EXHIBIT 10.02
MORTGAGE ASSISTANCE CENTER CORPORATION
SERIES A PREFERRED STOCK
INVESTORS' RIGHTS AGREEMENT
NOVEMBER 30, 2006
TABLE OF CONTENTS
REGISTRATION RIGHTS............................................................1
1.1 Registration Rights..........................................1
1.2 Piggy-Back Registration......................................2
1.3 Registration Expenses........................................3
1.4 Form S-3 Registration........................................3
1.5 Registration Procedures......................................3
1.6 Indemnification..............................................4
1.7 Information by Holder........................................6
1.8 Limitations on Subsequent Registration Rights................6
1.9 Rule 144 Reporting...........................................6
1.10 Allocation of Registration Opportunities.....................7
1.11 Delay of Registration........................................7
1.12 Limitations on Registration..................................8
1.13 Market Stand-Off.............................................8
1.14 Legend.......................................................8
COMPANY COVENANTS..............................................................9
2.1 Financial Information........................................9
2.2 Inspection Rights............................................9
2.3 Board of Directors..........................................10
MISCELLANEOUS.................................................................10
3.1 Certain Definitions.........................................10
3.2 Amendment...................................................11
3.3 Notices.....................................................11
3.4 Governing Law...............................................12
3.5 Successors and Assigns......................................12
3.6 Entire Agreement............................................13
3.7 Delays or Omissions.........................................13
3.8 Severability................................................13
3.9 Titles and Subtitles........................................13
3.10 Construction................................................13
3.11 Counterparts................................................13
3.12 Facsimile Execution and Delivery............................13
3.13 Further Assurances..........................................14
3.14 Several Rights and Obligations..............................14
3.15 Termination.................................................14
MORTGAGE ASSISTANCE CENTER CORPORATION
SERIES A PREFERRED STOCK
INVESTORS' RIGHTS AGREEMENT
This SERIES A PREFERRED STOCK INVESTORS' RIGHTS AGREEMENT (this
"Agreement"), dated November 30, 2006 (the "Effective Date"), is executed by and
among Mortgage Assistance Center Corporation, a Florida corporation (the
"Company"), and the undersigned investors (the "Investors").
RECITALS
WHEREAS, the Investors are parties to the Series A Preferred Stock
Purchase Agreement, dated as of the Effective Date, by and among the Company and
the Investors (the "Purchase Agreement") pursuant to which such Investors
purchased shares of the Company's Series A Preferred Stock, par value $0.001 per
share (the "Series A Preferred Stock"), and warrants to purchase shares of the
Company's Common Stock, par value $0.001 per share (the "Common Stock", and the
shares of Common Stock underlying the warrants issued in connection with the
Purchase Agreement and the Note (defined below) are referred to as the
"Shares");
WHEREAS, a certain Investor has advanced funds to the Company pursuant
to certain Promissory Notes dated August 10, 2006 and September 14, 2006 in the
aggregate principal amount of $200,000 (collectively, the "Note"), and in
connection therewith was granted a warrant to purchase shares of the Company's
Common Stock; and
WHEREAS, certain of the Company's and the Investors' obligations under
the Purchase Agreement are conditioned on the Company and the Investors
executing and delivering this Agreement.
AGREEMENT
In consideration of the mutual promises and covenants set forth in this
Agreement and the Purchase Agreement, the parties agree as follows:
SECTION 1
REGISTRATION RIGHTS
1.1 Registration Rights
The Company shall file a registration statement covering the
Registrable Securities and shall cause such registration statement to be
effective within eighteen (18) months after the Effective Date (the "Filing
Period").
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1.2 Piggy-Back Registration (a) In the event the Registrable Securities
have not otherwise been registered in accordance with Section 1.1, if the
Company decides at any time to register any of the Company's securities either
for the Company's own account or the account of a security holder or holders
exercising their respective demand registration rights or otherwise (other than
pursuant to Section 1.1 or Section 1.4), other than a registration relating
solely to employee benefit plans, the offer and sale of debt securities, or a
corporate reorganization or other transaction on Form S-4 (or any successor
form), then the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) use its best efforts to include in such registration (and
any related qualification under blue sky securities laws or other
compliance), except as set forth in Section 1.2(b), and include in any
underwriting involved therein, all the Registrable Securities specified
in a written request or requests made by any Holder and received by the
Company within thirty (30) days after written notice is delivered by
the Company. Such request by a Holder may specify all or a part of such
Holder's Registrable Securities. If a Holder decides not to include all
of its Registrable Securities in any registration statement thereafter
filed by the Company, then such Holder shall nevertheless continue to
have the right to include any of its Registrable Securities in any
subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
(b) If the registration for which the Company gives notice is for a
registered public offering involving an underwriting, then the Company will so
advise the Holders as a part of the written notice given pursuant to Section
1.2(a)(i). In such event, any Holder's right to registration pursuant to this
Section 1.2 will be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting will (together with the
Company and the other holders of Company securities with registration rights to
participate therein) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the Company
and reasonably acceptable to a majority in interest of the Holders' Registrable
Securities included in such underwriting.
(c) Notwithstanding any other provision of this Section 1.2, if the
underwriters' representative advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, then
the underwriters' representative may (subject to the limitations set forth
below) limit the number of Registrable Securities to be included in, the
registration and underwriting, but in no event shall (i) the amount of
securities of the selling Holders included in the offering be reduced unless the
securities of all other selling stockholders included in the offering are first
excluded entirely, or (ii) the amount of securities of the selling Holders
included in the offering be reduced below twenty percent (20%) of the total
amount of securities included in such offering, unless such offering is the
initial public offering of the Company's securities, in which case the selling
Holders may be excluded entirely if the underwriter's representative makes the
determination above and if the securities of all other selling stockholders are
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first excluded entirely. The Company will so advise all Holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting will, subject to
the immediately preceding sentence, be allocated first to the Company for
securities being sold for the Company's own account and thereafter as set forth
in Section 1.10. If any Person does not agree to the terms of any such
underwriting, then such Person will be excluded from the underwriting by written
notice from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting will be withdrawn from
such registration. To facilitate the allocation of shares in accordance with the
foregoing provisions, the Company or the underwriter(s) may round the number of
shares allocated to any Holder to the nearest 100 shares.
(d) If shares are so withdrawn from the registration and if the number
of shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, then the Company will offer
to all Persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the Persons requesting additional inclusion in accordance
with Section 1.10.
1.3 Registration Expenses
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 1.1, 1.2 or 1.4 will be borne by
the Company provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.4 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
selling Holders shall bear such expenses pro rata based upon the number of
Registrable Securities that were to be included in the withdrawn registration).
1.4 Form S-3 Registration
To the extent the Company is not otherwise already eligible, the
Company will use its best efforts to qualify for registration on Form S-3 (or
any successor form). After the Company has qualified for the use of Form S-3, in
addition to the rights contained in the foregoing provisions of this Section 1,
the Company will effect as soon as practicable a registration on Form S-3 if
requested by one or more Holders who hold in the aggregate at least ten percent
(10%) of the Registrable Securities, which registration will result in aggregate
proceeds to the Company, net of Selling Expenses, of at least $1,000,000.
1.5 Registration Procedures
In the case of each registration effected by the Company pursuant to
this Section 1, the Company will keep each Holder advised in writing as to the
initiation of each registration and as to the completion thereof. At the
Company's expense, the Company will use its best efforts to:
(a) keep such registration effective for a period of one hundred twenty
(120) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever occurs
first;
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(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) furnish such number of prospectuses, including preliminary
prospectuses, and other documents incident thereto, including any amendment of
or supplement to the prospectus, as a Holder from time to time may reasonably
request;
(d) cause all such Registrable Securities registered pursuant to this
Agreement to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(e) enter into and
perform its obligations under any underwriting agreement to effect the offer and
sale of Registrable Securities;
(f) register and qualify the securities covered by such registration
statement under such other securities laws or blue sky laws of such
jurisdictions as will be reasonably requested by the Holders; provided that the
Company will not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions;
(g) notify each Holder covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and
(h) provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effect date of such registration.
1.6 Indemnification
(a) The Company will indemnify, defend and hold harmless each Holder,
its officers, directors, stockholders, partners, members, employees, agents,
legal counsel, accountants and other representatives, and each Person
controlling such Holder within the meaning of Section 15 of the Securities Act,
and each underwriter and each Person who controls any underwriter within the
meaning of Section 15 of the Securities Act, from and against any and all
losses, claims, damages, liabilities, obligations, fines, penalties, judgments,
settlements, costs, expenses and disbursements (including, without limitation,
attorneys' fees and expenses), joint or several (or any action, grievance,
hearing, investigation, proceeding or suit with respect thereto) (collectively,
"Losses") arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any violation
(or alleged violation) by the Company of the Securities Act, the Exchange Act,
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any state securities or blue sky law, or any rule or regulation under any of the
foregoing applicable to the Company. The Company will promptly reimburse each
such indemnified Person for any Losses as they are incurred. The Company will
not be liable for Losses to the extent that such Losses are based on any untrue
statement or omission based upon written information furnished to the Company by
a Holder or underwriter and stated to be specifically for use in such
registration statement, prospectus, offering circular or other document. The
obligations of the Company under this Section 1.6(a) will not apply to amounts
paid in settlement of any such Losses if such settlement is effected without the
Company's consent (which consent will not be unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration is being effected,
indemnify, defend and hold harmless the Company, its officers, directors,
stockholders, partners, members, employees, agents, legal counsel, accountants
and other representatives, and each Person controlling the Company within the
meaning of Section 15 of the Securities Act, and each underwriter and each
Person who controls any underwriter within the meaning of Section 15 of the
Securities Act, from and against any and all Losses arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or (ii) any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The applicable Holder will promptly reimburse each such
indemnified Person for any Losses as they are incurred. The obligations of any
Holder under this Section 1.6(b) will apply only to the extent that such untrue
statement (or alleged u
ntrue statement) or omission (or alleged omission) is
made in a registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein. The
obligations of any Holder under this Section 1.6(b) will not apply to amounts
paid in settlement of any such Losses if such settlement is effected without
such Holder's consent (which consent will not be unreasonably withheld). In no
event will any obligations of a Holder under this Section 1.6(b) exceed the net
proceeds received by such Holder from the offering as to which such registration
is being effected, except in the case of fraud or willful misconduct by such
Holder.
(c) Each Person entitled to indemnification under this Section 1.6 (the
"Indemnified Party") will give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who will conduct the defense of such claim or any litigation resulting
therefrom, will be approved by the Indemnified Party (whose approval will not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at the Indemnified Party's own expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein will not
relieve the Indemnifying Party of its obligations under this Section 1.6, to the
extent such failure is not materially prejudicial; provided, however, that an
Indemnified Party shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the Indemnifying Party, if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
action. No Indemnifying Party, in the defense of any such claim or litigation,
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will, except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party will furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in writing and as will
be reasonably required in connection with defense of such claim and litigation
resulting therefrom.
(d) If the indemnification provided for in this Section 1.6 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any Losses, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, will contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and of the Indemnified Party, on the other hand, in connection with the
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party will be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The obligations of the Company and the Holders under this Section
1.6 shall survive the completion of any offering of Registrable Securities under
this Section 1, and shall otherwise survive the termination of this Agreement.
1.7 Information by Holder
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Sections 1.1, 1.2 and 1.4 with respect to the
Registrable Securities of any selling Holder that such Holder will furnish to
the Company such information regarding such Holder as the Company may reasonably
request in writing and as will be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 1.
1.8 Limitations on Subsequent Registration Rights
From and after the date of this Agreement, the Company will not,
without the prior written consent of a majority in interest of the Holders,
enter into any agreement giving any registration rights that are on parity with
or superior to those granted in this Agreement to any holder or prospective
holder of any Company securities.
1.9 Rule 144 Reporting
With a view to making available to the Holders the benefits of certain
Commission rules and regulations, including Rule 144 under the Securities Act,
that may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
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(a) make and keep public information available, as those terms are
understood and defined in Rule 144 or any similar or analogous rule promulgated
under the Securities Act, at all times after the effective date of the first
registration filed by the Company for an offering of the Company's securities to
the general public;
(b) use commercially reasonable efforts to file with the Commission in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act at any time after the Company has become
subject to such reporting requirements;
(c) so long as a Holder owns any Restricted Securities, furnish to the
Holder promptly upon written request (i) a written statement by the Company as
to the Company's compliance with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act; (ii) a copy of the Company's most
recent annual or quarterly report; and (iii) such other reports and documents as
a Holder may reasonably request in availing itself of any Commission rule or
regulation allowing such Holder to sell any its securities without registration.
1.10 Allocation of Registration Opportunities
If any Holders exercise registration rights under Section 1.2 or 1.4
(but not Section 1.1), and all of such Holders' Registrable Securities requested
to be included in a registration, along with all other securities (including
Registrable Securities) of the Company (the "Other Shares") requested to be
included in a registration on behalf of other selling stockholders, cannot be so
included as a result of limitations of the aggregate number of shares of
Registrable Securities and Other Shares that may be so included, then the number
of shares of the Holders' Registrable Securities that may be so included will be
allocated among the Holders pro rata on the basis of the number of shares of the
Holders' Registrable Securities that would be held by such Holders, assuming
conversion; provided, however, that if any Holder does not request inclusion of
at least the number of shares of Registrable Securities allocated to such Holder
or selling stockholder pursuant to the foregoing procedure, then the remaining
portion of such Holder's allocation will be reallocated among those requesting
Holders whose allocations did not satisfy their requests pro rata on the basis
of the number of shares of Registrable Securities that would be held by such
Holders, assuming conversion, and this procedure will be repeated until all of
the shares of Registrable Securities that may be included in the registration on
behalf of the Holders and other selling stockholders have been so allocated. The
Company will not limit the number of any Holder's Registrable Securities to be
included in a registration pursuant to this Agreement in order to include Other
Shares or, in the case of registrations under Section 1.4, in order to include
in such registration securities registered for the Company's own account.
1.11 Delay of Registration
No Holder will have any right to take any action to restrain, enjoin or
otherwise delay any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 1.
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1.12 Limitations on Registration
The Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to Section 1.1 if the initiating Holders
propose to dispose of shares of Registrable Securities during the Filing Period
that may be immediately registered on Form S-3 pursuant to a request made
pursuant to Section 1.4. The Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to Section 1.4 (i) during
the period that is thirty (30) days before the Company's good faith estimate of
the date of filing of, and ending on a date that is ninety (90) days after the
effective date of, a Company-initiated registration, provided, that the Company
is actively employing in good faith commercially reasonable efforts to cause
such registration statement to become effective and the Company complies with
its obligations under Section 1.2 with respect to those registrations; or (ii)
if the Company has effected two registrations pursuant to Section 1.4 within the
twelve (12) month period immediately preceding the date of such request.
1.13 Market Stand-Off
Each Holder hereby agrees that, if requested in writing by the managing
underwriter and holders of at least ten percent (10%) of the Registrable
Securities that are the subject of a registration that includes some or all of
the shares of Common Stock owned by such Holder, it will not, without the prior
written consent of the managing underwriter, during the period commencing on the
date of the final prospectus relating to registration by the Company for its own
behalf of shares of its Common Stock or any other equity securities under the
Securities Act on a registration statement on Form S-1, Form S-2, or Form S-3,
and ending on the date specified by the Company and the managing underwriter
(such period not to exceed ninety (90) days, (i) lend; offer; pledge; sell;
contract to sell; sell any option or contract to purchase; purchase any option
or contract to sell; grant any option, right, or warrant to purchase; or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable
(directly or indirectly) for Common Stock (whether such shares or any such
securities are then owned by the Holder or are thereafter acquired) or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of such securities,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or other securities, in cash, or otherwise.
The foregoing provisions of this Section 1.13 shall not apply to the sale of any
shares to an underwriter pursuant to an underwriting agreement, and shall be
applicable to the Holders only if all officers, directors, and stockholders
individually owning more than five percent (5%) of the Company's outstanding
Common Stock (after giving effect to conversion into Common Stock of all
outstanding Series A Preferred Stock) are subject to the same restrictions. Each
Holder further agrees to execute such agreements as may be reasonably requested
by the underwriters in connection with such registration that are consistent
with this Section 1.13 or that are necessary to give further effect thereto.
1.14 Legend
In addition to any other required legends, each certificate or
instrument representing (i) the Series A Preferred Stock, (ii) the Registrable
Securities, and (iii) any other securities issued in respect of the securities
referenced in clauses (i) and (ii), upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall be stamped or
otherwise imprinted with a legend substantially in the following form:
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THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF AN INVESTORS' RIGHTS AGREEMENT BETWEEN THE COMPANY
AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
The Holders consent to the Company making a notation in its records and giving
instructions to any transfer agent of the Restricted Securities in order to
implement the restrictions on transfer set forth in this Section 1.14.
SECTION 2
COMPANY COVENANTS
The Company covenants and agrees as follows:
2.1 Financial Information
The Company will furnish the following reports to each Holder: (a) as
soon as practicable but no later than ninety (90) days after the end of each
fiscal year, a consolidated balance sheet of the Company and its subsidiaries,
if any, as at the end of such fiscal year, and consolidated statements of income
and cash flows of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles
consistently applied, certified by independent public accountants selected by
the Company; (b) as soon as practicable but no later than forty-five (45) days
after the end of each calendar quarter, an unaudited consolidated balance sheet
of the Company and its subsidiaries, if any, as of the end of each such calendar
quarter, and consolidated statements of income and cash flows of the Company and
its subsidiaries, if any, for such period; (c) as soon as practicable but no
later than twenty-five (25) days after the end of each calendar month, an
unaudited consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of each such calendar month, and consolidated statements of
income and cash flows of the Company and its subsidiaries, if any, for such
period; and (d) at least thirty (30) days before the beginning of each fiscal
year, a projected annual budget and business plan for such fiscal year.
2.2 Inspection Rights
The Company shall permit each Holder, at such Holder's expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, during normal business hours with two (2) business days' written
notice as may be requested by such Holder. The provisions of this Section 2.2
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shall not be in limitation of any rights which any such Holder may have with
respect to the books and records of the Company and its subsidiaries, or to
inspect their properties or discuss their affairs, finances and accounts, under
the laws of the State of Florida.
2.3 Board of Directors
The Company shall promptly reimburse in full each director of the
Company and its subsidiaries who is not an employee of the Company or its
subsidiaries for all of his or her reasonable out-of-pocket expenses incurred in
attending each meeting of the Board of Directors of the Company or subsidiary,
or any committee thereof. In addition, the Company shall promptly reimburse in
full each such director for all of his or her reasonable out-of-pocket expenses
incurred in performing business of the Company or a subsidiary at the request of
the Company or a subsidiary. Unless otherwise determined by the Board of
Directors, including the Series A Directors as defined in the Articles of
Amendment of Articles of Incorporation of the Company (the "Series A
Directors"), during the first twelve month period following the closing of the
Purchase Agreement (the "Closing"), the Series A Directors shall each receive
compensation of $1,000 per quarter for their service on the Company's and each
subsidiary's Board of Directors, with such amount increased to (i) $2,500 per
quarter during the second twelve month period following the Closing, and (ii)
$5,000 per quarter for each quarter during the third twelve month period
following the Closing and each quarter thereafter.
SECTION 3
MISCELLANEOUS
3.1 Certain Definitions
As used in this Agreement, the following terms will have the meanings
set forth below:
(a) "Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Common Stock" shall have the meaning give to such term in the
Recitals.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
thereunder, all as in effect from time to time.
(d) "Holder" means any Investor or any of such Investor's affiliates
who holds Registrable Securities and any transferee of such Registrable
Securities.
(e) "Person" means any person, entity or organization.
(f) "Register," "registered," "registration," and derivatives thereof
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
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(g) "Registrable Securities" means issued shares of Common Stock and
shares of Common Stock issuable upon conversion or exercise of any convertible
securities, warrants or options, but does not include shares of Common Stock
which have previously been registered or which have been sold to the public
either pursuant to a registration statement or Rule 144 under the Securities
Act.
(h) "Registration Expenses" means all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of the Company's counsel, fees and disbursements of one
counsel for the selling Holders whose shares are included in such registration
not to exceed $37,500, blue sky fees and expenses, stock transfer taxes, and
expenses of any regular or special audits incident to or required by any such
registration, but will not include Selling Expenses.
(i) "Securities Act" means the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations thereunder, all as
in effect from time to time.
(j) "Selling Expenses" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
3.2 Amendment
Except as expressly provided in this Agreement, neither this Agreement
nor any term of this Agreement may be amended, waived, discharged or terminated
other than by a written instrument referencing this Agreement and signed by the
Company (after having been approved by the Board of Directors, including the
Series A Directors) and by Holders holding a majority of the Registrable
Securities.
3.3 Notices
All notices and other communications required or permitted under this
Agreement will be in writing and will be mailed by registered or certified mail,
postage prepaid, sent by facsimile, or otherwise delivered by hand or by
messenger addressed:
(k) if to an Investor, to such address or facsimile number as shown on
the Schedule of Investors attached to the Purchase Agreement, or to such other
address or facsimile number as an Investor will have furnished to the Company
and the other Investors, and a copy, which will not constitute notice, to:
Hallett & Perrin, P.C.
Attn: Scot W. O'Brien
2001 Bryan Street, Suite 3900
Dallas, Texas 75201
Fax: (214) 922-4144
(l) if to any other Holder, to such address or facsimile number as
shown in the Company's records, or, until any such holder so furnishes an
address or facsimile number to the Company, then to and at the address or
facsimile number of the last Holder for which the Company has contact
information in its records; or
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(m) if to the Company, to:
Mortgage Assistance Center Corporation
2614 Main Street
Dallas, Texas 75226
Attention: Chief Executive Officer
Facsimile:
or to such other address or facsimile number as the Company will have furnished
to the Investors, with a copy, which will not constitute notice, to:
With a copy to:
Michael Caolo & Associates
Attn: Michael Caolo, Jr.
600 E. John Carpenter Freeway, Suite 170
Irving, Texas 75062
Fax: (972) 717-5208
Each notice or other communication will be treated as effective or
having been given when delivered if delivered personally, or, if sent by mail,
at the earlier of its receipt or three (3) business days after such notice or
other communication has been deposited in a regularly maintained receptacle for
deposit of United States mail or, if sent by facsimile, upon confirmation of
facsimile transfer.
3.4 Governing Law
This Agreement will be governed in all respects by the internal laws of
the State of Texas as applied to agreements entered into among Texas residents
to be performed entirely within Texas, without regard to principles of conflicts
of law.
3.5 Successors and Assigns
This Agreement and any and all rights, duties and obligations under
this Agreement, may be assigned, transferred, delegated, or sublicensed by any
Investor, provided that the Company is provided prior written notice of such
assignment, transfer, delegation or sublicense. Subject to the foregoing, the
provisions of this Agreement will inure to the benefit of, and be binding upon,
the parties' successors, assigns, heirs, executors and administrators.
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3.6 Entire Agreement
This Agreement, the other Transaction Agreements (as defined in the
Purchase Agreement) and the schedules and exhibits thereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
3.7 Delays or Omissions
Except as expressly provided herein, no delay or omission to exercise
any right, power or remedy accruing to any party upon any breach or default of
any other party under this Agreement will impair any such right, power or remedy
of such non-breaching party, and it will not be construed to be a waiver of any
such breach or default or a waiver of any similar breach or default thereafter
occurring, and no waiver of any single breach or default will be deemed a waiver
of any other breach or default occurring before or after such single breach or
default. Any waiver, permit, consent or approval of any kind or character by any
party of any breach or default under this Agreement, or any waiver by any party
of any provisions or conditions of this Agreement, must be in writing and will
be effective only to the extent specifically set forth in such writing.
3.8 Severability
If any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, then this Agreement
will continue in full force and effect without such provision, and the Parties
agree to negotiate, in good faith, a legal and enforceable substitute provision
which most nearly reflects the Parties' intent in entering into this Agreement.
3.9 Titles and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
3.10 Construction
As used in this Agreement, the word "including" means "including
without limitation" and the word "days" (unless otherwise expressly indicated)
refers to calendar days.
3.11 Counterparts
This Agreement may be executed in any number of counterparts, each of
which will be enforceable against the parties that execute such counterparts,
and all of which together will constitute one instrument.
3.12 Facsimile Execution and Delivery
A facsimile or other reproduction of this Agreement may be executed by
one or more parties, and an executed copy of this Agreement may be delivered by
one or more parties by facsimile, and such execution and delivery will be
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considered valid, binding and effective for all purposes. At the request of any
party, all parties agree to execute an original of this Agreement as well as any
facsimile or other reproduction of this Agreement.
3.13 Further Assurances
Each party agrees to execute and deliver all such instruments and
documents, and do all such other acts and things, as may be necessary to more
fully effectuate the purposes and intent of this Agreement.
3.14 Several Rights and Obligations
Unless otherwise expressly provided in this Agreement, the Holders'
rights and obligations under this Agreement are several rights and obligations,
not rights or obligations jointly held with any other Holder.
3.15 Termination
This Agreement will terminate in its entirety and be of no further
force or effect (a) immediately before the closing of a sale, lease or other
conveyance of all or substantially all of the Company's assets, (b) immediately
before the closing of an acquisition of the Company by another entity by
consolidation, merger or other reorganization in which the holders of the
Company's outstanding voting stock immediately before the acquisition
transaction own, immediately after the acquisition transaction, securities
representing less than fifty percent (50%) of the voting power of the Company or
other entity surviving such transaction (other than a merger effected solely for
the purpose of changing the Company's domicile or effected solely for the
purpose of raising operating capital), or (c) on the date that is immediately
prior to the Company's sale of its Common Stock in a firm commitment
underwritten public offering pursuant to a registration statement under the
Securities Act, in which the net proceeds to the Company are equal to or greater
than $20,000,000 (before deduction of underwriters' commissions and expenses).
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
THE COMPANY:
MORTGAGE ASSISTANCE CENTER CORPORATION
By:__________________________________________
Name:________________________________________
Title:_______________________________________
INVESTORS:
W.C. PAYNE INVESTMENTS, LLC
By:__________________________________________
Name: W.C. Payne
Its: Managing Member
FAX / MACC, L.P.
By: Family Access Exchange II, L.P.
Its: General Partner
By: FAX GenPar, L.L.C.
Its: General Partner
By:__________________________________________
Name: Rod Cain Jones
Its: President