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EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made as of July 21, 1998, between CONSUMER PORTFOLIO
SERVICES, INC., a California corporation (the "Company"), and STANWICH FINANCIAL
SERVICES CORP., a Rhode Island corporation ("Purchaser").
RECITALS
This Agreement is made pursuant to the Subscription Agreement for
Common Stock ("Subscription Agreement"), dated July 21, 1998, between the
Company and the Purchaser, under which the Company has agreed to issue and sell,
and the Purchaser has agreed to buy, Four Hundred Forty-Three Thousand Four
Hundred Fifty-Nine shares of the common stock, no par value, of the Company.
To induce the Purchaser to provide funds to the Company pursuant to the
terms of the Subscription Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. This Agreement shall become
effective upon the issuance of any shares of common stock of the Company to the
Purchaser (or any other assignee of the Purchaser's rights under the
Subscription Agreement) pursuant to the terms of the Subscription Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Agreement" shall mean this Registration Rights Agreement.
(b) "Exchange Act" shall mean the Securities Exchange Act of
1934, as the same has been or may hereafter be amended.
(c) "Holder" means any person owning or having the right to
acquire the Shares or the Prior Shares, respectively.
(d) "Indemnified Party" shall mean a party entitled to
indemnification under Section 7 of this Agreement.
(e) "Indemnifying Party" shall mean the party required to
provide indemnification under Section 7 of this Agreement.
(f) "Other Shareholders" shall mean, collectively, officers or
directors of the Company who own common stock of the Company or other holders of
the Company common stock who are entitled, by contract with the Company, to have
their common stock included in a registration of the Company's securities.
(g) "Prior Shares" shall mean the shares of capital stock of
the Company defined as the "Shares" in that certain Registration Rights
Agreement between the Company and the Purchaser dated as of June 12, 1997.
(h) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and
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applicable rules and regulations thereunder, and such registration statement
becoming effective.
(i) "Registration Expenses" shall mean all expenses incurred
by the Company in compliance with Sections 2 and 3, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration,
but excluding fees and disbursements of counsel to, or other experts retained
by, any Holder.
(j) "Securities Act" shall mean the Securities Act of 1933, as
the same has been or may hereafter be amended.
(k) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of securities registered.
(l) "Shares" shall mean the 443,459 shares of the common stock
of the Company issued pursuant to the Subscription Agreement, and any shares of
the Company's capital stock issued in respect of or exchange for such shares,
whether by stock split, stock dividend or otherwise.
2. Registration under Securities Act, etc.
2.1 Demand Registration.
(a) Request. At any time on or after the date of this
Agreement, upon the written request of the Purchaser, or an assignee of Shares
as provided in Section 9, that the Company effect the registration under the
Securities Act of all or part of the Shares specifying the number of Shares to
be registered and the intended method of disposition thereof, the Company will
give prompt written notice of such request to all registered holders of the
Shares, and thereupon the Company will use its best efforts to effect the
registration under the Securities Act of:
(i) those Shares that the Company has been requested
to register by the Purchaser, and
(ii) all other Shares that the Company has been
requested to register by written request of the Holders thereof given to the
Company within 30 days after the giving of the aforesaid written notice by the
Company (specifying the intended method of disposition of such Shares), all to
the extent requisite to permit the intended disposition of the Shares to be so
registered.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.1 in connection with an
underwritten offering by one or more Holders of the Shares, no securities other
than the Shares and the Prior Shares shall be included among the securities
covered by such registration unless (i) the managing underwriter of such
offering shall have advised the Purchaser in writing that the inclusion of such
other securities would not adversely affect such offering or (ii) the Purchaser
shall have consented in writing to the inclusion of such other securities.
(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Purchaser
and (ii) as shall permit the disposition of the Shares in accordance with the
intended method or methods of disposition specified in the request for such
registration. The Company agrees to include in any such registration statement
all information which, in the opinion of counsel to the Purchaser and counsel to
the Company, is required to be included.
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(d) Effective Registration Statement. A registration statement
requested pursuant to this Section 2.1 shall not be deemed to have been effected
and will not be considered a demand registration which may be requested pursuant
to this Agreement (i) unless a registration statement with respect thereto has
become effective, (ii) if after it has become effective, it does not remain
effective for a period of at least 180 days (unless the Shares registered
thereunder have been sold or disposed of prior to the expiration of such 180 day
period) or such registration is interfered with by any stop order, injunction or
other order or requirement of the Securities and Exchange Commission ("SEC") or
other governmental agency or court for any reason and has not thereafter become
effective, or (iii) if the conditions to closing specified in the underwriting
agreement entered into in connection with such registration are not satisfied or
waived other than by reason of the failure or refusal of a Holder of Shares to
satisfy or perform a condition to such closing.
(e) Priority in Demand Registrations. If a demand registration
pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy sent to each Holder
of the Shares requesting registration) that the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Purchaser, or such other Person
demanding registration pursuant to Section 9 hereof, such registration will
include only that number of the Shares and Prior Shares which the Company is so
advised can be sold in such offering, drawn pro rata from the Holders of the
Shares and the Prior Shares requesting such registration on the basis of the
percentage of Shares and the Prior Shares held by the Holders of Shares which
have requested that such securities be included. In connection with any such
registration, no securities other than the Shares and the Prior Shares shall be
covered by such registration.
(f) Demand Registration. Without limiting the ability of other
Holders of Shares to have such securities registered once a demand registration
has been requested, a demand registration may only be requested by the Purchaser
and any other Person entitled to demand registration pursuant to Section 9
hereof, and notwithstanding anything in this Section 2.1 to the contrary, the
Company shall not be required to effect more than one registration pursuant to
this Section 2.1; provided, however, that the Purchaser, or any other Person
entitled to demand registration pursuant to Section 9 hereof, shall be entitled
to one additional demand registration if all of the Shares which the Purchaser
or such other Person requested to be included in any prior demand registration
were not, for whatever reason, registered pursuant to such prior demand
registration.
2.2 Company Registration.
(a) If at any time during the period commencing on the date on
which the Shares are issued pursuant to the Subscription Agreement and ending on
the third anniversary of such date, the Company proposes to register (including
for this purpose a registration effected by the Company for shareholders other
than the Holders) any of its stock or other securities under the Securities Act
in connection with the public offering of such securities solely for cash (other
than (i) a registration on Form S-8 of securities to be offered to employees
pursuant to an employee benefit plan, (ii) a registration in connection with an
exchange offer or any acquisition, (iii) a registration of asset-backed
securities to be issued by a trust, or (iv) a registration on any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Shares), the
Company shall, each such time, give each Holder written notice of such proposed
registration at least twenty (20) days prior to filing the registration
statement respecting such proposed registration. Upon the written request of any
Holder given within fifteen (15) days after mailing of such notice by the
Company, the Company shall cause to be registered under the Securities Act all
of the Shares that each such Holder has requested to be registered, subject to
Section 6 hereof.
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(b) Priority in Incidental Registrations. In a registration
pursuant to this Section 2.2 involving an underwritten offering of the
securities so being registered, whether or not for sale for the account of the
Company by or through one or more underwriters of recognized standing, if the
managing underwriter of such underwritten offering shall inform the Company and
the Holders of the Shares requesting registration in such offering by letter of
its belief that the number or type of securities to be included in such
registration would materially adversely affect its ability to effect such
offering, then the Company will be required to include in such registration only
that number, if any, and type of Shares which it is so advised can be sold in
such offering, drawn pro rata from the Holders of the Shares and Prior Shares
requesting such registration on the basis of the percentage of the Shares and
Prior Shares held by the Holders of Shares and Prior Shares which have requested
that such securities be included.
3. Obligations of the Company. Whenever required under this Agreement
to effect the registration of any Shares, the Company shall use its best efforts
to, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Shares and use its best efforts to cause such registration
statement to become effective.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Shares owned by
them.
(d) Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the Shares for sale in
any jurisdiction, at the earliest possible moment;
(e) Register and qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Holders provided that in
no event shall: the Company be required to qualify to do business in any state
or to take any action which would subject it to general or unlimited service of
process in any state where it is not now so subject, any stockholder be required
to escrow their shares of capital stock of the Company, or the Company or any
stockholder be required to comply with any other requirement which they deem
unduly burdensome; and
(f) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally available
to its security holders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 90 days after the end of any 12-month
period (i) commencing at the end of any fiscal quarter in which Shares are sold
to underwriters in a firm or best efforts underwriting offering and (ii)
beginning with the first day of the Company's first fiscal quarter next
succeeding each sale of Shares after the effective date of a registration
statement, which statements shall cover said 12-month periods;
The Company may require each holder of Shares as to which any
registration is being effected to furnish to the Company such information
regarding such Holder and the distribution of such Shares as the Company may
from time to time reasonably request in writing in order to comply with the
Securities Act. Each Holder of Shares as to which any registration is being
effected agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such Holder to
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the Company or of the happening of any event in either case as a result of which
any prospectus relating to such registration contains an untrue statement of a
material fact regarding such Holder or the distribution of such Shares or omits
to state any material fact regarding such Holder or the distribution of such
Shares required to be stated therein or necessary to make the statement therein
not misleading in light of the circumstances then existing, and to promptly
furnish to the Company any additional information required to correct and update
any previously furnished information or required such that such prospectus shall
not contain, with respect to such Holder or the distribution of such Shares, an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
Each Holder of Shares agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(d)
hereof, or notice from the Company that revision or correction of any of the
information contained in such registration statement or prospectus is then
required, such holder will forthwith discontinue disposition of such Shares
covered by such registration statement or prospectus until such Holder's receipt
of the copies of the supplemented or amended prospectus relating to such
registration statement or prospectus, or until it is advised in writing by the
Company that the use of the applicable prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in such Prospectus, and, if so directed by the Company, such Holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering the Shares current at the time of receipt of such notice.
(g) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement with terms
generally satisfactory to the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement, that
the selling Holders shall furnish to the Company such information regarding
themselves, the Shares held by them, and the intended method of disposition of
such securities as shall be required to effect the registration of their Shares.
5. Expenses Of Registration. All expenses incurred in connection with
any registration pursuant to this Agreement (other than underwriter's
commissions and fees or any fees of others employed by a selling Holder,
including attorneys' fees), including without limitation all registration,
filing and qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for the Company, shall be borne by the Company.
6. Underwriting Requirements. In connection with any offering involving
an underwriting of securities being issued by the Company, the Company shall not
be required under Section 2 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity, if any, as will not, in the opinion of the underwriters, jeopardize or
in any way reduce the success of the offering by the Company. If the total
amount of Shares that all Holders with registration rights under Section 2 and
any Holders of Prior Shares request to be included in such offering exceed the
amount of such securities that the underwriters reasonably believe compatible
with the success of the offering, then the Company shall be required to include
in the offering only that number of Shares and Prior Shares of the Holders that
the underwriters believe will not jeopardize the success of the offering;
provided that the Shares and Prior Shares to be included in such case shall be
apportioned pro rata among the Holders according to the total amount of Shares
and Prior Shares requested to be registered.
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7. Indemnification. In the event any Shares are included in a
registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the officers and directors of each Holder, any underwriter
(as defined in the Exchange Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
Securities Exchange Act of 1934, as amended ("Exchange Act") against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or any state securities law
or regulation, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will reimburse each such Holder, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in a connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this paragraph 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person or his or their
representative or agent.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors and officers, any
underwriter (as defined in the Securities Act) for the Company, each person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, and any other holder selling securities in
such registration statement or any of its directors or officers or any person
who controls such Holder, against any losses, claims, damages, or liabilities
(or actions in respect thereto) which arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder or his representative or agent expressly for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, any person who controls the Company, any underwriter or controlling
person of any such underwriter, any other such Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this paragraph 7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), and provided further that the obligations of each
selling Holder hereunder shall be limited to an amount equal to the proceeds of
each such selling Holder of the shares sold by such selling Holder pursuant to
such registration.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however,
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that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to notify an indemnifying party within a reasonable time
of the commencement of any such action shall not relieve such indemnifying party
of any liability that it may have to any indemnified party otherwise than under
this Section 7.
8. Reports Under the Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or pursuant to
a registration form which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC,
the Company agrees that it shall, for at least three (3) years from the date on
which the Shares are issued pursuant to exercise of the conversion right under
the Note:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) Furnish to any Holder, so long as the Holder owns any Shares,
forthwith upon reasonable request (i) a written statement by the Company that it
has complied with the reporting requirements of the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
permitting the selling of any such securities without registration or pursuant
to such form.
9. Assignment of Registration Rights. The rights to cause the Company
to register Shares pursuant to this Agreement may be assigned by a Holder to a
transferee or assignee of such securities by providing the Company, within a
reasonable time after such transfer, with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; provided, however, that such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act, (i) such transferee explicitly accepts all obligations of
the transferor hereunder, and (ii) such transfer is of not less than 50% of the
total number of the Shares initially issued under the Subscription Agreement.
10. Exceptions to Registration. Notwithstanding any other provision of
this Agreement, the Company shall not be required to register any of the Shares
if and to the extent that the Holder may at such time dispose of all of such
Shares pursuant to Rule 144 promulgated under the Securities Act, or pursuant to
any currently effective registration statement previously filed by the Company.
11. Nominees for Beneficial Owners. In the event that any Shares are
held by a nominee for the beneficial owner thereof, the beneficial owner thereof
may, at its election, be treated as the holder of such securities for purposes
of any request or other action by any holder or holders of securities pursuant
to this Agreement or any determination of any number or percentage of shares of
securities held by any holder
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or holders of securities contemplated by this Agreement. If the beneficial owner
of any Shares so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Shares.
12. Legend. Prior to the sale of the Shares pursuant to a registration
under the Securities Act, a legend in substantially the following form will be
placed on all documents or certificates evidencing the Shares:
"THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED."
13. Transfer of Note and/or Shares. The Purchaser hereby represents
that the Note and the Shares are being acquired solely for investment purposes,
for the Purchaser's own account and not for the interest of any other Person and
not with a view to the resale or distribution thereof other than pursuant to an
exemption under the Securities Act and in compliance with the terms hereof.
14. GENERAL AND MISCELLANEOUS
14.1 Survival Of Warranties. The warranties, representations and
covenants of the parties contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement.
14.2 Entire Agreement. This Agreement constitutes the entire agreement
among the parties concerning registration of the Shares, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, guarantees or covenants except as specifically set forth in
this Agreement. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
14.3 Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of California without regard to conflicts
of law.
14.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.5 Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) three (3) days after it shall have been mailed by United States
mail, first class, certified or registered, return receipt requested, with
postage prepaid, or (c) in the case of notice by such a telecommunications
device, when properly transmitted, in each case addressed to the party to be
notified as follows:
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If to Purchaser: Stanwich Financial Services Corp.
c/o Stanwich Partners, Inc.
One Stamford Landing
62 Southfield Ave.
Stamford, CT 06902
Attention: Chief Executive Officer
If to the Company: Consumer Portfolio Services, Inc.
2 Ada
Irvine, CA 92618
Attention: Chief Executive Officer
or to such other address as each party may designate for itself by like notice.
14.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written.
CONSUMER PORTFOLIO SERVICES, INC.
a California corporation
By:_____________________________________
Its:____________________________________
STANWICH FINANCIAL SERVICES CORP.
a Rhode Island corporation
By:_____________________________________
Its:____________________________________
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