,
a California corporation By:
Jack C. Smith,
President
LIST OF EXHIBITS
Exhibit A. List of states in which the exercise of Subscription Rights
or the purchase of unsubscribed Shares may be solicited by the
Rights Agent or any Participating Agent.
Exhibit B. Form of Rights Agent Warrant Purchase Agreement.
Exhibit C. Form of Participating Agent Agreement.
EXHIBIT A
States in Which the Rights Agent
and any Participating Agent May Solicit
the Exercise of Subscription Rights
or the Purchase of Unsubscribed Shares
Arizona
California
Connecticut
Idaho
Illinois
Iowa
Minnesota
Missouri
Nevada
New Jersey
New York
Pennsylvania
Tennessee
Texas
Virginia
EXHIBIT B
FORM OF
RIGHTS AGENT WARRANT PURCHASE AGREEMENT
_____________, 1995
SDNB FINANCIAL CORP.
___________ Shares
No Par Value Common Stock
$4.34 Per Share
RIGHTS AGENT WARRANT PURCHASE AGREEMENT
This Warrant Purchase Agreement (the "Agreement") is made by
and between SDNB Financial Corp., a California corporation (the
"Company"), and Torrey Pines Securities, Inc., a California
corporation (the "Warrantholder").
In consideration of $10.00, the receipt of which is hereby
acknowledged, the Company hereby issues to the Warrantholder a
purchase warrant (the "Warrant") to purchase an aggregate of
__________________________________ (__________) shares of the
Company's Common Stock, no par value (the "Rights Agent Shares"),
subject to adjustment pursuant to Section 8 below. The Warrant
is being issued pursuant to Article II, Section B.5 of the Rights
Agent Agreement, dated effective as of __________________, 1995
(the "Rights Agent Agreement"), by and among the Company, the
Rights Agent, and each Participating Agent (as defined in Article
II, Section C of the Rights Agent Agreement) who expressly adopts
and agrees to be bound by the terms of the Rights Agent
Agreement, in connection with the offering ("Offering") by the
Company of up to 769,582 shares of its Common Stock to holders of
record of its Common Stock on May 5, 1995, pursuant to
transferable subscription rights. The Warrantholder is the
Rights Agent under the Rights Agent Agreement and is executing
this Agreement for its own behalf and as the representative of
the Participating Agent Group (as hereinafter defined) who may be
entitled to receive the Warrants pursuant to Section 1(d) hereof.
Capitalized terms used, but not defined herein, shall have the
meanings ascribed to such terms in the Rights Agent Agreement.
In consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrant and the
respective rights an obligations thereunder, the Company and the
Warrantholder, for value received, hereby agree as follows:
1. FORM AND TRANSFERABILITY OF WARRANT
(a) Registration. The Warrant (or Warrants should the
Warrant be divided and/or assigned as provided herein) shall be
numbered and shall be registered on the books of the Company when
issued.
(b) Form of Warrant. The text and the form of the Warrant
and of the election to purchase the Rights Agent Shares (the
"Election to Purchase") shall be substantially as set forth in
Exhibit "A" attached hereto and by this reference incorporated
herein. The price per share as determined in accordance with the
provisions of Section 7 hereof (the "Warrant Price") and the
number of the Rights Agent Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain
events, all as hereinafter provided in section 8 hereof.
The Warrant shall be executed on behalf of the Company by
its president or a vice president, under its corporate seal
reproduced thereon attested by its secretary or an assistant
secretary. A Warrant bearing the signature of an individual who
was at any time the proper officer of the Company shall bind the
Company, notwithstanding that such individual shall have ceased
to hold such office prior to the delivery of such Warrant or did
not hold such office on the date of this Agreement.
The Warrant shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
(c) Transfer. The Warrant shall be divisible and
transferable only on the books of the Company maintained at its
principal office in San Diego, California, or at the office of
the Company's stock transfer agent, upon delivery thereof duly
endorsed by the Warrantholder or by its duly authorized attorney
or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver a
new Warrant to the person entitled thereto.
(d) Limitations on Transfer of Warrant. The Warrant shall
not be sold, transferred, assigned, exchanged or hypothecated by
the Warrantholder, except to: (i) broker-dealer firms which have
executed, and are not then in default of, their respective
Participating Agent Agreement regarding the Offering (the
"Participating Agent Group") and one or more persons, each of
whom on the date of transfer is an officer (including
officer-director) or partner of a member of the Participating
Agent Group or an officer (including officer-director) or partner
of a successor to a member of the Participating Agent Group; (ii)
one or more persons, each of whom on the date of transfer is an
officer (including officer-director) of a Warrantholder or an
officer (including officer-director) or partner of a successor to
a Warrantholder as provided herein; (iii) a partnership or
partnerships, all of the partners of which are a Warrantholder
and one or more persons, each of whom on the date of transfer is
an officer (including officer-director) of a Warrantholder or an
officer (including officer-director) or partner of a successor to
a Warrantholder; (iv) a successor to a Warrantholder through
merger or consolidation; (v) a purchaser of all or substantially
all of a Warrantholder's assets; (vi) the stockholders of a
Warrantholder or the stockholders or partners of its transferee
in the event of liquidation or dissolution; or (vii) any person
receiving the Warrant from one or more persons listed in this
Subsection (d) at such person's or persons' death pursuant to
will, trust or the laws of intestate succession. The Warrant may
be divided or combined, upon request to the Company by the
Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of Rights Agent
Shares.
(e) Exchange or Assignment of Warrant. Any Warrant
certificate may be exchanged without expense for another
certificate or certificates entitling the Warrantholder to
purchase a like aggregate number of Rights Agent Shares as the
certificate or certificates surrendered then entitled such
Warrantholder to purchase. Any Warrantholder desiring to
exchange a Warrant certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed,
the certificate evidencing the Warrant to be so exchanged.
Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant certificate as so requested. Any
Warrantholder desiring to assign a Warrant shall make such
request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate evidencing the Warrant to be
so assigned, with an instrument of assignment duly executed
accompanied by proper evidence of assignment, succession or
authority to transfer, and funds sufficient to pay any transfer
tax, whereupon the Company shall, without charge, execute and
deliver a new Warrant certificate in the name of the assignee
named in such instrument of assignment and the original Warrant
certificate shall promptly be cancelled. The text and form of
the request for assignment shall be substantially as set forth in
Exhibit "B" attached hereto and by this reference incorporated
herein.
(f) Warrantholder. Unless the context indicates otherwise,
the term "Warrantholder" shall include any transferee or
transferee of the Warrant pursuant to Subsection (d) above, and
the term "Warrant" shall include any and all Warrants outstanding
pursuant to this Agreement, including those evidenced by a
certificate or certificates issued upon division, exchange,
substitution, or transfer pursuant to this Agreement.
2. TERMS AND EXERCISE OF WARRANTS
Subject to the terms of this Agreement, the Warrantholder
shall have the right, at any time during the twenty-four (24)
month period (the "Exercise Period") commencing ________________,
1995 (the "Exercise Date") and ending at 5:00 p.m., California
time, on ___________________, 1997 (the "Warrant Expiration
Date"), or if any such date is a day on which banking
institutions are authorized by law to close, then on the next
succeeding day which shall not be such a day, to purchase from
the Company up to the number of fully paid and nonassessable
Rights Agent Shares which the Warrantholder may at the time be
entitled to purchase pursuant to this Agreement, upon surrender
to the Company, at its principal office in San Diego, California,
or at the office of the Company's stock transfer agent or at such
other address as the Company may designate by notice in writing
to the Warrantholder at the address of the Warrantholder
appearing on the books of the Company, of the certificate
evidencing the Warrant to be exercised, together with the form of
Election to Purchase duly completed and signed, and upon payment
to the Company of the Warrant Price (as determined in accordance
with the provisions of Sections 7 and 8 hereof), for the number
of Rights Agent Shares with respect to which such Warrant is then
exercised together with all taxes applicable upon such exercise.
Payment of the aggregate Warrant Price shall be made in cash or
by certified check or cashier's check, payable to the order of
the Company.
Upon such surrender of the Warrant certificate and payment
of such Warrant Price as aforesaid, the Company shall issue and
cause to be delivered with all reasonable dispatch to the
Warrantholder in such name or names as the Warrantholder may
designate in writing, a certificate or certificates for the
number of full Rights Agent Shares so purchased upon the exercise
of the Warrant, together with cash, as provided in Section 9
hereof, with respect to any fractional Rights Agent Shares
otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become
a holder of such Rights Agent Shares as of the close of business
on the date of the surrender of the Warrant and payment of the
Warrant Price, as aforesaid, notwithstanding that the
certificates representing such Rights Agent Shares shall not
actually have been delivered or that the stock transfer books of
the Company shall then be closed. The Warrant shall be
exercisable, at the election of the Warrantholder, either in full
or from time to time in part, and, in the event that the
certificate evidencing the Warrant is exercised with respect to
less than all of the Rights Agent Shares specified therein at any
time prior to the Warrant Expiration Date, a new certificate
evidencing the remaining Rights Agent Shares shall be issued by
the Company.
3. MUTILATED OR MISSING WARRANT
In case the certificate or certificates evidencing the
Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of
the mutilated certificate or certificates, or in lieu of and in
substitution for the certificate or certificates lost, stolen or
destroyed, a new Warrant certificate or certificates of like
tenor and date and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory the Company of
such loss, theft or destruction of such Warrant, and of
reasonable bond of indemnity, if requested, also satisfactory in
form and amount and at the applicant's cost. Applicants for such
other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
4. RESERVATION OF RIGHTS AGENT SHARES
There has been reserved, and the Company shall at all times
keep reserved so long as the Warrant remains outstanding, out of
its authorized Common Stock, such number of shares of its Common
Stock as shall be subject to purchase under the Warrant. Every
transfer agent for the Common Stock issuable upon the exercise of
the Warrant shall be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be
requisite for such purpose. The Company shall keep a copy of
this Agreement on file with every transfer agent for the shares
of Common Stock issuable upon the exercise of the Warrant. The
Company shall supply such transfer agent with duly executed stock
and other certificates for such purpose and shall provide or
otherwise make available any cash which may be payable as
provided in Section 9 hereof.
5. LEGEND ON CERTIFICATE FOR RIGHTS AGENT SHARES
Each certificate for Rights Agent Shares initially issued
upon exercise of the Warrant, unless at the time of exercise such
Rights Agent Shares are registered with the Securities Exchange
Commission (the "Commission"), under the Securities Act of 1933,
as amended (the "Act"), shall bear the following legend:
NO SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS
CERTIFICATE OR THE SECURITIES PURCHASABLE HEREUNDER
SHALL BE MADE EXCEPT PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED. TRANSFER OF THIS
CERTIFICATE IS ALSO RESTRICTED BY THAT CERTAIN WARRANT
PURCHASE AGREEMENT DATED AS OF __________________,
1995, A COPY OF WHICH IS AVAILABLE FROM THE ISSUER.
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend (except a
new certificate issued upon completion of a public underwriting
pursuant to a registration statement under the Act of the
securities represented thereby) shall also bear the above legend
unless, in the opinion of such counsel as shall be reasonably
approved by the Company, the securities represented thereby need
no longer be subject to such restrictions.
6. PAYMENT OF TAXES
The Company shall pay all documentary stamp taxes, if any,
attributable to the initial issuance of the Warrant and
underlying shares of Common Stock evidenced thereby; provided,
however, that the Company shall not be required to pay any tax or
taxes which may be payable with respect to any secondary transfer
of the Warrant or such securities.
7. WARRANT PRICE
The price per share at which the Rights Agent Shares shall
be purchasable on the exercise of the Warrant (the "Warrant
Price") shall be four and thirty-four one-hundredths dollars
($4.34) per share, subject to adjustment pursuant to Section 8
hereof.
8. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF RIGHTS AGENT
SHARES
The number and kind of securities purchasable upon the
exercise of the Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain
events, as follows:
(a) In case the Company shall (i) pay a dividend in Common
Stock or make a underwriting in Common Stock, (ii) subdivide its
outstanding Common Stock, (iii) combine its outstanding Common
Stock into a smaller number of shares of Common Stock, or (iv)
issue by reclassification of its Common Stock other securities of
the Company, the number and kind of securities purchasable upon
the exercise of the Warrant immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive
the number and kind of securities of the Company which it would
have owned or would have been entitled to receive after the
happening of any of the events described above had the Warrant
been exercised immediately prior to the happening of such event
or any record date with respect thereto. Any adjustment made
pursuant to this Subsection (a) shall become effective on the
effective date of such event retroactive to the record date, if
any, for such event.
(b) No adjustment in the number of Rights Agent Shares
purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one percent
(1%) in the number of Rights Agent Shares (calculated to the
nearest full share) then purchasable upon the exercise of the
Warrant or, if the Warrant is not then exercisable, the number of
Rights Agent Shares purchasable upon the exercise of the Warrant
on the first date thereafter that the Warrant becomes
exercisable; provided, however, that any adjustment which by
reason of this Subsection (b) is not required to be made
immediately shall be carried forward and taken into account in
any subsequent adjustment.
(c) Whenever the number of Rights Agent Shares purchasable
upon the exercise of the Warrant is adjusted as herein provided,
the Warrant Price payable upon the exercise of the Warrant shall
be adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, of which the numerator shall be
the number of Rights Agent Shares purchasable upon the exercise
of the Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of Rights Agent Shares so
purchasable immediately thereafter.
(d) For the purpose of this Section 8, the term "Common
Stock" shall mean: (i) the class of stock designated as the
Common Stock of the Company at the date of this Agreement; or
(ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or from
no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to this Section 8, the
Warrantholder shall become entitled to purchase any securities of
the Company other than Rights Agent Shares, thereafter the number
of such other securities so purchasable upon the exercise of the
Warrant and the Warrant Price of such securities shall be subject
to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect
to the Rights Agent Shares contained in this Section 8.
(e) Whenever the number of Rights Agent Shares purchasable
upon the exercise of the Warrant or the Warrant Price is adjusted
as herein provided, the Company shall cause to be promptly mailed
to the Warrantholder by first class mail, postage prepaid, notice
of such adjustment and a certificate of a firm of independent
certified public accountants selected by the board of directors
of the Company (who may be the regular accountants employed by
the Company) setting forth the number of Rights Agent Shares
purchasable upon the exercise of the Warrant or the Warrant Price
after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was
made.
(f) In case of any reclassification, capital reorganization
or other change in the outstanding shares of Common Stock of the
Company (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result
of an issuance of Common Stock by way of dividend or other
distribution, or of a subdivision or combination of the Common
Stock), or in case of any consolidation or merger of the Company
with or into another corporation or entity (other than a merger
with a subsidiary in which merger the Company is the continuing
corporation and which does not result in any reclassification,
capital reorganization or other change in the outstanding shares
of Common Stock of the Company) as a result of which the holders
of the Company's Common Stock become holders of other shares or
securities of the Company or of another corporation or entity, or
such holders receive cash or other assets, or in case of any sale
or conveyance to another corporation of the property, assets or
business of the Company as an entirety or substantially as an
entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute with the
Warrantholder an agreement that the Warrantholder shall have the
right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon the exercise of
the Warrant the kind and number of securities and property which
it would have owned or have been entitled to have received after
the happening of such reclassification, capital reorganization,
change in the outstanding shares of Common Stock of the Company,
consolidation, merger, sale or conveyance had the Warrant been
exercised immediately prior to such action.
The agreement referred to in this Subsection (f) shall
provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this
Section 8. The provisions of this Subsection (f) shall similarly
apply to successive reclassifications, capital reorganizations,
changes in the outstanding shares of Common Stock of the Company,
consolidations, mergers, sales or conveyances.
(g) Except as provided in this Section 8, no adjustment
with respect to any dividends shall be made during the term of
the Warrant or upon the exercise of the Warrant.
(h) No adjustments shall be made in connection with the
public sale and issuance of Common Stock, or the options or
warrants issued in connection therewith, or for any warrants or
options outstanding on the date of this Agreement, including,
without limitation, the WHR Stock Purchase Commitment.
(i) Irrespective of any adjustments in the Warrant Price or
the number or kind of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price or
number or kind of securities stated in the Warrant initially
issuable pursuant to this Agreement.
9. FRACTIONAL INTEREST
The Company shall not be required to issue fractional Rights
Agent Shares upon the exercise of the Warrant. If any fraction
of a Rights Agent Share would, except for the provisions of this
Section 9, be issuable upon the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in
cash equal to the then current market price of the Company's
Common Stock multiplied by such fraction. For purposes of this
Agreement, the term "current market price" shall mean: (a) if the
Common Stock is traded in the over-the-counter market and not on
the NASDAQ National Market System (the "NASDAQ/NMS") or on any
national securities exchange, the average between the per share
closing bid and asked prices of the Common Stock for the 30
consecutive trading days immediately preceding the date in
question, as reported by the NASDAQ/NMS or an equivalent
generally accepted reporting service; or (b) if the Common Stock
is traded on the NASDAQ/NMS or on a national securities exchange,
the average for the 30 consecutive trading days immediately
preceding the date in question of the daily per share closing
prices of the Common Stock on the NASDAQ/NMS or on the principal
national stock exchange on which it is listed, as the case may
be. The closing price referred to in clause (b) above shall be
the last reported sales price or, in case no such reported sale
takes place on such day, the average of the reported closing bid
and asked prices on the NASDAQ/NMS or on the principal national
securities exchange on which the Common Stock is then listed, as
the case may be.
10. NO RIGHTS AS SHAREHOLDER; NOTICES OF WARRANTHOLDER
Nothing contained in this Agreement or in the Warrant shall
be construed as conferring upon the Warrantholder or its
transferee any rights as a
shareholder of the Company, either at law or in equity, including
the right to vote, receive dividends, consent or receive notices
as a shareholder with respect to any meeting of shareholders for
the election of directors of the Company or for any other matter.
If, however, at any time prior to the Warrant Expiration Date and
prior to the exercise of the Warrant, any action which requires
an adjustment pursuant to Section 8 occurs, or a dissolution,
liquidation or winding up of the Company (other than in
connection with a consolidation, merger or sale of its property,
assets and business as an entirety) is proposed, then the Company
shall give notice in writing of such occurrence or proposal to
the Warrantholder, as provided in Section 13 hereof, at least 30
days prior to the date fixed as the record date or the date of
closing the transfer books for the determination of the
shareholders entitled to any relevant dividend, underwriting,
subscription rights or other rights or for the determination of
the shareholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record
date or such date of closing the transfer books, as the case may
be.
11. REGISTRATION RIGHTS
(a) Demand Registration. When so requested in writing at
any time during the Exercise Period by the holder or holders then
of record of more than 50% of the outstanding Warrant(s) and any
Rights Agent Shares issued upon the exercise of the Warrant(s)
(the "50% Holder"), the Company shall, as promptly as practicable
after receipt of such request, but in no event later than 90 days
therefrom, prepare and file with the Commission a registration
statement pursuant to Rule 415 of the Act on such form as may
then be available to the Company, for the registration under the
Act of a public offering by such 50% Holder of all or any portion
of the Rights Agent Shares. The preparation and filing of the first
registration statement requested pursuant to this Subsection (a)
shall be without any expense to such 50% Holder (other
than fees and expenses of counsel to such 50% Holder
and any underwriting discounts or commissions) for that
one time only. The Company shall be required to file only one
such registration statement hereunder, but shall use its best
efforts to keep such registration statement effective for a
period of not less than twenty-four (24) months.
Within ten (10) days after receiving any such request, the
Company shall give notice to any other holders of Warrants or
Rights Agent Shares advising them that the Company is filing such
registration statement, and offering to include therein all or
any portion of the Rights Agent Shares of such holders. The Company shall
not be obligated to any such other holder unless such other holder shall
accept such offer by notice in writing to the Company within
thirty (30) days after the receipt thereof. Notwithstanding any
provision to the contrary, the Company's obligation to file a
registration statement shall not be satisfied unless and until
the registration statement is declared effective by the
Commission and it is effective for a period of at least twenty-
four (24) months following such effective date. The registration
rights of the holder shall not be extinguished if the
registration statement is withdrawn for any reason.
The Company may include other of its securities in such
registration statement, unless the underwriter of such offering
reasonably advises the Company that the inclusion of such other
securities will materially and adversely affect the underwriting
of, or the market for, the Rights Agent Shares.
(b) Piggyback Registration. In addition to the rights of
the Warrantholder pursuant to Subsection (a) above, if the
Company shall at any time during the period commencing with the
Exercise Date and ending with the Warrant Expiration Date prepare
and file a registration statement under the Act with respect to
the public offering of any of its securities (other than on Forms
S-8, S-14 or S-15 or other similar form inappropriate to the
registration of the Rights Agents Shares), and pursuant to the then
applicable rules and regulations under the Act a secondary
offering of the Rights Agent Shares by the Warrantholder
may be combined with such public offering in a single
registration, the Company shall in every such instance
give reasonable written notice thereof to the Warrantholder
thirty (30) or more days prior to the filing of such registration
statement, and shall upon the written request of the
Warrantholder made within fifteen (15) days of the mailing of
said written notice by the Company, include in such registration
statement such number of Rights Agent Shares as the Warrantholder
may request. Any such registration statement shall remain
effective for a period of not less than ninety (90) days
following its effective date; provided, however, that if the
Warrantholder defers the sale of its Rights Agent Shares pursuant
to Subsection (c) below, then the Company shall keep such
registration statement current for an additional period of ninety
(90) days; provided further, that the Company shall have no duty
to file any amendment to any such registration statement at any
time that the Company reasonably believes that disclosure of the
information required to be included in such amendment would be
premature or contrary to the best interests of the Company and
its security holders. The inclusion of such Rights Agent Shares
in any registration statement shall be without any expense to the
Warrantholder, other than fees and expenses of counsel to the
Warrantholder and any underwriting discounts or commissions.
Neither the delivery of such notice by the Company nor such
request by the Warrantholder shall in any way obligate the
Company to file such registration statement, and notwithstanding
the filing of such registration statement, the Company may, at
any time prior to the effective date thereof, determine not to
offer the securities to which such registration statement
relates, without liability to the Warrantholder. In the event
the Company fails to receive written notice from the
Warrantholder within fifteen (15) days of the mailing of said
written notice by the Company, then the Company shall treat such
failure as having the same force and effect as if the Warrant
holder had advised the Company that the Warrantholder does not
intend to include any of its Rights Agent Shares in such
registration statement. If the Warrantholder shall advise or be
deemed to have advised the Company of its intention not to
include any of its Rights Agent Shares in such registration
statement, then the Warrantholder shall, for a period of ninety
(90) days thereafter, refrain from demanding its rights pursuant
to Subsection (a).
(c) Notwithstanding the provisions of Subsection (b) above,
if the offering subject to any registration statement referred to
in Subsection (b) is made by the Company and is underwritten, and
if the underwriter makes a written determination prior to the
effectiveness of such registration statement and so requests and
such request is based upon the opinion of the underwriter that
the sale of the Rights Agent Shares to be registered on such
registration statement by the Warrantholder pursuant to
Subsection (b) will materially and adversely interfere with such
planned offering, then: (i) the Warrantholder shall agree not to
sell any Rights Agent Shares, whether pursuant to such
registration statement or otherwise, for a period not to exceed
ninety (90) days following the effective date of such
registration statement, and the Company shall, at the expiration
of such ninety (90) day period, at its expense, maintain the
currency of the registration statement and take such other steps
as may be required to permit the Warrantholder to sell Rights
Agent Shares pursuant to such registration statement for an
additional period of ninety (90) days following the expiration of
such ninety (90) days period; provided, however, that the Company
shall have no duty to file any amendment to any such registration
statement at any time that: (A) the Company reasonably believes that
disclosure of the information required to be included in such
amendment would be premature or contrary to the best interests of
the Company and its security holders; or (B) the underwriter makes a
written determination prior to the filing of any such amendment requesting
that the Company not file such amendment and such request is based upon the
opinion of the underwriter that the sale of the Rights Agent Shares to be
registered on such amendment by the Warrantholder will materially and
adversely interfere with the Company's planned offering; and (ii) the
Warrantholder shall agree that the Rights Agent Shares shall be sold
through such underwriter in the same manner as the other securities that
are the subject of the registration, and shall pay to such
underwriter a commission in respect of such Rights Agent Shares
at the same rate as the commission to be paid to such underwriter
in respect of the other securities that are the subject of such
registration.
If securities are proposed to be offered for sale pursuant
to such registration statement by other security holders of the
Company, and the total number of securities to be offered by the
Warrantholder and such other selling security holders is required
to be reduced pursuant to a request from the underwriter (which
request shall be made only for the reasons and in the manner set
forth above in this Subsection (c)), then the number of Rights
Agent Shares to be offered by the Warrantholder pursuant to such
registration statement shall equal the number that bears the same
ratio to the maximum number of securities that the underwriter
believes may be included for all the selling security holders
(including the Warrantholder) as the original number of Rights
Agent Shares proposed to be sold by the Warrantholder bears to
the total original number of securities proposed to be offered by
the Warrantholder and the other selling security holders.
(d) The Company shall use its best efforts to cause any
registration statement covering all or any portion of the Rights
Agent Shares to become effective as promptly as possible and, if
any stop order shall be issued in connection therewith, to use
its best efforts to obtain the removal of such order. The
Company shall furnish the selling Warrantholder with copies of
preliminary prospectuses (together with any supplements thereto)
and other documents necessary or incidental to the offering being
made by the Warrantholder in such quantities as the Warrantholder
may reasonably request. The Warrantholder agrees to cooperate in
all respects with the Company in effectuating the foregoing. The
obligations of the Company to the Warrantholder hereunder are
expressly conditioned on the timely furnishing in writing by the
Warrantholder to the Company of such information concerning the
Warrantholder and the terms of the Warrantholder's proposed
offering as the Company may reasonably request.
(e) In connection with any registration of all or any
portion of the Rights Agent Shares (and the Warrant, if
applicable), the Company shall, without any expense to the
Warrantholder (other than fees and expenses of counsel to the
Warrantholder and any underwriting discounts or commissions),
prepare and file such documents as may be necessary to register
or qualify such Rights Agent Shares under the securities or blue
sky laws of such states as the Warrantholder shall reasonably
request, and use its best efforts to do any and all other acts
and things, consistent with its existing business practices, that
may reasonably be necessary or advisable to enable the
Warrantholder to consummate a public sale in such states of such
Rights Agent Shares; provided, however, that in connection with
any registration statement filed pursuant to Subsection (b)
above, the Company shall be required to make the Rights Agent
Shares eligible for public offering and sale only in such
additional states (including the District of Columbia) as any
other securities of the Company included in such registration
statement are eligible for public offering and sale. In no event
shall the Company be obligated to qualify to do business in any
state where it is not so qualified at the time of filing such
documents or to take any action which would subject it to
unlimited service of process in any state where it is not so
subject at such time. The Company shall keep any such filing
current for the time period it is obliged to keep any
registration statement current pursuant to Subsections (a), (b)
or (c).
(f) Nothing herein shall be construed to require the
Warrantholder to exercise the Warrant with respect to any Rights
Agent Shares which the Warrantholder is entitled to require the
Company to register pursuant to any provision of this Section 11
prior to the effective date of the registration statement
effecting such registration, and the Warrantholder, at its
election, to the extent permissible by law, may exercise such
Warrant against payment of the proceeds of the sale of the
registered Rights Agent Shares in the offering covered by such
registration statement.
(g) The provisions of this Section 11 and of Section 12
below shall apply to the extent provided herein if the Company
chooses to file an offering statement under Regulation A
promulgated under the Act.
(h) The Company agrees that until the Rights Agent Shares
have been sold under a registration statement or pursuant to Rule
144 under the Act, it shall keep current in filing all materials
required to be filed with the Commission in order to permit
holders of the Rights Agent Shares, if they otherwise comply with
the requirements of Rule 144, to sell Rights Agent Shares under
such Rule.
12. INDEMNITY AND CONTRIBUTION PROVISIONS
The Company, the Rights Agent, and each Participating Agent
hereby agree to the following indemnity provisions:
B. In the event of the filing of any registration
statement with respect to the Warrant or the Rights Agent Shares
pursuant to Section 11 above, the Company agrees to indemnify and
hold harmless the Warrantholder(s) and any person who controls
any such person within the meaning of the Act, and each of their
directors, officers, employees, and agents, against losses,
claims, damages, or liabilities, joint and several, to which any
such person, or any director, officer, employee, or agent, may
become subject under the Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. Subject to Subsection C of
this Section 12, the Company agrees to reimburse any legal or
other expenses reasonably incurred by such Rights Agent, each
member of the selling group, and such controlling person, and
each of their directors, officers, employees, and agents, in
connection with the investigation or the defense of any such
loss, claim, damage, liability, or action; provided, however,
that the Company will not be liable under this Section 12,
Subsection A, if such loss, claim, or liability arises out of or
is based on an untrue statement or alleged untrue statement or
omission or alleged omission made in the Prospectus in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of the Warrantholder(s) specifically for
use in preparation thereof. A person who controls the
Warrantholder(s) or any of their directors, officers, employees,
or agents, will be covered by the indemnity agreement in this
Section 12, Subsection A, for all such losses, claims, damages,
liabilities, and expenses irrespective of whether they are based
on Section 15 of the Act. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
C.
C. Each Warrantholder agrees, jointly and severally, to
indemnify and hold harmless the Company, each of its directors,
each of its officers who signs the Registration Statement, and
any person who controls the Company within the meaning of the
Act, against any losses, claims, damages, or liabilities to which
the Company or any such director, officer, or controlling person
may become subject, under the Act or otherwise, if such losses,
claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based on any untrue or alleged untrue
statement of material fact contained in the Prospectus or arise
out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading, in each case if, but only if, such untrue
statement or alleged untrue statement or omission or alleged
omission was made in the Prospectus in reliance upon and in
conformity with written information concerning the
Warrantholder(s) furnished to the Company by or on behalf of the
Warrantholder(s) specifically for use in the preparation thereof.
Subject to Subsection C of this Section 12, the Rights Agent and
each Participating Agent agrees, jointly and severally, to
reimburse any legal or other expense reasonably incurred by the
Company or such director, officer, or controlling person in
connection with the investigation or the defense of any such
loss, claim, damage, liability, or action. This indemnity
agreement will be in addition to any liability which such person
may otherwise have.
D. Promptly after receipt by an indemnified party under
this Article IV of notice of the commencement of any action, the
indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 12, notify
the indemnifying party in writing of the commencement thereof;
but the omission to notify the indemnifying party will not
relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 12. In case
any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof with counsel who shall be reasonably satisfactory to such
indemnified party; and after notice from the indemnifying party
to such indemnified party of its election to so assume the
defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 12 for any legal or
other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation. In any such action, any indemnified party
shall have the right to retain its own counsel, but the fees and
expense 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 to the retention of
such counsel; or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing legal defenses or interests between them.
The indemnifying party shall not be liable for any settlement of
any proceeding or claim effected without its written consent; but
if settled with such consent or if there is a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by
reason of such settlement or judgment.
E. If the indemnification provided for in Subsection A or
B of this Section 12 is for any reason, other than as specified
in such sections, held by a court to be unavailable and the
Company or the Warrantholder(s) has been required to pay damages
as a result of a determination by a court that the Prospectus
contains an untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, then the Company shall contribute to the damages paid
by the Warrantholder(s) and such persons shall contribute to the
damages paid by the Company (but in each case only to the extent
that such damages arise out of or are based upon such untrue
statement or omissions): (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the
one hand and the Warrantholder(s) on the other from the offering
of the Securities; or (ii) if the allocations provided by clause
(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect the relative fault of the Company
and the Warrantholder(s) in connection with statements or
omissions which resulted in such damages, as well as any other
relevant equitable considerations. The relative benefits
received by the Company and the Warrantholder(s) shall be deemed
to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Company
bears to the total commissions received by the Warrantholder(s)
as set forth in the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company or
Warrantholder(s) and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such
untrue statement or omission. For purposes of this Section 12,
Subsection D, the term "damages" shall include any legal or other
expenses reasonably incurred by the Company or Warrantholder(s)
in connection with investigation or defending any action or claim
which is the subject of the contribution provisions of this
Article IV, Section D. Notwithstanding the provisions of this
Section 12, Subsection D, the Rights Agent shall not be required
to contribute any amount in excess of the amount by which the
total Rights Agent compensation received by it under the Rights
Agent Agreement exceeds the amount of any damages which the
Rights Agent has otherwise been required to pay by reason of any
such untrue statements or omissions. No person adjudged guilty
of fraudulent misrepresentation within the meaning of Section
11(f) of the Act shall be entitled to contribution from any
person who was not adjudged guilty of such fraudulent
misrepresentation. Under this Section 12, Subsection D, the
obligations of the Warrantholder(s) to contribute are several in
proportion to their respective obligations and not joint.
F. The agreements contained in this Section 12 and the
representations and warranties of the Company and the
Warrantholder in this Agreement shall remain operative and in
full force and effect regardless of: (i) any investigation made
by or on behalf of: (a) the Warrantholder or any person
controlling the Warrantholder; or (b) the Company, any of its
directors or officers, or any person controlling Company or any
of its directors or officers; (ii) acceptance of any Rights Agent
Shares and payment therefor hereunder; and (iii) any termination
of this Agreement.
13. NOTICES
G. Notices. Except as otherwise expressly provided
herein, notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be delivered personally,
by first class, certified, or registered mail, by facsimile
transmission, or by Federal Express or any other reputable
overnight courier service addressed as set forth below (or in
each case to such other address as the person to be notified may
have requested in writing:
1. If to the Company:
SDNB Financial Corp.
1420 Kettner Boulevard
San Diego, California 92101
Attention: Howard W. Brotman,
Senior Vice President and Chief Financial Officer
With a copy to:
Theodore G. Johnsen, Esq.
ARNOLD & PORTER
777 South Figueroa Street, 44th Floor
Los Angeles, California 90017
2. If to the Rights Agent:
Torrey Pines Securities, Inc.
140 Marine View Drive, Suite 110
Solana Beach, California 92075
Attention: Jack C. Smith
President
With a copy to:
Bruce J. Rushall, Esq.
RUSHALL & McGEEVER
2111 Palomar Airport Road, Suite 200
Carlsbad, California 92009
14. PARTIES IN INTEREST
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company, the Warrantholder,
and, to the extent expressed, any holder of Rights Agent Shares,
any person controlling the Company or the Warrantholder or any
holder of Rights Agent Shares, directors of the Company, nominees
for directors (if any) named in the final prospectus, or officers
of the Company who have signed the registration statement, any
legal or equitable right, remedy or claim under this Agreement,
and this Agreement shall be for the sole and exclusive benefit of
the aforementioned parties.
15. MISCELLANEOUS PROVISIONS
(a) Successors. All the covenants and provisions of this
Agreement by or for the benefit of the parties listed in Section
14 above shall bind and inure to the benefit of their respective
executors, administrators, successors and assigns hereunder;
provided, however, that the rights of the Warrantholder shall be
assignable only to those persons and entities specified in
Section 1, Subsection (d), hereof, in which event such assignee
shall be bound by each of the terms and conditions of this
Agreement.
(b) Merger or Consolidation of the Company. The Company
shall not merge or consolidate with or into any other corporation
or sell all or substantially all of its property to another
corporation, unless it complies with the provisions of Section 8,
Subsection (f), hereof.
(c) Survival of Representations and Warranties. All
statements contained in any schedule, exhibit, certificate or
other instrument delivered by or on behalf of the parties hereto,
or in connection with the transactions contemplated by this
Agreement, shall be deemed to be representations and warranties
hereunder. Notwithstanding any investigations made by or on
behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement
or pursuant hereto shall survive.
(d) Choice of Law. This Agreement and the rights of the
parties hereunder shall be governed by and construed in
accordance with the laws of the State of California, including
all matters of construction, validity, performance, and
enforcement, and without giving effect to the principles of
conflict of laws.
(e) Jurisdiction. The parties submit to the jurisdiction
of the Courts of the State of California or a Federal Court
empaneled in the State of California for the resolution of all
legal disputes arising under the terms of this Agreement.
(f) Entire Agreement. Except as provided herein, this
Agreement, including exhibits, contains the entire agreement of
the parties, and supersedes all existing negotiations,
representations or agreements and all other oral, written, or
other communications between them concerning the subject matter
of this Agreement.
(g) Severability. If any provision of this Agreement is
unenforceable, invalid, or violates applicable law, such
provision shall be deemed stricken and shall not affect the
enforceability of any other provisions of this Agreement.
(h) Captions. The captions in this Agreement are inserted
only as a matter of convenience and for reference and shall not
be deemed to define, limit, enlarge, or describe the scope of
this Agreement or the relationship of the parties, and shall not
affect this Agreement or the construction of any provisions
herein.
(i) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first above written.
SDNB FINANCIAL CORP. TORREY PINES SECURITIES, INC.
a California corporation a California corporation
By: By:
Name and Title Name and Title
EXHIBIT A
SDNB FINANCIAL CORP.
RIGHTS AGENT WARRANT
AND
ELECTION TO PURCHASE
SDNB FINANCIAL CORP.
1420 Kettner Boulevard
San Diego, California 92101
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the attached Rights Agent Warrant (the
"Warrant") and to purchase thereunder __________ Rights Agent
Shares provided for therein and hereby tenders
$_______________________ in payment of the actual exercise price
thereof, and requests that certificates evidencing the Rights
Agent Shares be issued in the name of
(Please Print Name, Address and SSN or EIN of Assignee)
and, if said number of Rights Agent Shares shall not be the total
possible number of Rights Agent Shares purchasable hereunder,
that a new Warrant certificate for the balance of the Rights
Agent Shares purchasable under the attached Warrant certificate
be registered in the name of the undersigned Warrantholder or his
or assignee as indicated below and delivered at the address
stated below:
Dated: , 19
Name of Warrantholder or Assignee:
(Please Print)
Address:
Signature:
Signature Guaranteed:
Note: The above
signature must correspond
with the name as written
upon the face of the
attached Warrant
certificate in every
particular respect,
without alteration or
enlargement any change
whatever, unless this
Warrant has been duly
assigned.
SDNB FINANCIAL CORP.
RIGHTS AGENT WARRANT NO. 001
NO SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS WARRANT OR
THE SECURITIES PURCHASABLE HEREUNDER SHALL BE MADE EXCEPT
PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED. TRANSFER OF THIS
WARRANT IS ALSO RESTRICTED BY THAT CERTAIN RIGHTS AGENT WARRANT
PURCHASE AGREEMENT DATED AS OF AUGUST ___, 1995, A COPY OF WHICH
IS AVAILABLE FROM THE ISSUER.
WARRANT TO PURCHASE SHARES OF NO PAR VALUE COMMON STOCK
OF SDNB FINANCIAL CORP.
Exercisable upon issuance
Void after _______________, 1997
THIS CERTIFIES that, for value received, the undersigned holder (the
"Warrantholder"), or registered assigns, is entitled, subject to the terms
and conditions set forth in this warrant (the "Warrant"), to purchase from
SDNB Financial Corp., a California corporation (the "Company"), the above-
stated number of shares of the Company's no par value common stock (the
"Rights Agent Shares"). The Warrant may be exercised at any time during
the twenty-four (24) month period commencing on ________________, 1995, and
continuing up to 5:00 p.m., California time, on ___________________, 1997,
at a price of four and thirty-four one-hundredths dollars ($4.34) per
share, subject to adjustment from time to time as set forth in that certain
Rights Agent Warrant Purchase Agreement between Torrey Pines Securities,
Inc., a California corporation, and the Company, dated effective as of
August ___, 1995, and subject to all the terms thereof, including the
limitations on transferability set forth therein.
THIS WARRANT may be exercised by the holder thereof, in whole or in
part (but not as to a fractional Rights Agent Share), by the presentation
and surrender of this Warrant with the form of Election to Purchase duly
executed, with signature(s) guaranteed, at the principal office of the
Company or its stock transfer agent (or at such other address as the
Company may designate by notice to the holder hereof at the address of such
holder appearing on the books of the Company), and upon payment to the
Company of the purchase price in cash or by certified check or bank
cashier's check. The Rights Agent Shares so purchased shall be deemed to
be issued to the holder hereof as the record owner of such Rights Agent
Shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such Rights Agent Shares. The
Rights Agent Shares so purchased shall be registered to the holder (and, if
requested, certificates issued) promptly after this Warrant shall have been
so exercised and unless this Warrant has expired or has been exercised, in
full, a new Warrant identical in form, but representing the number of
Rights Agent Shares with respect to which this Warrant shall not have been
exercised, shall also be issued to the holder hereof.
NOTHING CONTAINED herein shall be construed to confer upon the holder
of this Warrant, as such, any of the rights of a shareholder of the
Company.
"WARRANTHOLDER"
TORREY PINES SECURITIES, INC., SDNB FINANCIAL CORP.
a California corporation a California corporation
By: By:
140 Marine View Drive, Suite 110 Name of President or Vice President
Solana Beach, California 92075
Name of Secretary or Assistant
Secretary
EXHIBIT B
SDNB FINANCIAL CORP.
RIGHTS AGENT WARRANT
ASSIGNMENT
(To be signed only upon assignment of the Rights Agent Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto:
(Please Print Name, Address and SSN or EIN of Assignee)
the attached Warrant No. , to purchase shares of
the Common
(number)
Stock, no par value, of SDNB Financial Corp. (the "Company"),
hereby irrevocably constituting and appointing the Company and/or
its transfer agent as its attorney to transfer said Warrant on
the books of the Company, with full power of substitution.
By its signature below, the undersigned hereby represents
and warrants that to the best of its knowledge, after reasonable
investigation, this assignment is a permitted transfer under
Section 1(d) of the Rights Agent Warrant Purchase Agreement.
Dated: , 19
Signature of Registered Holder
Signature Guaranteed:
Note: The
above signature must correspond
with the name as written upon the
face of the attached Warrant
certificate in every particular
respect, without alteration or
enlargement any change whatever,
unless this Warrant has been duly
assigned.
EXHIBIT C
FORM OF
PARTICIPATING AGENT AGREEMENT
PARTICIPATING AGENT AGREEMENT
SDNB FINANCIAL CORP.
RIGHTS OFFERING
____________, 1995
TORREY PINES SECURITIES, INC.
140 Marine View Drive, Suite 110
Solana Beach, California 92075
Dear Sirs:
We understand that, pursuant to the terms of an agreement,
executed as of August ___, 1995 (the "Rights Agent Agreement"),
between you and SDNB Financial Corp., a California corporation
(the "Issuer"), you serve as Rights Agent for the Issuer in
connection with the Issuer's offering (the "Offering") of up to
769,582 shares of its Common Stock, no par value (the "Shares"),
to holders of record of its Common Stock on May 5, 1995, pursuant
to transferable subscription rights (the "Basic Subscription
Rights" and, together with the "Oversubscription Rights,"
hereinafter referred to as the "Subscription Rights") (the
Subscription Rights and the Shares are collectively referred to
herein as the "Securities"). This Participating Agent Agreement
(the "Participating Agent Agreement" or "this Agreement") shall
evidence our agreement to act as a Participating Agent in the
Offering and our participation in the Offering shall be subject
at all time to the provisions of this Agreement. This Agreement,
as it may be amended or supplemented, shall become effective with
respect to our participation in the Offering upon the later of
the Effective Date hereof (as defined on the execution page of
this Agreement) or the Effective Date of the Rights Agent
Agreement. Our acceptance of this Agreement will constitute our
confirmation that, except as otherwise indicated in a written
communication previously furnished to you, each statement
included in the Participating Agent Questionnaire (in the form
attached hereto as Exhibit "A" and by this reference incorporated
herein or in the form otherwise furnished to us) is correct. All
references in this Agreement to "you" or to the "Rights Agent"
shall mean Torrey Pines Securities, Inc., a California
corporation. All other capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the
Rights Agent Agreement. This Agreement may be supplemented or
amended by you by written notice to us and any such supplement or
amendment to this Agreement will be effective with respect to the
Offering after this Agreement is so amended or supplemented.
1. Rights Agent Agreement; Authority of Rights
Agent. We authorize, consent to and ratify your execution and
delivery of the Rights Agent Agreement, of any amendment or
supplement thereto and of any associated agreement (collectively
referred to hereinafter as, the "Rights Agent Agreement") on our
behalf to the Issuer with respect to the Offering or the
Securities in such form as you determine. We expressly adopt and
agree to be bound by all terms of the Rights Agent Agreement as
executed, including, without limitation, the representations,
warranties, and agreements set forth in Section C.2 of Article I
thereof.
You are authorized to take such action as you deem necessary
or advisable to carry out this Agreement, the Rights Agent
Agreement and the sale of the Securities, and to agree to any
waiver or modification of any provision of the Rights Agent
Agreement. It is expressly understood and agreed that Torrey
Pines Securities, Inc. may act on behalf of all Participating
Agents.
2. Registration Statement and Prospectus. You will
furnish to us, upon our request, to the extent made available to
you by the Issuer, copies of the registration statement relating
to the Offering or the Securities which was filed with the
Securities and Exchange Commission (the "Commission") pursuant to
the Securities Act of 1933, as amended (the "1933 Act"), and Post-
Effective Amendment No. 4 thereto (excluding exhibits but
including any documents incorporated by reference therein). Such
registration statement(s), as amended, and the form of
prospectus(es) relating to the Offering or to the Securities
constituting a part thereof, including all documents incorporated
therein by reference, as from time to time amended or
supplemented by the filing of documents pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the
1933 Act or otherwise, are referred to herein as the
"Registration Statement" and the "Prospectus."
3. Public Offering. The sale of the Securities to the
public shall commence as soon as you deem advisable. When
notified by you that the Securities are publicly offered for
sale, we will offer and sell the Securities in conformity with
the terms of the Offering set forth in the Prospectus, in the
Rights Agent Agreement and in conformity with the following:
(a) We will instruct each Holder on behalf of whom we
solicit the exercise of, or on behalf of whom we exercise,
Subscription Rights that payment for the aggregate Subscription
Price attributable to any Subscription Rights so solicited or
exercised must be made by bank certified check or cashier's
check, payable to the order of the Subscription Agent.
(b) We will transmit to the Subscription Agent, as defined
in the Prospectus, any funds received from a Holder by 12:00
p.m., New York time, on the business day following the date of
our receipt of such funds.
(c) During the duration of the Offering, we will promptly
notify the Rights Agent, as defined in the Prospectus, of any
acquisition by us, or any of our associated or affiliated
persons, of any unregistered securities of the Issuer. Such
notification shall set forth complete details of any such
acquisition, including, but not limited to, the date of
acquisition, the acquisition price, and the amount of
unregistered securities so acquired.
(d) During the duration of the Offering, we will promptly
notify the Rights Agent of any contractual or other relationship,
other than the relationship evidenced hereby, between us and the
Issuer.
(e) We will not sell any Securities to any account over
which we have discretionary authority. We will also comply with
any other restrictions which may be set forth in the Rights Agent
Agreement. The initial public advertisement, if any, with
respect to the Securities shall appear on such date, and shall
include the names of such Participating Agents, as you may
determine.
4. Scope of Participation. Our participation in the
Offering and in the sale of the Securities offered thereby shall
be limited to: (i) prior to the Expiration Date of the Offering,
soliciting the exercise of Subscription Rights at the
Subscription Price of $4.34 per share; and (ii) prior to the
Termination Date of the Offering, soliciting the purchase of any
unsubscribed Shares at a purchase price of $4.34 per share.
5. Open Market Transactions. We represent, warrant and
agree that in connection with the Offering of the Securities we
have complied and will comply with the provisions of Rule 10b-6
under the 1934 Act with regard to trading in the Securities. For
purposes of the foregoing sentence, we agree that, in addition to
the Securities, other securities of the Issuer or securities of
any guarantor of the Securities or any other right or option to
purchase or otherwise acquire any securities of the Issuer shall
be considered securities of the same class and series as the
Securities.
6. Compensation. As compensation for our services in
the Offering, you agree to pay to us compensation attributable to
any Subscription Rights validly exercised through us, exclusive
of Excluded Subscriptions (as defined in the prospectus) or to
any unsubscribed Shares purchased on behalf of customers
solicited by us, which compensation is equal to four percent
(4.0%) of the aggregate Subscription Price, as defined in the
Prospectus, or aggregate purchase price, as applicable,
attributable to any shares of the Issuer's Common Stock placed by
us in the Offering other than Shares exercised pursuant to the
Excluded Shares Subscriptions or shares purchased by WHR pursuant
to the WHR Stock Purchase Commitment (as defined in the
Prospectus).
Subject to the Issuer's acceptance of each subscription, and
subject to and conditioned on your prior receipt of good funds in
payment of your commissions under the Rights Agent Agreement
(collectively, the "Rights Agent Commissions"), commissions will
be payable to us within three (3) business days after the Rights
Agent's receipt of good funds in payment of the Rights Agent
Commissions.
Under no circumstances may you withhold any portion of the
Rights Agent Commissions to be applied toward payment of our
compensation.
7. Legal Qualifications. You shall inform us, upon
request, of the states and other jurisdictions of the United
States in which it is believed that the Securities are qualified
for sale under, or are exempt from the requirements of, their
respective securities laws, but you assume no responsibility with
respect to our right to sell securities in any jurisdiction.
If we propose to offer Securities outside the United States,
its territories or its possessions, we will take, at our own
expense, such action, if any, as may be necessary to comply with
the laws of each foreign jurisdiction in which we propose to
offer Securities.
8. Membership in National Association of Securities
Dealers, Foreign Rights Agents and Banks. We understand that you
are a member in good standing of the NASD. We confirm that we
are actually engaged in the investment banking or securities
business and are either: (i) a member in good standing of the
NASD; (ii) a dealer with its principal place of business located
outside the United States, its territories and its possessions
and not registered under the 1934 Act who hereby agrees to make
no sales within the United States, its territories or its
possessions or to persons who are nationals thereof or residents
therein; or (iii) a bank not eligible for membership in the NASD.
We hereby agree to comply with Section 24 of Article III of the
Rules of Fair Practice of the NASD, and if we are a foreign
dealer or bank and not a member of the NASD we also hereby agree
to comply with the NASD's interpretation with respect to free-
riding and withholding, to comply, as though we were a member of
the NASD, with the provisions of Sections 8 and 36 of Article III
of such Rules of Fair Practice, and to comply with Section 25 of
Article III thereof as that section applies to a non-member
foreign dealer or bank.
9. Distribution of Prospectuses. We are familiar with
Securities Act of 1933 Release No. 4968 and Rule 15c2-8 under the
1934 Act, relating to the distribution of preliminary and final
prospectuses and we confirm that we will comply therewith, to the
extent applicable, in connection with any sale of the Securities.
You shall cause to be made available to us, to the extent made
available to you by the Issuer, such number of copies of the
Prospectus as we may reasonably request for purposes contemplated
by the 1933 Act, the 1934 Act and the rules and regulations
thereunder.
10. Net Capital. The incurrence by us of our obligations
hereunder and under the Rights Agent Agreement in connection with
the Offering of the Securities will not place us in violation of
the net capital requirements of Rule 15c3-1 under the 1934 Act,
nor will such incurrence, if we are a financial institution
subject to regulation by the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency or the Federal
Deposit Insurance Corporation, place us in violation of the
capital requirements of such regulator or any other regulator to
which we are subject.
11. Termination. You may terminate any or all of the
provisions of this Agreement at any time by prior notice to us.
12. Expenses. We agree to bear our own expenses in
connection with our participation in the Offering without right
to reimbursement from you; provided, however, that the Offering
is terminated, we will only be entitled to be reimbursed for our
out-of-pocket expenses.
13. Indemnification. With respect to the Offering, we
will indemnify and hold harmless each other Participating Agent
and each person, if any, who controls a Participating Agent
within the meaning of Section 15 of the 1933 Act, to the extent
that and on the terms upon which we agree to indemnify and hold
harmless the Issuer and other specified persons as set forth in
the Rights Agent Agreement.
14. Claims Against Participating Agents. With respect to
the Offering, if at any time any person other than a
Participating Agent asserts a claim (including any commenced or
threatened investigation or proceeding by any governmental agency
or body) against one or more of the Participating Agents or
against the Rights Agent arising out of an alleged untrue
statement or omission in the Registration Statement (or any
amendment thereto) or any prospectus or any amendment or
supplement thereto, or relating to any transaction contemplated
by this Agreement, the indemnification provisions set forth in
the Rights Agent Agreement shall apply.
15. Legal Responsibility. As the Rights Agent, you shall
have no liability to us, except for your lack of good faith and
for obligations assumed by you in this Agreement and except that
we do not waive any rights that we may have under the 1933 Act or
the 1934 Act or the rules and regulations thereunder. No
obligation not expressly assumed by you in this Agreement shall
be implied herefrom.
Nothing herein contained shall constitute the Participating
Agents to be in association, or partnership, with you, or with
each other, or, except as otherwise provided herein or in the
Rights Agent Agreement, nor render any Participating Agent liable
for the obligations of any other Participating Agent; and the
rights, obligations and liabilities of the Participating Agents
are several in accordance with their respective obligations, and
not joint.
If the Participating Agents are deemed to constitute a
partnership for federal income tax purposes, we elect to be
excluded from the application of Subchapter K, Chapter 1,
Subtitle A, of the Internal Revenue Code of 1986, as amended (the
"Code"), and agree not to take any position inconsistent with
such election, and you, as the Rights Agent, are authorized, in
your discretion, to execute on behalf of the Participating Agents
such evidence of such election as may be required by the Internal
Revenue Service and to act as Tax Matters Partner, within the
meaning of the Code and Regulations promulgated thereunder, for
the Partnership.
16. Name and Address. Unless we have promptly notified
you in writing otherwise, our name as it should appear in the
Prospectus and our address are set forth on the signature pages
hereof.
17. Notices. Any notice from you shall be deemed to have
been duly given if mailed or transmitted to us at our address
appearing below.
18. Governing Law. This Agreement shall be governed by
the laws of the State of California applicable to agreements made
and to be performed in said State.
19. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when taken
together, shall be deemed a fully executed agreement between the
parties.
Please confirm your acceptance of this Agreement and deliver
a copy to us.
Very truly yours,
Name of Firm
By:
Authorized Officer or Partner
Address:
TORREY PINES SECURITIES, INC.
By:
Accepted as of:
_____________________, 1995 (the "Effective Date")
EXHIBIT A
PARTICIPATING AGENT QUESTIONNAIRE
This Participating Agent Questionnaire constitutes a part
of, and is expressly incorporated by reference in, that certain
Participating Agent Agreement relating to the participation by
each Participating Agent in the offering (the "Offering") by SDNB
Financial Corp., a California corporation (the "Issuer"), of up
to 769,582 shares of its Common Stock, no par value (the
"Shares"), to holders of record of its Common Stock on May 5,
1995, pursuant to transferable subscription rights (the "Basic
Subscription Rights" and, together with the "Oversubscription
Rights," hereinafter referred to as the "Subscription Rights")
(the Subscription Rights and the Shares are collectively referred
to herein as the "Securities"). By accepting the Participating
Agent Agreement and except as otherwise indicated in a written
communication previously furnished to Torrey Pines Securities,
Inc., a California corporation (the "Rights Agent"), each
Participating Agent expressly confirms the following information.
Capitalized terms used but not defined herein shall have the same
meanings ascribed to such terms in the Participating Agent
Agreement.
(a) At or prior to the Closing Date of the Rights Agent
Agreement, such Participating Agent shall comply with all
agreements and shall satisfy all conditions on its part required
to be performed pursuant to the Participating Agent Agreement or
the Rights Agent Agreement.
(b) The representations and warranties of such
Participating Agent set forth in the Participating Agent
Agreement and the Rights Agent Agreement are accurate in all
material respects, and such Participating Agent shall maintain
compliance with such representations and warranties at, and as
of, all times from the Effective Date of the Participating Agent
Agreement through the Closing Date of the Rights Agent Agreement.
(c) Neither such Participating Agent nor any of its
directors, officers or partners have any material (as defined in
Regulation C under the 1933 Act) relationship with Issuer, its
parent (if any) or any other seller of the Securities.
(d) Except as described or to be described in the
Participating Agent Agreement, the Rights Agent Agreement or the
Prospectus, such Participating Agent does not know: (i) of any
discounts or commissions to be allowed or paid to dealers,
including all cash, securities, contracts, or other consideration
to be received by any dealer in connection with the sale of the
Securities, or of any other discounts or commissions to be
allowed or paid to the Participating Agents or of any other items
that would be deemed by the NASD to constitute underwriting
compensation for purposes of the NASD's Rules of Fair Practice;
(ii) of any intention to over-allot; or (iii) that the price of
any security may be stabilized or manipulated to facilitate the
offering of the Securities.
(e) No report or memorandum has been prepared for external
use (i.e., outside such Participating Agent's organization) by
such Participating Agent in connection with the proposed offering
of Securities and, in the case of a registered offering, such
Participating Agent has not prepared or had prepared for it any
engineering, management or similar report or memorandum relating
to the broad aspects of the business, operations or production of
the Issuer, its parent (if any) or any guarantor of any of the
Securities within the past twelve months (except for reports
solely composed of recommendations to buy, sell or hold the
securities of the Issuer, its parent (if any) and any guarantor
of the Securities, unless such recommendations have changed
within the past six months). If any such report or memorandum
has been prepared, such Participating Agent shall promptly
furnish to the Rights Agent three copies thereof, together with a
statement as to the actual or proposed use, identifying each
class of persons who have received or will receive the report or
memorandum, the number of copies distributed to each class and
the period of distribution.
(f) Neither such Participating Agent, nor any "group" (as
that term is defined in Section 13(d)(3) of the 1934 Act) of
which it is a member, is the beneficial owner (determined in
accordance with Rule 13d-3 under the 1934 Act) of more than 5% of
any class of voting securities of the Issuer, its parent (if
any), any other seller of the Securities or any guarantor of the
Securities, nor does such Participating Agent have any knowledge
that more than 5% of any class of voting securities of the Issuer
is held or to be held subject to any voting trust or other
similar agreement.
(g) The Participating Agent is not, directly or indirectly,
affiliated or associated with any beneficial owner of any
unregistered security of the Issuer acquired within the 12-month
period prior to April 3, 1995, the initial filing date of the
Registration Statement on Form S-3 relating to the Offering.
(h) The Participating Agent does not have any, direct or
indirect, affiliation or association with any officer, director
or five percent (5%) or greater shareholder of the Issuer.
(i) Neither the Participating Agent nor any associated
person, parent or affiliate of the Participating Agent has a
"Conflict of Interest" with the Issuer within the meaning of
Section 2(g) of Schedule E to the NASD Bylaws.
The undersigned hereby confirms and certifies that each of
the foregoing is true and correct.
Date Name of Participating Agent
By:
Signature
[Print Name and Title]