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EXHIBIT 10.12
EXECUTION
NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated the
28th day of December, 1995, by and among Financial Pacific Insurance Group,
Inc., a Delaware corporation (the "Corporation"), and each of the persons
severally listed on the Schedule of Purchasers attached hereto (the "Schedule of
Purchasers") - The persons listed on the Schedule of Purchasers are herein
referred to collectively as the "Purchasers" and individually as a "Purchaser".
W I T N E S S E T H:
SECTION 1. Authorization of Notes and Warrants. The Corporation has
authorized the issue and sale of (a) $5,000,000 aggregate principal amount of
its 12% Senior Notes due January 1, 2001 (the "Notes", such term to include all
Notes issued in substitution therefor pursuant to Section 13), to be
substantially in the form of Exhibit A, (b) Common Stock Purchase Warrants (the
"Warrants", such terms to include any such warrants issued in substitution
therefor), to be substantially in the form of Exhibit B, for the purchase of up
to 1,505.4 shares (subject to adjustment) of the Corporation's Common Stock, par
value $.001 per share (the "Common Stock"), at a purchase price equal to the
Warrant Purchase Price (as defined in the Warrants), at any time or from time to
time prior to 5:00 p.m., eastern time, on January 1, 2004 (provided, however,
that if any exercise of any Warrant would result in a change in "control" of the
Corporation, as defined in Section 1215(b) of the California Insurance Code,
then such exercise shall be delayed until such time as the approval of the
California Department of Insurance is obtained).
SECTION 2. Sale and Purchase of Notes and Warrants. The Corporation
will issue and sell to the Purchasers and, subject to the terms and conditions
hereof, the Purchasers will purchase from the Corporation, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite the
name of each Purchaser in the Schedule of Purchasers and Warrants for the
purchase of the number of shares of Common Stock specified opposite the name of
each Purchaser in the Schedule of Purchasers at the aggregate purchase price of
100% of the aggregate principal amount of such Notes.
SECTION 3. Closing. (a) The closing of the sale of Notes and
Warrants to the Purchasers shall take place at the offices of McCarter &
English, Four Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102, at
10:00 a.m., eastern time, on December 28, 1995 or on such other business day
thereafter as may be agreed upon by the Corporation and the Purchasers (the
"Closing Date"). At the Closing the Corporation shall deliver to
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the Purchasers (i) the Notes to be sold to each Purchaser, in each case in the
form of a single Note dated the Closing Date and registered in the name of such
Purchaser, and (ii) the Warrants to be purchased by each Purchaser, in each case
in the form of a single Warrant, dated the Closing Date and registered in the
name of such Purchaser, against delivery by the Purchasers of immediately
available funds in the aggregate amount of the purchase price therefor. If at
the Closing the Corporation shall fail to tender such Notes or Warrants to the
Purchasers as specified in this Section 3, or any of the conditions specified in
Section 6 shall not have been fulfilled or waived, the Purchasers shall, at
their election, be relieved of all further obligations hereunder, without
thereby waiving any other rights the Purchasers may have by reason of such
failure or such nonfulfillment.
(b) The Purchasers shall have the right, in the event that
the Closing shall not be held by [January 15, 1996], and if such failure to
close shall be attributable to any cause or event other than a failure by any
Purchaser to perform an action required to be performed by it pursuant to this
Agreement, to terminate this Agreement on written notice to the Corporation.
SECTION 4. Representations and Warranties of the Corporation. The
Corporation represents and warrants that:
4.1 Bring Down. All representations and warranties set
forth in the Stock Purchase Agreements dated September 7, 1993 and as of
December 30, 1994 (the "Purchase Agreements") are complete and correct as of the
date hereof as applied to the transactions contemplated under the Purchase
Agreement and to the transactions contemplated by this Agreement, except (i) as
affected by the closings of the transactions under the Purchase Agreements and
changes in the ordinary course of business since the dates thereof, and (ii)
that the Corporation's subsidiary, Financial Pacific Insurance Company, is not
in compliance with the rate filing requirements of the California Department of
Insurance.
4.2 Organization; Capital Stock. The Corporation is a corporation
duly organized and existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted and as it is contemplated to be conducted. The authorized capital
stock of the Corporation consists of 10,000 shares of common stock (the "Common
Stock"), and 5,000 shares of Series A Convertible Preferred Stock (the
"Preferred Stock"). There are 1232.284 shares of Common Stock and 4,400.001
shares of Preferred stock issued and outstanding which, together, are the only
shares of capital stock of the Corporation issued and outstanding on the date
hereof. All of the issued and outstanding Common Stock and Preferred Stock of
the Corporation is duly authorized, validly
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issued, fully paid and non-assessable. The Common Stock and the Preferred Stock
is owned of record and beneficially as set forth below:
Common Stock
Robert C. Goodell 1,182.284
David B. Rogers 50
Preferred Stock
FinPac Partners 1,466.667
St. Paul Fire and
Marine Insurance Company 1,466.667
The Firemark Global
Insurance Fund, L.P. 1,466,667
Those persons and entities listed above shall herein be referred to as the
"Stockholders". All the issued and outstanding Common Stock and Preferred Stock
of the Corporation has been issued and sold in conformity with or under
exemption from the requirements of the Securities Act of 1933, as amended, and
all other applicable federal and state laws relating to the issuance and sale of
securities which are applicable to the corporation or any holder of Common Stock
or Preferred Stock. To the knowledge of the Corporation, the Stockholders own
their respective shares of Common Stock and Preferred Stock free and clear of
any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, charge or other
security interest or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any capital lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of any
of the foregoing) (each, a "Lien"). Except as set forth on Schedule 4.2 and/or
as set forth in the Stockholders Agreement dated as of September 7, 1993, as
amended on December 28, 1995 (the "Stockholders Agreement"), there are no
authorized, outstanding or existing:
(a) proxies, voting trusts or other agreements or understandings
with respect to the voting of any capital stock of the Corporation;
(b) securities convertible into or exchangeable for any capital
stock of the Corporation;
(c) options, warrants or other rights to purchase or subscribe for
any capital stock of the Corporation, or securities
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convertible into or exchangeable for any capital stock of the Corporation;
(d) pre-emptive rights or rights of first refusal of any holder
of capital stock, or agreements of any kind relating to the issuance of any
capital stock of the Corporation, any such convertible or exchangeable
securities or any such options, warrants or rights; or
(e) stockholders' or similar agreements with respect to the
voting and/or transfer of capital stock, or agreements of any kind that may
obligate the Corporation to issue or purchase any of its securities.
4.3 Financial Statements; Undisclosed Liabilities. (a)
Beginning with the fiscal year which began January 1, 1993, each of the
Corporation and its Subsidiaries have kept proper books of record and account in
accordance with generally accepted accounting principles ("GAAP"). The
consolidated balance sheets of the Corporation and its Subsidiaries as of
December 31, 1993 and December 31, 1994, and the related consolidated statements
of income, stockholders equity and cash flows for the fiscal years then ended,
all of which have been certified by the Corporation's independent certified
public accountants, copies of which have been delivered to Purchaser, have been
prepared in accordance with GAAP consistently applied, and present fairly the
financial position of the Corporation and its Subsidiaries as of such dates and
the results of their operations for such periods. The Corporation has also
delivered to Purchasers copies of all audit or review comments and reports
thereon or in respect thereof which were received by the Corporation or any such
Subsidiary from its independent certified public accountants since the date of
incorporation of the Corporation. The Consolidated Balance Sheet of the
Corporation and Subsidiaries dated December 31, 1994 is herein called the
"Consolidated Balance Sheet," and December 31, 1994 is herein called the
"Balance Sheet Date."
(b) Except as set forth on Schedule 4.5, as of the date
hereof the Corporation does not have any liability of any nature (matured or
unmatured, fixed contingent or otherwise) which is, individually or in the
aggregate, material to the Corporation and its Subsidiaries on a consolidated
basis, and was not reflected on the Consolidated Balance Sheet.
4.4 Taxes. All income, gross receipts, ad valorem, sales,
use, franchise, property employment and other tax returns required to be filed
by the Corporation or any Subsidiary in any jurisdiction have in fact been filed
and are true and correct, and all taxes, assessments, fees and other
governmental charges upon the Corporation or any Subsidiary of the Corporation,
or upon any of their respective properties, income
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or franchises, which are due and payable have been paid. The provisions for
taxes on the books of the Corporation and each Subsidiary are adequate for all
open years, and for its current fiscal period. Neither the Corporation nor any
Subsidiary has granted or agreed to any extension of the period of limitations
with respect to any open tax year.
4.5 Brokers and Finders. The Corporation has not incurred
any obligation or commitment to any person which could give rise to a claim for
any finder's, broker's or other middleman's commission or compensation in
respect of the transactions contemplated by this Agreement.
4.6 Use of Proceeds. The proceeds to the Corporation from
the issuance and sale of the Notes and Warrants shall be invested in the surplus
of Financial Pacific Insurance Company, Inc., the wholly-owned subsidiary of the
Corporation.
4.7 Intercompany Transactions. Except for (i) Director
fees, (ii) Mr. Goodell's salary, (iii) the reimbursement of Mr. Goodell's travel
expenses, and (iv) the reimbursement of the Directors' travel expenses, there
have been no fees charged since January 1, 1993 by any stockholder, director,
officer or affiliate of the Corporation to the Corporation or by the Corporation
to any stockholder, director, officer or affiliate of the Corporation, for
management, computer, telephone or other services, and no space, facilities,
property or assets, personnel and services have been provided to any
stockholder, director, officer or affiliate of the Corporation by the
Corporation or to the Corporation by any stockholder, director, officer or
affiliate of the Corporation (except salaries, directors fees and reimbursements
in the ordinary course of business), and (ii) there are no other contracts and
transactions between the Corporation and any stockholder, director, officer or
affiliate since the date of incorporation of the Corporation.
4.8 Disclosure. No representation or warranty by the
Corporation contained herein, nor any information, document, statement,
certificate or schedule furnished or to be furnished to Purchasers in connection
herewith or with the transactions contemplated hereby, contains, or will on the
Closing Date contain, any untrue statement of a material fact or omits, or will
on the Closing Date omit, to state a material fact necessary to make the
statements contained therein not misleading. Any projections furnished by the
Corporation to the Purchasers were made in good faith, have a reasonable basis
and were based on reasonable and valid assumptions as at the date that such
projections were furnished to Purchasers. The Corporation has disclosed to the
Purchasers all material information relating to the Corporation and its
Subsidiaries and their respective business and operations, and has supplied to
the Purchasers all
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information and documents requested by the Purchasers in document requests lists
previously furnished to the Corporation.
SECTION 5. Representations and Warranties of Purchasers. Each
Purchaser represents and warrants to the Corporation, individually and not
jointly, and only as to itself, that:
5.1 Organization; Corporate Power. If applicable, it is a
corporation, limited partnership or limited liability company, as the case may
be, duly organized and existing and in good standing under the laws of its state
of organization and has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
5.2 Due Authorization. This Agreement has been duly
authorized by all necessary action of such Purchaser. Neither this Agreement nor
any of the transactions provided for herein violates any provision of such
Purchaser's Certificate of Incorporation or Bylaws, Certificate of Limited
Partnership or Partnership Agreement, Certificate of Formation or Operating
Agreement, as the case may be, or any agreement by which such Purchaser or any
of its properties is bound. This Agreement will, when duly executed and
delivered, be binding on such Purchaser, and enforceable against such Purchaser
in accordance with its terms.
5.3 Consents. Except for the consent of the Insurance
Department of the State of California, no consent, approval or authorization of,
or filing, registration or qualification with, any governmental authority or
other person on the part of the Purchasers is required in connection with the
execution, delivery and performance of this Agreement or the purchase of the
Notes and Warrants.
5.4 Investment Intent, etc. It has carefully reviewed the
representations concerning the Corporation contained in this Agreement; it is
experienced in evaluating and investing in companies engaged in businesses
similar to that of the Corporation; it understands that this investment involves
substantial risks; it or its representative has made detailed inquiry concerning
the Corporation, its proposed business and services, its officers and its
personnel; the officers of the Corporation have made available to it any and all
written information it has requested; the officers of the Corporation have
answered to its satisfaction all inquiries made by it; in making this investment
it has relied upon information made available to it by the Corporation; and it
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of investment in the Corporation and
it is able to bear the economic risk of that
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investment. Such Purchaser is acquiring the Notes and Warrants for investment
for its own account and not with the view to, or for resale in connection with,
any distribution thereof. It understands that the Notes and Warrants, and the
shares of Common Stock issuable upon exercise of the Warrants, have not been
registered under the Securities Act of 1933 nor qualified under the California
Securities Law by reason of specified exemptions therefrom which depend upon,
among other things, the bona fide nature of its investment intent as expressed
herein. It acknowledges that the Notes and shares of Common Stock issuable upon
exercise of the Warrants must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. It has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which generally permits limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions.
SECTION 6. Conditions Precedent to Obligations of Purchasers. The
obligations of the Purchasers under this Agreement are subject to and
conditioned upon the satisfaction at or prior to the Closing of each of the
following conditions:
6.1 Representations; Performance. The representations and
warranties of the Corporation contained in this Agreement and in each other
document being executed by the Corporation in connection herewith (the
"Ancillary Documents") W shall be true and correct in all material respects at
and as of the date hereof, and (ii) shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date. The Corporation shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement and each of the Ancillary Documents to be performed or complied
with by it prior to or on the Closing Date. The Corporation shall have delivered
to the Purchasers a certificate, dated the Closing Date and signed by duly
authorized officers of the Corporation to the foregoing effect and with respect
to incumbency of officers and such other matters as the Purchasers may
reasonably request.
6.2 Corporate Proceedings. (a) All corporate and other
proceedings of the Corporation in connection with this Agreement and the
Ancillary Documents and the transactions contemplated hereby and thereby, and
all documents and instruments incident thereto, shall be reasonably satisfactory
in substance and form to the Purchasers and its counsel, and the Purchasers and
its counsel shall have received all such documents and instruments, or copies
thereof, certified if requested, as may be reasonably requested.
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(b) Waiver of Preemptive Rights. Each stockholder of the
Corporation who is not participating in this transaction shall have duly and
validly waived his preemptive rights under the Stockholders Agreement insofar as
such rights are applicable to this transaction.
6.3 Consents. All consents needed for the execution, delivery and
performance of this Agreement and each Ancillary Document shall have been
obtained.
6.4 Intentionally omitted.
6.5 certified Documents. The Purchasers shall have received copies
of (1) the Certificate of Incorporation of the Corporation, as amended to date,
certified by the Secretary of State of the State of Delaware, and (2) the Bylaws
of the Corporation, as amended to date, certified by an appropriate officer of
the Corporation.
6.6 Legal Proceedings. There shall be no law, rule or regulation
and no order shall have been entered and not vacated by a court or
administrative agency of competent jurisdiction in any litigation, which (i)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated hereby, (ii) requires separation of a significant portion of the
assets or business of the Corporation or any Subsidiary after the Closing or
(iii) restricts or interferes with, in any material way, the operation of the
Corporation or any Subsidiary or their respective businesses or assets after the
Closing, materially adversely affects the financial condition, results of
operations, properties, assets, business or prospects of the Corporation or any
Subsidiary; and there shall be no litigation pending before a court or
administrative agency of competent jurisdiction, or threatened, seeking to do,
or which, if successful, would have the effect of, any of the foregoing.
6.7 Due Diligence. The Purchasers shall have completed their "due
diligence" investigation of the properties, business, prospects, profits and
financial condition of the Corporation and its Subsidiaries, and the information
acquired by the Purchasers as a result of or in connection therewith shall be
satisfactory to the Purchasers in their sole discretion.
SECTION 7. Conditions Precedent to Obligations of Corporation. The
obligations of the Corporation to deliver the Notes and the Warrants on the
Closing Date are subject to and conditioned upon the satisfaction at or prior to
the Closing of each of the following conditions:
7.1 Representations; Performance. The representations and
warranties of the Purchasers contained in this Agreement (i) shall be true and
correct in all material
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respects at and as of the date hereof and (ii) shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
made at and as of such time. The Purchasers shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date. The Purchasers shall have delivered to the Corporation a certificate,
dated the Closing Date and signed by a duly authorized officer, to the foregoing
effect.
7.2 Proceedings. All proceedings of the Purchasers in connection
with this Agreement and the transactions contemplated hereby and thereby, and
all documents and instruments incident thereto, shall be reasonably satisfactory
in substance and form to the Corporation, and its counsel, and the Corporation
and its counsel shall have received all such documents and instruments, or
copies thereof, certified if requested, as may be reasonably requested.
7.3 Consents. All consents needed for the execution, delivery and
performance of this Agreement shall have been obtained.
SECTION 8. Prepayment of Notes.
8.1 Required Payments on Notes.
(a) Commencing on January 1, 1996, interest only shall be payable
on the Notes and shall be paid in semiannual installments commencing on July 1,
1996, and on every January 1 and July 1 thereafter, or, if such date is not a
business day, on the next business day thereafter, to and including January 1,
2001 (the "Maturity Date"). In the event that the California Department of
Insurance fails to approve any dividends proposed to be paid by Financial
Pacific Insurance Company to the Corporation and, due to that fact, the
Corporation is unable to make any portion of an interest payment, or up to two
entire interest payments in any one calendar year, the Corporation shall, upon
written notice of such an event to the Purchasers, be entitled to apply the
amount of that unpaid interest to the principal of the Notes as of the date due,
and shall enter into an allonge to the Notes to that effect which shall be
satisfactory in all respects to the Purchasers, provided that the Corporation
shall be entitled to exercise this postponement of interest only once during the
term of this Agreement.
(b) On the Maturity Date, the Corporation shall pay the entire
principal amount then outstanding on the Notes together with any accrued
interest thereon.
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(c) No partial prepayment of the Notes pursuant to section 8.2
shall relieve the Corporation from its obligation to make the required payments
on the Notes provided for in this section 8.1.
8.2. Optional Prepayments of Notes. At any time or from
time to time, the corporation may, at its option, prepay all or any part (in
integral multiples of $1,000) of the Notes, each such prepayment to be made at
the principal amount of the Notes so prepaid.
8.3 Allocation of Partial Prepayments. In the case of each
partial prepayment, the principal amount to be prepaid shall be allocated among
all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amount thereof not theretofore
called for prepayment, with adjustments, to the extent practicable, to
compensate for any prior prepayments not made exactly in such proportion.
8.4 Maturity; Surrender, etc. In the case of each
prepayment of the Notes, the principal amount of each Note to be prepaid shall
mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date. From and
after such date, unless the Corporation shall fail to pay such principal amount
when so due and payable, together with the interest as aforesaid, interest on
such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Corporation and canceled and shall not be reissued.
8.5 Acquisition of Notes. The Corporation will not, and
will not permit any Subsidiary or Affiliate to, purchase, redeem or otherwise
acquire any Note except upon the payment or prepayment thereof in accordance
with the terms hereof and of such Note.
SECTION 9. Covenants of the Corporation. The Corporation covenants
and agrees that:
9.1 Purchase Agreement. All of the covenants, agreements,
conditions and other terms set forth in the Purchase Agreements have been
performed or complied with and the Corporation shall continue to perform or
comply with them, as the case may be, for so long as the Notes remain
outstanding, provided that in the event any of the purchasers under the
Purchase Agreements ceases to own the stock sold pursuant to the Purchase
Agreements or the Purchase Agreements or any of the terms thereof become
inoperative in any way, the Corporation agrees to enter into an amendment hereto
which amendment shall contain such covenants, agreements, conditions and other
terms
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set forth in the Purchase Agreements as the Purchasers shall, in their sole
discretion, deem prudent.
9.2 Affirmative Covenants.
(a) Public Announcements. The Corporation shall not, and it shall
not permit any officer, director, employee or agent to, make any public
announcement, other than announcements approved by the Purchasers and made by
the Corporation to its own employees, officers, directors or other personnel, in
respect of this Agreement or the transactions contemplated hereby without the
prior written consent of the Purchasers, provided that the corporation may make
such an announcement to the extent it is required by law and in the event that
it promptly notifies the Purchasers of the circumstances of such announcement.
(b) Further Actions. (i) The Corporation agrees to use all
reasonable good faith efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated
hereby on the Closing Date.
(ii) The Corporation will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by the Corporation pursuant to
applicable law in connection with this Agreement, the issuance and sale of the
Notes and Warrants pursuant to this Agreement and the consummation of the other
transactions contemplated hereby and thereby.
(iii) The Corporation, as promptly as practicable, will use its
best efforts to obtain, or cause to be obtained, all consents (including,
without limitation, all consents, approvals, authorizations, waivers, permits,
grants, franchises, concessions agreements, licenses, exemptions or orders of
registration, certificates, declarations or filings with, or reports or notices
with or to any governmental authority and any consent required under any
contract) necessary to be obtained in order to consummate the issuance and sale
of the Notes and Warrants pursuant to this Agreement and the consummation of the
other transactions contemplated hereby and thereby.
(iv) At all times prior to the Closing, the Corporation shall
promptly notify the Purchasers in writing of any fact, condition, event or
occurrence that will or may result in the failure of any of the conditions
contained in Section 6 to be satisfied, promptly upon becoming aware of the
same.
(c) Further Assurances. Following the Closing, the Corporation
shall from time-to-time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by the Purchasers, to confirm and
assure the
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rights and obligations provided for in this Agreement and render effective the
consummation of the transactions contemplated hereby and thereby.
(d) Maintenance of Existence, etc. The Corporation will at all
times do or cause to be done, and will cause each of its officers and employees
to do, all things necessary to maintain, preserve and renew its corporate
existence and the corporate existence of its Subsidiaries and all necessary
licenses, permits, franchises and other governmental authorizations necessary to
own and operate its properties and carry on its business, and comply with, and
cause each Subsidiary to comply with, all laws applicable to the Corporation or
any Subsidiary, the violation of which would have a material adverse effect on
the financial condition, operations or prospects of the Corporation or such
Subsidiary.
(e) Payment of Taxes. The Corporation will at all times duly pay
and discharge, and cause each Subsidiary duly and promptly to pay and discharge,
as the same become due and payable, all taxes, assessments and governmental and
other charges, levies or claims levied or imposed; provided, that nothing
contained in this paragraph shall require the Corporation or any such Subsidiary
to pay or discharge, or cause to be paid and discharged, any such tax,
assessment, charge, levy or claim so long as the Corporation or such Subsidiary
in good faith shall contest the validity thereof and shall set aside on its
books adequate reserves with respect thereto.
(f) Warrant Purchase Price. The Corporation shall deliver to each
of the Purchasers a calculation of the Warrant Purchase Price (as such term is
defined in the Warrants) on or before the date ten days after the delivery of
the Corporation's 1995 audited financial statements to the Corporation.
9.3 Negative Covenants.
(a) Dividends. The Corporation will not, at any time prior to the
Closing Date or at any time during which any of the Notes remain outstanding (A)
pay any dividends of any kind on any shares in its capital of any class or
series, (B) make any payments on account of the purchase or other acquisition or
redemption or other retirement of any shares in its capital of any class or
series or any warrants or options to purchase any such shares, or (C) make any
other distributions of any kind in respect of any shares in its capital of any
class or series or in respect of any warrants or options. The parties hereto
affirm that nothing in this Agreement shall be deemed to prohibit or otherwise
limit the payment of dividends by any Subsidiary to the Corporation.
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(b) Sale of Stock of Subsidiaries. At any time prior to the Closing
Date, the Corporation will not, and will not permit any Subsidiary to, sell,
assign, transfer or otherwise dispose of (except to the Corporation or one or
more wholly-owned Subsidiaries) any shares of capital stock of any class or
series of any Subsidiary, or any other security of, or any funded indebtedness
owing to it by, any such Subsidiary.
(c) Certain Actions. The Corporation will not, at any time prior to
the Closing Date, take any action or omit to take any action, which action or
omission would result in a breach of any of the representations and warranties
of the Corporation set forth in Section 4.
(d) No Solicitation. The Corporation will not, at any time prior to
the Closing Date, (i) solicit any inquiries or proposals for, or enter into any
discussions with respect to, the acquisition of any capital stock or assets of
the Corporation, or (ii) furnish or cause to be furnished any non-public
information concerning the Corporation to any person (other than the Purchasers
and their agents and representatives), other than in the ordinary course of
business or pursuant to applicable law.
(e) Debt. The Corporation will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become or remain directly or indirectly liable with respect to any
indebtedness other than the indebtedness evidenced by the Notes, intercompany
indebtedness, Permitted Indebtedness as set forth on Schedule 9.2(e) hereto and
accounts payable and other liabilities and obligations arising in the ordinary
course of the Corporation's business, consistent with past practice.
(f) Liens. The Corporation will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, assume or permit to exist
any Lien on or with respect to any property or asset of the Corporation or any
Subsidiary, whether now owned or hereafter acquired, or any income or profits
therefrom, except for liens for taxes not yet due and payable or being contested
in good faith, mechanics liens and purchase money liens.
(g) Consolidated Net Worth. The Corporation will not at any time
permit Consolidated Net Worth to be less than $7,000,000. Consolidated Net Worth
shall mean at any date, the excess of (a) the total assets of the Corporation
and its Subsidiaries appearing on a consolidated balance sheet of the
Corporation and its Subsidiaries prepared in accordance with GAAP, after
eliminating all intercompany transactions and unrealized capital gains on
investments, over (b) the total liabilities of the Corporation and its
Subsidiaries, on a consolidated basis, after eliminating all intercompany
transactions.
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(h) Debt Service Coverage. The Corporation shall maintain at all
times a Debt Service Coverage Ratio of at least 5 to 1. "Debt Service Coverage
Ratio" shall mean the ratio of Operating Cash Flow to scheduled principal and
interest payments on the Notes, where "Operating Cash Flow" shall mean, for any
period, the sum of net income, interest expense, depreciation and amortization
minus extraordinary non-cash income.
SECTION 10. Covenants of the Purchasers. The Purchasers covenant
and agree that:
10.1 Public Announcements. The Purchasers shall not, and they shall
not permit any officer, employee or agent to, make any public announcement,
other than announcements approved by the Corporation and made by the Purchasers
to their own employees, officers, or other personnel, in respect of this
Agreement or the transactions contemplated hereby without the prior written
consent of the Corporation, provided that the Purchasers may make such an
announcement to the extent they are required by law and in the event that they
promptly notify the Corporation of the circumstances of such announcement.
SECTION 11. Registration Rights The parties hereto agree that
shares of Common Stock issuable upon exercise of the Warrants shall constitute
"Registrable securities" for purposes of the registration rights provisions
contained in Section 6 of the Stockholders Agreement, the terms of which are
incorporated by reference into this Agreement. In the event that any of the
parties hereto ceases to be a party to the Stockholders Agreement, or Section 6
of the Stockholders Agreement or any of the terms thereof terminate or become
inoperative in any way, the Corporation agrees to enter into an amendment hereto
which amendment shall afford to the Purchasers the identical registration rights
which are currently afforded to the parties to the Stockholders Agreement.
SECTION 12. Registration, Transfer and Substitution of Notes.
12.1 Note Register: Ownership of Notes. The Corporation will keep
at its principal office a register in which the Corporation will provide for the
registration of Notes and the registration of transfers of Notes. The
Corporation may treat the person in whose name any Note is registered on such
register as the owner thereof for the purpose of receiving payment of the
principal of and the premium, if any, and interest on such Note and for all
other purposes, whether or not such Note shall be overdue, and the Corporation
shall not be affected by any notice to the contrary.
12.2 Transfer and Exchange of Notes. Upon surrender of any Note for
registration of transfer or for
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exchange to the Corporation at its principal office, the Corporation at its
expense will execute and deliver in exchange therefor a new Note or Notes in
denominations, as requested by the holder or transferee, which aggregate the
unpaid principal amount of such surrendered Note. Each such new Note shall be
registered in the name of such person as such holder or transferee may request,
shall be dated so that there will be no loss of interest on such surrendered
Note and shall be otherwise of like tenor.
12.3 Replacement of Notes. Upon receipt of evidence reasonably
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
any Note and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity bond in such reasonable amount as the Corporation may determine
(or, in the case of any Note held by a Purchaser or a Purchaser's nominee or
another institutional investor, of an indemnity agreement from you or such other
holder reasonably satisfactory to the Corporation), or in the case of any such
mutilation, upon the surrender of such Note for cancellation to the Corporation
at its principal office, the Corporation at its expense will execute and
deliver, in lieu thereof, a new Note of the same class and of like tenor, dated
so that there will be no loss of interest on such lost, stolen, destroyed or
mutilated Note. Any Note in lieu of which any such new Note has been executed
and delivered by the Corporation shall not be deemed to be an outstanding Note
for any purpose hereof.
SECTION 13. Events of Default and Acceleration. If any of the
following conditions or events ("Events of Default") shall occur and be
continuing:
(a) if the Corporation shall default in the payment of any
principal or interest an a Note for a period of ten (10) days beyond the date
that the same becomes due and payable, whether at maturity or at a date fixed
for payment or by declaration or otherwise (provided, however, that no Event of
Default shall occur by reason of this subsection 13(a) under the circumstances
described in the last sentence of Section 8.1(a)); or
(b) if the Corporation shall default in the performance of or
compliance with any term contained herein, in the Notes or the Warrants; or
(c) if any representation or warranty made in writing by or on
behalf of the Corporation herein or in any instrument furnished in compliance
with or in reference hereto or otherwise in connection with the transactions
contemplated hereby shall prove to have been false or incorrect in any material
respect on the date as of which made; or
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(d) if the Corporation or any Subsidiary shall be in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or interest on any indebtedness for borrowed money which is outstanding
in a principal amount of at least $100,000 (other than the Notes) or in the
performance of or compliance with any term of any evidence of any such
indebtedness or of any mortgage, indenture or other agreement relating thereto
and, as a result thereof, such indebtedness shall have become due and payable
before its stated maturity or before its regularly scheduled dates of payment,
and such default, event or condition shall continue for more than the period of
grace, if any, specified therein and shall not have been waived pursuant
thereto; or
(e) if the Corporation or any Subsidiary shall (i) be generally not
paying its debts as they become due, (ii) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, (iii) make an
assignment for the benefit of its creditors, (iv) consent to the appointment of
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) be
adjudicated an insolvent or be liquidated, or (vi) take corporate action for the
purpose of any of the foregoing; or
(f) if a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Corporation or any
Subsidiary, a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Corporation or any Subsidiary,
or if any such petition shall be filed against the Corporation or any Subsidiary
and such petition shall not be dismissed within 30 days; or
(g) if a final judgment which, with other outstanding final
judgments against the Corporation and the Subsidiaries (other than judgments
covered by insurance and/or judgments against insurance policies issued by any
Subsidiary), exceeds $50,000 shall be entered against the Corporation or any
Subsidiary and if, within 60 days after entry thereof, such judgment shall not
have been discharged or execution thereof stayed pending appeal, or if, within
60 days after the expiration of any such stay, such judgment shall not have been
discharged; or
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(h) if the Corporation's and/or any Subsidiary's authorization to
engage in the business of insurance is revoked or suspended for more than ten
(10) days by the California Department of Insurance;
then, (x) upon the occurrence of any Event of Default described in subdivision
(e) or (f) of this section 13 (other than such an Event of Default described in
subdivision (e)(i) or described in subdivision (e)(vi) by virtue of the
reference in subdivision (e)(vi) to subdivision (e)(i)), the unpaid principal
amount of and accrued interest on the Notes shall automatically become due and
payable, or (y) upon the occurrence of any other Event of Default, any holder or
holders (other than the Corporation or any Subsidiary or Affiliate) of 33% or
more in principal amount of the Notes at the time outstanding (excluding any
Notes directly or indirectly owned by the Corporation or any Subsidiary or
Affiliate) may at any time (unless all defaults shall theretofore have been
remedied) at its or their option, by written notice or notices to the
Corporation, declare all the Notes to be due and payable, whereupon the same
shall forthwith mature and become due and payable, together with interest
accrued thereon, all without presentment, demand, protest or notice, which are
hereby waived.
At any time after the principal of, and interest accrued on, all of
the Notes are declared due and payable, the holders of not less than 75% in
principal amount of the Notes then outstanding (excluding any Notes directly or
indirectly owned by the Corporation or any Subsidiary or Affiliate), by written
notice to the Corporation, may rescind and annul any such declaration and its
consequences if (A) the Corporation has paid all over-due interest on the Notes,
the principal of on any Notes, which have become due otherwise than by reason of
such declaration, and interest on such overdue principal and (to the extent
permitted by applicable law) any overdue interest in respect of the Notes at a
rate per annum equal to 1% per annum in excess of the interest rate otherwise in
effect on the Notes, (B) all Events of Default, other than non-payment of
amounts which have become due solely by reason of such declaration, and all
conditions and events which constitute Events of Default have been cured or
waived, and (C) no judgment or decree has been entered for the payment of any
monies due pursuant hereto or to the Notes; but no such rescission and annulment
shall extend to or affect any subsequent Event of Default or impair any right
consequent thereon.
SECTION 14. Remedies on Default, etc. In case any Event of Default
shall occur and be continuing, the holder of any Note at the time outstanding
may proceed to protect and enforce the rights available to such holder at law,
in equity, by statute or otherwise, whether for the specific performance of any
agreement contained herein or in such Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in
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aid of the exercise of any power granted hereby or thereby or by law or
otherwise. In case of a default in the payment of any principal of or premium,
if any, or interest on any Note, the Corporation will pay to the holder thereof
such further amount as shall be sufficient to cover the cost and expenses of
collection, including, without limitation (to the extent permitted by applicable
law), reasonable attorneys' fees, expenses and disbursements. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred
hereby upon any holder of any Note or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity by statute or otherwise.
SECTION 15. Survival; Indemnification.
(a) Survival. The warranties and representations of the parties
hereto shall be deemed to have been relied upon, notwithstanding any
investigation made by or on behalf of any party. Such warranties and
representations shall survive the execution and delivery of this Agreement and
the delivery of any consideration without limitation as to time.
(b) Indemnification by Corporation. From and after the Closing, the
Corporation covenants and agrees to defend, indemnify and hold harmless the
Purchasers, their officers, directors, employees, agents and controlling persons
and the Corporation (collectively, the "Purchaser Indemnitee") from and against,
and pay or reimburse the Purchaser Indemnitee for, any and all claims,
liabilities, obligations, losses, fines, costs, royalties, proceedings,
deficiencies or damages (whether absolute, accrued, conditional or otherwise and
whether or not resulting from third party claims), including, but not limited
to, out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting any of their respective rights hereunder, resulting from or arising
out of:
(i) any inaccuracy of any representation or warranty made by the
Corporation herein or in connection herewith or therewith;
(ii) any failure of the Corporation to perform any covenant or
agreement hereunder or fulfill any other obligation in respect hereof;
(iii) any claim by any person for any finder's, broker's or other
middleman's commission or compensation in respect of the transactions
contemplated by this Agreement; and
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(iv) any claim by any person caused by or arising out of or
allegedly caused by or arising out of this Agreement and the transactions
contemplated hereby.
SECTION 16. Entire Agreement; Amendments. This Agreement (and the
Schedules and Exhibits hereto) are intended by the parties as the final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein with respect to the securities sold pursuant hereto. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter hereof and thereof. No term, covenant, agreement
or condition of this Agreement may be amended, or compliance therewith waived
(either generally or in a particular instance and either retroactively or
prospectively), unless agreed to in writing by Purchasers and the Corporation.
SECTION 17. Notices. All notices required or permitted hereunder
shall be in writing and shall be sufficiently given if: (a) hand delivered (in
which case the notice shall be effective upon delivery); (b) telecopied,
provided that in such case a copy of such notice shall be concurrently sent by
registered or certified mail, return receipt requested, postage prepaid (in
which case the notice shall be effective two days following dispatch); (c)
delivered by Express Mail, Federal Express or other nationally recognized
overnight courier service (in which case the notice shall be effective one
business day following dispatch); or (d) delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid (in which case the
notice shall be effective three days following dispatch), to the parties at the
following addresses and/or telecopier numbers, or to such other address or
number as a party shall specify by written notice to the others in accordance
with this Section 12.
If to the Corporation:
Financial Pacific Insurance Group, Inc.
8583 Elder Creek Road
Suite 100
Sacramento, California
Attn: Robert C. Goodell, CEO
Telecopier No.: (916) 387-0854
with a copy to:
Riordan & McKinzie
California Plaza, 29th floor
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300 South Grand Avenue
Los Angeles, CA 90071
Attn: Janis B. Salin, Esq.
Telecopier No.: (213) 229-8550
If to Purchasers:
Firemark Advisors, Inc.
67 Park Place
Morristown, New Jersey 07960
Attn: Michael Morrissey
Telecopier No.: 201-538-0484
with a copy to:
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101-0652
Attn: David F. Broderick, Esq.
Telecopier No.: 201-624-7070
FINPAC PARTNERS,
c/o Riordan, Lewis & Haden
300 S. Grand Avenue, 29th Flr.
Los Angeles, California 90071-3155
Attn: Patrick C. Haden, Esq.
Telecopier No.: 213-229-8597
with a copy to:
Riordan & McKinzie
California Plaza, 29th floor
300 South Grand Avenue
Los Angeles, CA 90071
Attn: Janis B. Salin, Esq.
Telecopier No.: (213) 229-8550
ST. PAUL FIRE AND MARINE
INSURANCE COMPANY
385 Washington Street
St. Paul, Minnesota 55102-1396
Attn: Richard Pfeiffer, Vice President
with a copy to:
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ST. PAUL FIRE AND MARINE INSURANCE COMPANY
385 Washington Street
St. Paul, Minnesota 55102
Attn: Corporate Secretary
CELERITY FINPAC, LLC
c/o Celerity Partners, LLC
11111 Santa Monica Boulevard
Suite 1127
Los Angeles, California 90025
Attn: Stephen E. Adamson
with a copy to:
Celerity Partners, LLC
5215 North O'Connor Blvd.,
Suite 2500
Irvine, Texas 75039
Attn: Gerald K. Beckman
SECTION 18. Sections and Counterparts. The section headings
contained in this Agreement are for reference purposes only and shall not affect
the interpretation of this Agreement. 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 the same agreement.
SECTION 19. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.
SECTION 20. Expenses. Whether or not the transaction contemplated
hereby shall be consummated, the Corporation shall pay all fees, costs and
expenses in connection with such transaction and in connection with any
amendments or waivers (whether or not the same become effective) under or in
respect hereof, including, without limitation, the fees and disbursements of the
Purchasers' counsel provided that the Corporation shall not be obligated to pay
fees of the Purchasers (including counsel fees) in excess of $50,000.
SECTION 21. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors, assigns, executors, administrators and personal
representatives. No party may assign its rights under this Agreement without the
written consent of the other parties, except that Purchasers may assign its
rights and delegate its obligations to any partner or Subsidiary of Purchasers,
or any Subsidiary thereof.
SECTION 22. No Recourse to General Partner of Purchasers. The
Corporation agrees that it shall have recourse
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only to the assets of Purchasers with respect to any breach or claimed breach of
this Agreement and that any general partner of any Purchaser which is a general
or limited partnership shall have no liability with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
FINANCIAL PACIFIC INSURANCE GROUP, INC.
By: /s/ ROBERT C. GOODELL
------------------------------------------
Name: Robert C. Goodell
Title: President and CEO
THE FIREMARK GLOBAL INSURANCE FUND, L.P.
By: Firemark Advisors, Inc.
General Partner
By:
------------------------------------------
Name:
Title:
FINPAC PARTNERS
By:
------------------------------------------
Name:
Title:
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By:
------------------------------------------
Name:
Title:
CELERITY FINPAC, LLC
By:
------------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
FINANCIAL PACIFIC INSURANCE GROUP, INC.
By:
------------------------------------------
Name:
Title:
THE FIREMARK GLOBAL INSURANCE FUND, L.P.
By: Firemark Advisors, Inc.
General Partner
By: /s/ MICHAEL J. MORRISSEY
------------------------------------------
Name: M. J. Morrissey
Title: Chairman and CEO
FINPAC PARTNERS
By:
------------------------------------------
Name:
Title:
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By:
------------------------------------------
Name:
Title:
CELERITY FINPAC, LLC
By:
------------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
FINANCIAL PACIFIC INSURANCE GROUP, INC.
By:
------------------------------------------
Name:
Title:
THE FIREMARK GLOBAL INSURANCE FUND, L.P.
By: Firemark Advisors, Inc.
General Partner
By:
------------------------------------------
Name:
Title:
FINPAC PARTNERS
By: /s/ PATRICK C. HADEN
------------------------------------------
Name: Patrick C. Haden
Title: General Partner
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By:
------------------------------------------
Name:
Title:
CELERITY FINPAC, LLC
By:
------------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
FINANCIAL PACIFIC INSURANCE GROUP, INC.
By:
------------------------------------------
Name:
Title:
THE FIREMARK GLOBAL INSURANCE FUND, L.P.
By: Firemark Advisors, Inc.
General Partner
By:
------------------------------------------
Name:
Title:
FINPAC PARTNERS
By:
------------------------------------------
Name:
Title:
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By: /s/ RICHARD G. PFEIFFER
------------------------------------------
Name: Richard G. Pfeiffer
Title: Vice President
CELERITY FINPAC, LLC
By:
------------------------------------------
Name:
Title:
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27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
FINANCIAL PACIFIC INSURANCE GROUP, INC.
By:
------------------------------------------
Name:
Title:
THE FIREMARK GLOBAL INSURANCE FUND, L.P.
By: Firemark Advisors, Inc.
General Partner
By:
------------------------------------------
Name:
Title:
FINPAC PARTNERS
By:
------------------------------------------
Name:
Title:
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
By:
------------------------------------------
Name:
Title:
CELERITY FINPAC, LLC
By: /s/ STEPHEN E. ADAMSON
------------------------------------------
Name: Stephen E. Adamson
Title: [not legible]
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28
SCHEDULE OF PURCHASERS
Principal Amount
Notes or of Notes or
Name of Purchaser Warrant Number of Shares
- ----------------- ------- ----------------
FIREMARK GLOBAL INSURANCE FUND, L.P. Senior $1,500,000.00
Notes
(1) In the case of all payments
on account of the Notes:
By crediting in the form of Warrant #451.62
bank wire transfer of Federal
or other immediately available
funds, providing sufficient
information to identify the
source of the transfer, and
the amount of interest
and/or principal, to Firemark
Global Insurance Fund, L.P.
Account No. ______________ (1) at:
(2) In the case of all notices:
THE FIREMARK GLOBAL INSURANCE
FUND, L.P.,
c/o Firemark Advisors, Inc.
1776 On The Green
67 Park Place, 6th Flr.
Morristown, NJ 07960
Attn: Michael Morrissey
- -------------
(1) All purchasers, please provide this information.
29
Principal Amount
Notes or of Notes or
Name of Purchaser Warrant Number of Shares
- ----------------- ------- ----------------
FINPAC PARTNERS Senior $1,500,000.00
Notes
(1) In the case of all payments on account
of the Notes:
By mailing Warrant #451.62
funds, providing sufficient
information to identify the
source of the transfer, and
the amount of interest
and/or principal, to FinPac
Partners at the address set forth below.
(2) In the case of all notices:
FINPAC PARTNERS,
c/o Riordan, Lewis & Haden
300 S. Grand Avenue, 29th Flr.
Los Angeles, California 90071-3155
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Principal Amount
Notes or of Notes or
Name of Purchaser Warrant Number of Shares
- ----------------- ------- ----------------
ST. PAUL FIRE AND MARINE Senior $1,500,000.00
INSURANCE COMPANY Notes
(1) In the case of all payments on account
of the Notes:
By crediting in the form of Warrant #451.62
bank wire transfer of Federal or other
immediately available funds, providing sufficient
information to identify the source of the
transfer, and the amount of interest and/or
principal, to St. Paul Fire and Marine Insurance
Company, Account No. ____________________ at:
(2) In the case of all notices:
ST. PAUL FIRE AND MARINE
INSURANCE COMPANY
385 Washington Street
St. Paul, Minnesota 55102-1396
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Principal Amount
Notes or of Notes or
Name of Purchaser Warrant Number of Shares
- ----------------- ------- ----------------
CELERITY FINPAC, LLC Senior $ 500,000.00
Notes
(1) In the case of all payments on account
of the Notes:
By crediting in the form of Warrant #150.54
bank wire transfer of Federal or other
immediately available funds, providing
sufficient information to identify the source
of the transfer, and the amount of interest
and/or principal, to Celerity FinPac, LLC
Account No. _________________ at:
Nations Bank of Texas, N.A.
5201 North O'Connor Blvd.,
Irvine, Texas 75039
ABA # 111000025
For the account of Celerity FinPac, LLC
(2) In the case of all notices:
c/o Celerity Partners, LLC
5215 North O'Connor Blvd., Suite 2500
Irvine, Texas 75039
Attn: Stephen E. Adamson
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EXHIBIT A
Senior Note due January 1, 2001
R- Sacramento, California
$ December 28, 1995
FINANCIAL PACIFIC INSURANCE GROUP, INC. (the "Corporation"), a
Delaware corporation, for value received, hereby promises to pay to
___________________ or registered assigns, the principal amount of $___________
on January 1, 2001 with interest (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid balance of such principal amount at the rate
of 12% per annum from the date hereof, payable semi-annually on each July 1 and
January 1 after the date hereof, until such unpaid balance shall become due and
payable (whether at maturity or at a date fixed for prepayment or by declaration
or otherwise), and interest on any overdue principal (including any overdue
prepayment of principal) and (to the extent permitted by applicable law) on any
overdue interest, at the rate of l4% per annum until paid, payable semi-annually
as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of
the United States of America as provided in the Schedule of Purchasers to the
Note and Warrant Purchase Agreement referred to below.
This Note is one of the Corporation's Senior Notes due January 1,
2001, originally issued in the aggregate principal amount of $5,000,000 pursuant
to the Note and Warrant Purchase Agreement (the "Note and Warrant Purchase
Agreement"), dated as of December 28, 1995, among the Corporation and each of
the Purchasers listed therein. The registered holder of this Note is entitled to
the benefits of such Note and Warrant Purchase Agreement and may enforce the
agreements of the Corporation contained therein and exercise the remedies
provided for thereby or otherwise available in respect thereof.
This Note is a registered Note and, as provided in such Note and
Warrant Purchase Agreement, is transferable only upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or his attorney duly
authorized in writing. The Corporation may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Corporation shall not be affected by any notice
to the contrary.
33
This Note is subject to prepayment, in whole or in part, in certain
cases, all as specified in such Note and Warrant Purchase Agreement.
In case an Event of Default (as defined in the Note and Warrant
Purchase Agreement) shall occur and be continuing, the unpaid balance of the
principal of this Note may be declared and become due and payable in the manner
and with the effect provided in such Note and Warrant Purchase Agreement.
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
FINANCIAL PACIFIC INSURANCE GROUP, INC.
By
-----------------------------------------
Title:
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EXHIBIT B
THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
Warrant No. 1-A December 28, 1995
COMMON STOCK PURCHASE WARRANT
This certifies that, for value received, and permitted assigns
(the "Holder"), is entitled to purchase on the terms and conditions contained
herein from Financial Pacific Insurance Group, Inc., a Delaware corporation (the
"Corporation"), shares (subject to adjustment as set forth in Sections 4
and 5 below, the "Warrant Shares") of the Corporation's Common Stock, $.001 par
value per share (the "Common Stock"), at the Warrant Purchase Price (subject to
adjustment as set forth in Section 4 below) at any time on or after the date
hereof, subject to Section 1.2, and prior to January 1, 2004 (the Exercise
Period"), on surrender to the Corporation at its principal office at 8583 Elder
Creek Road, Suite 100, Sacramento, California 95828 (or at such other location
as the Corporation may advise Holder in writing) of this warrant properly
endorsed with the Form of Subscription attached hereto duly filled in and signed
and upon payment in cash or by certified or cashier's check of the Warrant
Purchase Price for the appropriate number of Warrant Shares for which this
Warrant is being exercised, as determined in accordance with the provisions
hereof. In lieu of paying cash upon exercise of this Warrant, the Holder may
elect to either (i) make a cashless exercise, in which event the Holder will be
entitled to receive the Warrant Shares minus the number of shares of Common
Stock valued based on the Current Market Value (as defined below) equal to the
Warrant Purchase Price, or (ii) cancel indebtedness of the Corporation to the
Holder in an equivalent face amount.
The "Warrant Purchase Price" shall equal 1.4 times the per share
book value of the Corporation's Common Stock on a fully diluted basis, without
giving effect to the issuance of the Senior Notes, as set forth on the audited
financial statements of the corporation dated December 31, 1995, prepared in
accordance with GAAP, consistently applied. The Warrant Purchase Price is
subject to adjustment pursuant to Section 4 hereof.
This Warrant is subject to the following terms and conditions:
35
1. Exercise; Issuance of Certificates; Payment;
Definition.
1.1 Optional Exercise. Subject to Section 1.2 hereof and
to the limitations on exercise set forth in Section 2 hereof, this Warrant is
exercisable at the option of the Holder, from time to time during the Exercise
Period, for all or any part of the Warrant Shares. The Corporation agrees that
the Warrant Shares purchased under this Warrant shall be and are deemed to be
issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares. Subject to the provisions of Section 2,
certificates for shares of Common Stock so purchased shall be delivered to the
Holder within a reasonable time after this Warrant has been exercised, and, in
case of a purchase of less than all the Warrant Shares, the Corporation shall
cancel this Warrant and, within a reasonable period of time, shall execute and
deliver to the Holder a new Warrant of like tenor for the balance of the Warrant
Shares. Each stock certificate so delivered shall be registered in the name of
the Holder or such other name as shall be designated thereby, subject to the
limitations contained in Section 2.
1.2 Mandatory Exercise. Notwithstanding any provision
herein to the contrary, this Warrant must be exercised by the Holder, if at all,
upon the effective date of a registration statement filed pursuant to the
Securities Act of 1933, as amended (other than a registration relating solely to
a transaction under Rule 145 under such Act or any successor thereto, or an
employee benefit plan of the Corporation), in connection with the sale of the
Corporation's Common Stock in a firm commitment, underwritten public offering
with gross proceeds to be received by the Corporation which equal or exceed
$10,000,000 and a public offering price of the Common Stock of not less than
$5,000 per share (as adjusted for stock splits, dividends or other
recapitalization transactions) (an "Initial Public Offering"). The Corporation
shall give the Holder not less than 15 days notice of the expected date of the
effectiveness of such registration statement. Not later than the effective date,
the Holder shall give the Corporation notice to the effect that (i) the Holder
does not elect to exercise this Warrant, (ii) the Holder elects to make a cash
exercise of this Warrant (which notice shall be accompanied by the payment of
the Warrant Purchase Price) or (iii) the Holder elects to make a cashless
exercise of this Warrant as provided in the first paragraph hereof. If the
Holder does not give any notice to the Corporation, the Holder shall be deemed
to have elected to make a cashless exercise of this Warrant.
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1.3 Definitions. As used herein, the following terms shall have the
following meanings:
"Current Market Value" per share of Common Stock means (i) if an
Initial Public Offering of the Common Stock has taken place, the price at the
close of the market on the first day of trading of such Common Stock following
the effectiveness of a registration statement for the Common Stock and (ii) if
no Initial Public Offering has taken place, the Fair Market Value of the Common
Stock based upon the Fair Market Value of 100% of the corporation if sold as a
going concern and without regard to any discount for the lack of liquidity or on
the basis that the relevant shares of Common Stock do not constitute a majority
or controlling interest in the Corporation and assuming the exercise of all
warrants, convertible securities, options or other rights to subscribe for or
purchase any additional shares of Common Stock or securities convertible or
exchangeable into Common Stock.
"Fair Market Value" shall mean the value obtainable upon a sale in
an arm's length transaction to an unaffiliated third party under usual and
normal circumstances, with neither the buyer nor the seller under any compulsion
to act, with equity to both, as determined by the Board in good faith; provided,
however, that if the Holder shall dispute the Fair Market Value as determined by
the Board, the Holder may undertake to have the Holder and the Corporation
retain an Independent Expert. The determination of Fair Market value by the
Independent Expert shall be final, binding and conclusive on the Corporation and
the Holder. All costs and expenses of the Independent Expert shall be borne by
the Holder, unless the determination of Fair Market Value by the Independent
Expert is more than 5% more favorable to the Corporation than the Fair Market
Value determined by the Board, in which event the cost of the Independent Expert
shall be shared equally by the Holder and the Corporation, or more than 10% more
favorable to the Corporation than the Fair Market Value determined by the Board,
in which event the cost of the Independent Expert shall be borne solely by the
Corporation.
"Independent Expert" shall mean an investment banking firm
reasonably agreeable to the Corporation and the Holder who does not (and whose
affiliates do not) have a financial interest in the Corporation or any of its
stockholders.
2. Limitation on Transfer and Exercise. Notwithstanding the
provisions of Section 1, the Corporation shall not be required to deliver any
certificate for shares of Common Stock upon exercise of this Warrant except in
accordance with the provisions, and subject to the limitations, of Sections 8
and 9 hereof.
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3. Due Authorization and Issuance; Reservation of Issuance. The
Corporation covenants and agrees that all shares of Common Stock which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable
shares of the Common Stock of the Corporation, free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. The Corporation further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Corporation will at all times have authorized and reserved, for the purpose of
issue or transfer upon exercise of this Warrant, a sufficient number of
authorized but unissued shares of Common Stock, or other securities and
property, when and as required to provide for the exercise of this Warrant.
4. Adjustments to Warrant Purchase Price. The Warrant Purchase
Price shall be subject to adjustment from time to time as hereinafter provided
(such price, or the price as last adjusted, also being referred to herein as the
"Warrant Purchase Price"). Upon each adjustment of the Warrant Purchase Price,
the Holder shall thereafter be entitled to purchase, at the Warrant Purchase
Price resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Warrant Purchase Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment, and dividing the product thereof by the Warrant Purchase
Price resulting from such adjustment.
4.1 Subdivision or Combination of Stock. In case the Corporation
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares by way of stock split, stock dividend or similar event,
the Warrant Purchase Price in effect immediately prior to such subdivision shall
be proportionately reduced, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares by way of reverse
stock split or similar event, the Warrant Purchase Price in effect immediately
prior to such combination shall be proportionately increased.
4.2 Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization or reclassification of the capital stock of
the Corporation, any consolidation or merger of the Corporation with another
entity, or the sale of all or substantially all of the Corporation's assets to
another entity shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the Holder shall thereafter have the right to purchase and
receive upon the basis
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and the terms and conditions specified in this Warrant and in lieu of the shares
of Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby had such reorganization,
reclassification, consolidation, merger or sale not taken place and in any such
case appropriate provision shall be made with respect to the rights and
interests of the holder of this warrant to the end that the provisions hereof
(including without limitation provisions for adjustments of the Warrant Purchase
Price and of the number of shares of Common Stock purchasable and receivable
upon the exercise of this warrant) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument, executed and mailed or delivered to the Holder at the
last address thereof appearing on the books of the Corporation, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase.
4.3 Issuance of Certain Additional Shares. If the Corporation shall
sell or issue to any person any shares of Common Stock or any securities,
options, warrants or rights entitling any person to subscribe for, purchase,
convert or exchange into shares of Common Stock (other than (i) sales or
issuances to officers or employees of, or consultants or advisors to, the
Corporation pursuant to any stock incentive plan or arrangement approved by the
Corporation's Board of Directors and (ii) shares issued upon the conversion of
shares of Series A Convertible Preferred Stock) at a price per share of Common
Stock, or having an exercise price per share of Common Stock, as the case may
be, that is less than the Current Market Value of Common Stock on the date of
issuance (such shares being referred to as the "Below Market Shares") , the
Warrant Purchase Price shall be adjusted on and after the date of such sale or
issuance by multiplying the Warrant Purchase Price by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on such date
plus the number of shares of Common Stock that the aggregate purchase price or
exercise price of such Below Market Shares would purchase at the Current Market
Value, and of which the denominator shall be the number of shares of Common
Stock outstanding on such date plus the number of Below Market Shares. The
adjustment to the Warrant Purchase Price set forth above shall be made
successively whenever a sale or
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issuance of Below Market Shares occurs; provided, however, that, if any such
options, warrants or rights expire without the issuance of shares of Common
Stock, then the Warrant Purchase Price shall again be adjusted to equal the
Warrant Purchase Price in effect had such issuance of Below Market Shares not
occurred.
4.4 Notice of Adjustment. Upon any adjustment of the Warrant
Purchase Price and/or number of Warrant Shares, then and in each such case the
Corporation shall give written notice thereof, by first class mail, postage
prepaid, addressed to the Holder at the address thereof as shown on the books of
the Corporation. The notice shall state the Warrant Purchase Price and/or number
of Warrant Shares resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
5. Issue Tax. The issuance of shares of Common Stock upon the
exercise of this Warrant shall be made without charge to the Holder for any
issue tax in respect thereof, provided that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any shares of Common Stock in a name other than
that of the then Holder of this Warrant.
6. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of this Warrant or of any shares of Common
Stock issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise hereof.
7. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this warrant shall be construed as conferring upon the Holder the
right to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of Directors of the Corporation or any
other matter or any rights whatsoever as a stockholder of the Corporation. No
dividends or interest shall be payable or accrued in respect of this Warrant or
the shares of Common Stock purchasable hereunder until, and only to the extent
that, this Warrant shall have been exercised. No provisions hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of such Holder for the Warrant Purchase Price or as a
stockholder of the Corporation, whether such liability is asserted by the
Corporation or by its creditors.
8. Restrictions on Transferability of Securities; Compliance with
Securities Act.
8.1 Restrictions on Transferability. The Warrant and the
Common Stock issuable hereunder shall not be transferable
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except upon the conditions specified in this Section 8, which conditions are
intended to insure compliance with the provisions of the Securities Act of 1933,
as amended (the "Securities Act") Each holder of this Warrant or the Common
Stock issuable hereunder will cause any proposed transferee of the Warrant or
such Common Stock to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section A.
8.2 Transfers Not Subject to Restrictions. Subject to Section 9
hereof, the Holder may sell, assign or transfer this Warrant to an affiliate, or
to his parents, the parents of his spouse, his spouse or issue or adopted
children, or to a trust established for the benefit of his parents, the parents
of his spouse, his spouse, issue, adopted children, or himself, or dispose of
them under his will.
8.3 Restrictive Legend. Each certificate representing (a) this
Warrant, (b) the shares of Common Stock or other securities issued upon exercise
of the Warrant and (c) any other securities issued in respect of such shares of
Common Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event (collectively, the "Restricted Securities") ,
shall (unless otherwise permitted by the provisions of Section 8.4 below or
unless such securities have been registered under the Securities Act) be
imprinted with the following legend, in addition to any legend required under
applicable state securities laws:
THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
Upon request of a holder of such a certificate, the Corporation
shall remove the foregoing legend therefrom or issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Corporation shall have received either the opinion referred to in Section 8.4(a)
or the "no-action" letter referred to in Section 8.4(b) to the effect that any
transfer by such holder of the securities evidenced by such certificate will
be exempt from the registration and/or qualification requirements of, and that
such legend is not required in order to establish compliance with, the
Securities Act, and if applicable, any state securities laws under which
transfer restrictions on such securities had been previously imposed.
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8.4 Notice of Proposed Transfers. The holder of each
certificate representing Restricted Securities by acceptance thereof agrees to
comply in all respects with the provisions of this Section 8.4. Prior to any
proposed transfer of any Restricted Securities, the holder thereof shall give
written notice to the Corporation of such holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied by either (a)
an unqualified written legal opinion addressed to the Corporation from counsel
who shall be reasonably satisfactory to the Corporation, which opinion shall be
reasonably satisfactory in form and substance to the Corporation's counsel, to
the effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act and any applicable state
securities laws, or (b) a "no-action" letter from the Securities and Exchange
Commission (and any necessary state securities administrator) to the effect that
the distribution of such securities without registration will not result in a
recommendation by the staff of the Commission (or such administrators) that
action be taken with respect thereto, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the
Corporation. Each certificate evidencing the Restricted Securities transferred
as above provided shall bear the appropriate restrictive legend set forth in
Section 8.4 above.
8.5 Required Approvals. Notwithstanding anything to the
contrary contained herein, if any exercise of this warrant would result in a
change in "control" of the Corporation, as defined in Section 1215(b) of the
California Insurance Code, then such exercise shall be delayed until such time
as the approval of the California Department of Insurance is obtained.
9. Transferability of Warrant. Each qualified transferee of this
Warrant must, prior to the acknowledgment and acceptance of such transfer by the
Corporation, agree to take and hold this Warrant subject to the provisions
specified herein. Any such permitted transfers may be made without charge to the
Holder (except for transfer taxes), at the office or agency of the Corporation
referred to in the first paragraph of this Warrant, by the Holder or by its duly
authorized attorney, upon surrender of this Warrant properly endorsed.
10. Rights and Obligations Survive Exercise of Warrant. The rights
and obligations of the Corporation, of the Holder and of the holder of shares of
Common Stock issued upon exercise of this Warrant contained in Sections 8, 9 and
10 shall survive the exercise of this Warrant.
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11. Modification and Waiver. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request or other document required or
permitted to be given or delivered to the record Holder or the Corporation shall
be delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such Holder at its address as shown on the books of the Corporation or
to the Corporation at the address indicated therefor in the first paragraph of
this Warrant.
13. Binding Effect on Successors. This Warrant shall be binding
upon any corporation succeeding the Corporation by merger, consolidation or
acquisition of all or substantially all of the Corporation's assets, and all of
the obligations of the Corporation relating to the Common Stock issuable upon
the exercise of this Warrant shall survive such merger, consolidation or
acquisition and all of the covenants and agreements of the Corporation shall
inure to the benefit of the permitted successors and assigns of the Holder.
14. Descriptive Headings; Governing Law. The descriptive headings
of the several paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. This Warrant shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of Delaware without regard to conflicts of laws principles
thereof.
15. Lost Warrant or Certificates. The Corporation represents and
warrants to the Holder that upon receipt of evidence reasonably satisfactory to
the Corporation of the loss, theft, destruction or mutilation of this Warrant or
certificate evidencing shares of Common Stock issued on exercise hereof and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such Warrant or stock certificate,
the Corporation will make and deliver a new Warrant or stock certificate, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
16. Expiration of Warrant. Subject to Section 1.2 hereof, this
Warrant shall expire and shall no longer be exercisable on or after January 1,
2004.
17. Note and Warrant Purchase Agreement. This Warrant is one of the
Common Stock Purchase Warrants (the "Warrants", such term to include all
Warrants in substitution therefor) originally authorized for issuance pursuant
to the Note and Warrant Purchase
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Agreement (the "Note and Warrant Purchase Agreement"), dated as of December 28,
1995, between the Corporation and certain institutional investors, copies of
which are on file at the principal office of the Corporation in Sacramento,
California. The holder of this Warrant is entitled to the benefits of the Note
and Warrant Purchase Agreement and may enforce the agreements of the Corporation
contained therein, all in accordance with the terms thereof. Certain terms used
in this Warrant not otherwise defined herein shall have the respective meanings
specified in the Note and Warrant Purchase Agreement.
18. Stockholders Agreement. All Common Stock or other securities
issuable upon exercise of this warrant shall be subject to all of the provisions
of and shall be entitled to the benefits of the Stockholders Agreement dated as
of September 7, 1993 by and among the Corporation and the stockholders of the
Corporation as of such date (the "Stockholders Agreement"). Upon such exercise,
the holder of the Common Stock or other securities issuable hereunder shall
become a "Stockholder" under such Agreement, as the Stockholders Agreement may
have been modified, supplemented or amended prior to the date of such exercise.
The provisions of this Section 19 shall not apply if the Stockholders Agreement
has been terminated, either by agreement of the parties thereto or by its own
terms, prior to the date of such exercise.
19. Certain Events. In the event of the dissolution, liquidation or
winding up of the Corporation, the rights to purchase Warrant Shares evidenced
by this Warrant shall terminate and expire and the Holder of this Warrant shall
be entitled to receive from the Corporation, after payment of all debts,
obligations and liabilities of the Corporation and after payment of any
liquidation preference on any class of capital stock of the Corporation having a
preference as to such payments over the holders of Common Stock, payment in an
amount equal to the product of (a) the amount by which the liquidating payment
per share of Common Stock exceeds the Exercise Price, multiplied by (b) the
number of shares of Common Stock purchasable pursuant to this Warrant.
IN WITNESS WHEREOF, the Corporation has caused this warrant to be
duly executed and issued by the officer or officers thereunto duly authorized as
of this 28th day of December, 1995.
FINANCIAL PACIFIC INSURANCE GROUP, INC.,
a Delaware corporation
By:
------------------------------------------
Robert C. Goodell, President
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To the Corporation:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder,
__________________________________________________________________ (___________)
of the number of shares of Common Stock purchasable under this warrant and
herewith makes payment of _____________________________________________________
Dollars ($_________) therefor, and requests that a certificate(s) for such
shares be issued in the name of, and delivered to, ____________________________
_______________________________________________________________________________
_________________________________, whose address is ___________________________
_______________________________________________________________________________
____________________________________________________________.
The undersigned represents that it is acquiring such shares of Common
Stock for its own account for investment purposes only and not with a view to or
for sale in connection with any distribution thereof.
DATED:________________
__________________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
Address:
__________________________________________________
__________________________________________________
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ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________________ hereby
sells, assigns and transfers unto:
Name:_________________________________
Address:______________________________
______________________________
the right to purchase Common Stock represented by this Warrant to the extent of
_________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ___________________________________________,
attorney, to transfer the same on the books of the Corporation with full power
of substitution in the premises.
Dated:___________________
__________________________________________________
(Signature)
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