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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): APRIL 9, 1997
CITYSCAPE FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 0-27314 11-2994671
STATE OR OTHER JURISDICTION COMMISSION (IRS EMPLOYER
OF INCORPORATION FILE NUMBER IDENTIFICATION NO.)
565 TAXTER ROAD, ELMSFORD, NEW YORK 10523-5200
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES) ZIP CODE
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Registrant's telephone number, including area code: (914) 592-6677
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FORMER NAME OR FORMER ADDRESS,
IF CHANGED SINCE LAST REPORT
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Item 5. Other Events.
ISSUANCE OF 6% CONVERTIBLE PREFERRED STOCK, SERIES A AND RELATED
WARRANTS
On April 9, 1997, the Company completed the private placement of 5,000
shares of 6% Convertible Preferred Stock, Series A (the "Series A Preferred
Stock"), with a liquidation preference (the "Liquidation Preference") of $10,000
per share, and related Warrants, pursuant to which the Company received
aggregate net proceeds (after transaction fees and expenses) of approximately
$49 million. The net proceeds from the sale of the Series A Preferred Stock will
be used for working capital purposes or for the repayment of outstanding
indebtedness under the Company's Senior Secured Credit Agreement.
Dividends on the Series A Preferred Stock are cumulative at the rate of
6% of the Liquidation Preference per annum payable quarterly. Dividends are
payable, at the option of the Company, (i) in cash, (ii) in shares of Common
Stock valued at the closing price on the day immediately preceding the dividend
payment date or (iii) by increasing the Liquidation Preference in an amount
equal to and in lieu of the cash dividend payment.
The Series A Preferred Stock is redeemable at the option of the Company
at a redemption price equal to 105% of the Liquidation Preference at any time
prior to July 9, 1997 or thereafter at a redemption price equal to 120% of the
Liquidation Preference if the closing price of the Common Stock is less than
$17.50 per share (subject to adjustments) for ten consecutive trading days. In
addition, the Series A Preferred Stock is redeemable at the option of the
Company at a redemption price equal to 120% of the Liquidation Preference within
30 days of the occurrence of any of the following events: (i) the Common Stock
ceases to be listed on Nasdaq or a national securities exchange; (ii) the
Company is unable for any reason to issue Common Stock upon receipt of a notice
of conversion (such redemption only to the effected holders); (iii) the Company
fails to make certain cash payments when due as described below (such redemption
only to the effected holders); (iv) trading in the Common Stock is suspended by
Nasdaq or the principal market on which the Common Stock is traded for more than
seven consecutive trading days; and (v) the registration statement the Company
is required to file with respect to the resale of the Common Stock issuable upon
conversion of the Series A Preferred or exercise of the Warrants (the "Preferred
Registration Statement") has not been declared effective on or before October 6,
1997.
The Series A Preferred Stock is convertible into shares of Common Stock
subject to the following restrictions: each holder is entitled to convert up to
25% of its Series A Preferred Stock on the date of issuance; up to 50% (on a
cumulative basis) after 90 days; up to 75% (on a cumulative basis) after 180
days; and up to 100% after 270 days. The conversion price is equal to the lowest
daily sales price of the Common Stock during the four consecutive trading days
immediately preceding conversion (the "Conversion Period"), discounted by 2% for
conversions occurring on days 91 through 180 following original issuance, 3% for
conversions occurring on days 181 through 270 and 4% thereafter. Upon the
occurrence of any of the events that give rise to the Company's optional
redemption right described in clauses (i) through (v) of the previous paragraph,
the conversion restrictions will be lifted, the Conversion Period will be
increased to 15 consecutive trading days and the conversion discount will be
increased to 10%. In addition, during the continuance of such events or the
failure (beyond certain specified periods) of the Preferred Registration
Statement to remain effective and available for use, the dividend rate will be
increased to 15% and the Company will be obligated to make certain cash payments
to the holders of the Series A Preferred Stock, provided that if the Company is
prohibited from making such payments, such amounts will be added to the
Liquidation Preference. Any shares of Series A Preferred Stock outstanding on
the fifth anniversary of the original issuance date (subject to certain
extensions as provided in the Certificate of Designations) will be automatically
converted into Common Stock at the conversion price in effect on the date
thereof.
In the event of a Change of Control (as defined below) of the Company,
the conversion restrictions will be lifted and holders of the Series A Preferred
Stock may elect, within a specified period, to have the Company redeem such
stock at a redemption price equal to 110% of the Liquidation Preference. For
purposes of the Series A Preferred Stock, a Change of Control is defined as (i)
the sale, conveyance or disposition of all or substantially all of the assets of
the Company, (ii) the consolidation or merger of the Company, in which the
stockholders of the Company immediately preceding the merger or consolidation
fail to continue to own more than 50% of the voting power of the capital stock
of the surviving entity and (iii) the acquisition of more than 50% of the
voting power of the Company's capital stock by any entity or "group," subject to
certain exceptions.
The Warrants are exercisable at any time within five years of issuance
for an aggregate of 500,000 shares of Common Stock at an exercise price per
share of $20.625, which is equal to 125% of the closing sale price of the Common
Stock on the date immediately prior to the date of original issuance of the
Warrants.
The Company has provided registration rights in connection with the
resale of the Common Stock issued upon conversion of the Series A Preferred
Stock or the exercise of the Warrants and has agreed to file the Preferred
Registration Statement.
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A copy of the underlying Securities Purchase Agreement by and
between the Company and the purchasers named therein, the Certificate of
Designation of the Series A Preferred Stock, the Registration Rights Agreement
and the Form of Warrant have been filed with this Form 8-K as exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
4.1 Certificate of Designation of 6% Convertible Preferred Stock, Series
A.
4.2 Securities Purchase Agreement dated April 9, 1997 by and among the
Company and the purchasers named therein.
4.3 Registration Rights Agreement dated April 9, 1997 by and among the
Company and the purchasers named therein.
4.4 Form of Common Stock Purchase Warrant.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
CITYSCAPE FINANCIAL CORP.
(Registrant)
By: /s/ ROBERT C. PATENT
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Name: Robert C. Patent
Title: Executive Vice President
Dated: April 10, 1997
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INDEX TO EXHIBITS
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EXHIBITS DESCRIPTION PAGE
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4.1 Certificate of Designation of 6% Convertible Preferred Stock, Series A.
4.2 Securities Purchase Agreement dated April 9, 1997 by and among the
Registrant and the purchasers named therein.
4.3 Registration Rights Agreement dated April 9, 1997 by and among the Company
and the purchasers named therein.
4.4 Form of Common Stock Purchase Warrant.
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EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
OF
6% CONVERTIBLE PREFERRED STOCK, SERIES A
OF
CITYSCAPE FINANCIAL CORP.
Cityscape Financial Corp., a Delaware corporation (the "Corporation"),
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, does hereby state and certify that pursuant to the authority
expressly vested in the Board of Directors of the Corporation by the Certificate
of Incorporation of the Corporation, the Board of Directors duly adopted the
following resolutions, which resolutions remain in full force and effect as of
the date hereof;
RESOLVED, that, pursuant to authority granted to and vested in the Board of
Directors in accordance with the Certificate of Incorporation of the
Corporation, the Board of Directors hereby authorizes the issuance of, and fixes
the designation and preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions, of a series of
the Corporation's previously authorized Preferred Stock consisting of 5,000
shares, par value $0.01, to be designated "6% Convertible Preferred Stock,
Series A" (the "Series A Preferred Stock").
RESOLVED, that each of the shares of Series A Preferred Stock shall rank
equally in all respects and shall be subject to the following terms and
provisions:
1. Dividends.
(a) Cumulative. The holders of the Series A Preferred Stock shall be
entitled to receive dividends at the rate of six percent (6%) of the Liquidation
Preference of each share of Series A Preferred Stock, per annum payable
quarterly on March 31, June 30, September 30 and December 31 of each year,
commencing June 30, 1997 (each a "Dividend Payment Date"), in preference and
priority to any payment of any dividend on the Common Stock (as defined below)
or any other class or series of Junior Stock (as defined below) of the
Corporation. Such dividends shall accrue on each share of Series A Preferred
Stock from the most recent date on which a dividend has been paid with respect
to such Series A Preferred Stock, or if no dividends have been paid, from the
date of the original issuance of such Series A Preferred Stock, and such
dividends shall accrue on a daily basis, determined based on the actual number
of days and months elapsed and computed on a 360-day year consisting of twelve
30-day months. If a holder of Series A Preferred Stock elects to convert all or
a portion of its Series A Preferred Stock at any time prior to a Dividend
Payment Date, dividends shall accrue with respect to such holder's Series A
Preferred Stock up to and including the day of conversion and in lieu of payment
of such dividend an amount equal to such dividend shall be added to the
Liquidation Preference (as defined below) of such shares of Series A Preferred
Stock to be converted. If at any time dividends on the outstanding Series A
Preferred Stock at the rate set forth above shall not have been paid or declared
and set apart for payment with respect to all preceding periods, the amount of
the deficiency shall be fully paid or declared and set apart for payment, before
any distribution, whether by way of dividend or otherwise, shall be declared or
paid upon or set apart for the shares of any class or series of Junior Stock of
the Corporation.
(b) Cash, Common Stock or Liquidation Preference Adjustment. Dividends on
the outstanding Series A Preferred Stock are payable to each holder of Series A
Preferred Stock registered on the books of the Corporation, at the option of the
Corporation, either (i) in cash, provided the Corporation has assets legally
available therefor, (ii) in shares of Common Stock, as determined based upon the
closing price of the Common Stock on the day immediately preceding the Dividend
Payment Date with respect to such dividend, provided that the certificates
representing such shares of Common Stock do not bear any legends restricting
their transfer or there is an effective registration statement registering the
resale by the holders of Series A Preferred Stock of such shares of Common Stock
or (iii) in lieu of payment of such dividend, an amount
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equal to such dividend shall be added to the Liquidation Preference of such
Series A Preferred Stock. The Corporation shall notify each holder within five
trading days prior to a Dividend Payment Date of the form in which the
Corporation elects to pay dividends on the Series A Preferred Stock. If the
Corporation fails to provide such notice, payments of dividends shall be in the
form of shares of Common Stock. If the Corporation (x) fails to provide timely
notice of its election of the form in which it intends to pay dividends and
fails to timely deliver shares of Common Stock with respect to a Dividend
Payment Date as provided in clause (ii) above or (y) provides timely notice of
its election to pay dividends either in cash or in shares of Common Stock as
provided in clauses (i) or (ii) above, and fails to timely deliver such cash or
shares of Common Stock with respect to a Dividend Payment Date as provided in
clauses (i) or (ii) above, then in each such case in lieu of payment of such
dividend, an amount equal to such dividend shall be added to the Liquidation
Preference of such shares of Series A Preferred Stock as provided in clause
(iii) as of such Dividend Payment Date.
(c) Dividends or Distributions. The Corporation shall not, as long as
there is an aggregate amount in excess of 500 shares (as appropriately adjusted
for any stock split or reverse stock split of the shares of Series A Preferred
Stock) of Series A Preferred Stock outstanding, declare any dividends or
distributions that, upon payment, would cause the aggregate fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive) of all such dividends and distributions which have been
declared or paid on such date and during the 365-day period immediately
preceding such date exceed the product of (x) .15 times (y) the closing price of
the Common Stock on the record date for such most recent dividend or
distribution times (z) the number of shares of Common Stock outstanding on such
date.
2. Liquidation Preference; Change of Control Transactions.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation Event"), the
holders of the Series A Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, whether such assets are capital, surplus or earnings, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of any Junior Stock, an amount equal to the Liquidation Preference
(as defined below). If upon the occurrence of a Liquidation Event, the assets
and funds available for distribution among the holders of the Series A Preferred
Stock and holders of securities ranking pari passu with the Series A Preferred
Stock shall be insufficient to permit the payment to such holders of the
preferential amounts payable thereon, then the entire assets and funds of the
Corporation legally available for distribution to the Series A Preferred Stock
and the shares ranking pari passu with such Series A Preferred Stock shall be
distributed ratably among such shares in proportion to the ratio that the
Liquidation Preference payable on each such share bears to the aggregate
Liquidation Preference payable on all such shares.
(b) For purposes hereof (i) the "Liquidation Preference" with respect to
each share of Series A Preferred Stock shall mean the amount of $10,000 plus (x)
any amounts in lieu of dividends added to the Liquidation Preference in
accordance with Section 1(b)(iii) above, (y) default payments added to the
Liquidation Preference pursuant to Section 8 hereof and (z) an amount equal to
any accrued but unpaid dividends (with dividends deemed accrued on a daily basis
through the date of such Liquidation Event, conversion or other event, even if
such event or any distribution is not on a Dividend Payment Date); (ii) "Person"
shall mean any individual, corporation, limited liability company, partnership,
association, trust or other entity or organization; and (iii) "Junior Stock"
shall mean the Common Stock and all other shares of capital stock of the
Corporation that do not rank pari passu with or do not have preference over the
Series A Preferred Stock in respect of dividends, redemption or distribution
upon liquidation.
(c) A "Change of Control Transaction" shall mean, (i) the sale, conveyance
or disposition of all or substantially all of the assets of the Corporation,
(ii) a consolidation or merger of the Corporation with or into any other
"Person" (whether or not the Corporation is the surviving Person, but other than
a merger or consolidation whereby the stockholders of the Corporation
immediately preceding the merger or consolidation continue to own greater than
50% of the voting power of the capital stock of the surviving Person in such
merger or consolidation that is normally entitled to vote in the election of
directors, managers or trustees, as applicable) or, (iii) any Person or any
"group" (as such term is used in Section 13(d) of the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), becomes the beneficial
owner or is deemed to beneficially own (as described in Rule 13d-3 under the
Exchange Act without regard to the 60-day exercise period) in excess of 50% of
the Corporation's voting power of the capital stock of the Corporation normally
entitled to vote in the election of directors of the Corporation (other than (A)
any group that held such voting power as of the date of this Certificate of
Designations, or (B) any group that holds such voting power subsequent to the
date of this Certificate of Designations, provided that the persons that
constitute such group include the majority of the members of, and at least 50%
of the voting power held by, a group referenced in clause (A)). The Corporation
shall promptly mail written notice of either the occurrence of, or the
announcement of the Corporation's intent to engage in, a Change of Control
Transaction (with a copy sent by facsimile), but in any event such notice (other
than, if inapplicable, in the case of a Change of Control Transaction of the
type set forth in clause (iii)) shall not be given less than twenty (20) days
prior to the effective date of such Change of Control Transaction to each record
holder of Series A Preferred Stock.
(d) Upon the notice or occurrence of, or announcement of the Corporation's
intent (or a third party's or parties' intent in the case of a Change of Control
Transaction of the type set forth in clause (iii) of the definition of a Change
of Control Transaction) to engage in, a Change of Control Transaction, then, the
Series A Preferred Stock shall thereupon be convertible in full, notwithstanding
the limitations set forth in Section 3(a) hereof; provided that a holder's
ability to convert shares of Series A Preferred Stock shall cease three (3)
trading days prior to the consummation of a Change of Control Transaction of the
type set forth in clauses (i) and (ii) of the definition thereof. In addition,
upon either the notice of, or the announcement of the Corporation's intent to
engage in, a Change of Control Transaction (of the type set forth in clauses (i)
and (ii) of the definition thereof), a holder of Series A Preferred Stock shall
have the right, up to and including the third trading day prior to the date of
effectiveness of such Change of Control Transaction, to elect redemption by the
Corporation of the shares of Series A Preferred Stock held by such holder at a
redemption price equal to 110% of the Liquidation Preference thereof, which
redemption, in the case of such Change of Control Transaction, shall be
conditioned upon and shall be effective immediately prior to consummation of
such Change of Control Transaction. If the holder does not make such an
election, such holder's shares of Series A Preferred Stock shall be deemed
automatically converted into shares of Common Stock immediately prior to the
consummation of such Change of Control Transaction, and the holder shall receive
the same consideration that a holder of Common Stock is entitled to receive in
connection with such Change of Control Transaction.
3. Conversion. Subject to the restrictions on conversion of Series A
Preferred Stock set forth in Section 3(a) hereof, each holder of the Series A
Preferred Stock shall have the right, at any time and from time to time, to
convert each share of Series A Preferred Stock into such number of fully paid,
validly issued and nonassessable shares ("Common Shares") of common stock, par
value $0.01 per share of the Corporation ("Common Stock"), free and clear of any
liens, claims or encumbrances (other than those created or suffered by such
holder), as is determined by dividing (i) the Liquidation Preference times the
number of shares of Series A Preferred Stock being converted (the "Conversion
Amount") by (ii) the Conversion Price (determined as hereinafter provided) in
effect on the Conversion Date (as defined below), on the following terms and
conditions.
(a) Conversion Restrictions. Except as otherwise provided herein, each
holder of Series A Preferred Stock may only convert such number of Series A
Preferred Stock owned by such holder as stated below:
(i) during calendar days 1 through 90 following the date of the first
issuance of the shares of Series A Preferred Stock (the "Initial
Issuance Date"), 25% of the shares of Series A Preferred Stock
owned by such holder;
(ii) during calendar days 91 through 180 following the Initial
Issuance Date, 50% (on a cumulative basis) of the shares of
Series A Preferred Stock owned by such holder;
(iii) during calendar days 181 through 270 following the Initial
Issuance Date, 75% (on a cumulative basis) of the shares of
Series A Preferred Stock owned by such holder; and
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(iv) at any time on or after the 271st calendar day following Initial
Issuance Date, 100% of the shares of Series A Preferred Stock
owned by such holder.
(b) Mechanics of Conversion. To convert Series A Preferred Stock into
Common Shares, the holder shall give written notice ("Conversion Notice") to the
Corporation in the form of Exhibit A hereto (which Conversion Notice may be
given by facsimile). The date that such Conversion Notice is received by the
Corporation (whether by facsimile or otherwise) shall be deemed to be the
"Conversion Date." As soon as reasonably practicable after delivery of the
Conversion Notice, such holder shall surrender the certificate or certificates
representing the shares of Series A Preferred Stock being converted, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Series A Preferred Stock, provided that the Corporation shall at all times
maintain an office or agency in New York City for such purposes. The Corporation
shall, immediately upon receipt of such Conversion Notice, issue and deliver to
or upon the order of such holder, against delivery of the certificates
representing the Series A Preferred Stock which have been converted, a
certificate or certificates for the number of Common Shares to which such holder
shall be entitled (with the number of and denomination of such certificates
designated by such holder), and the Corporation shall immediately issue and
deliver to such holder a certificate or certificates for the number of shares of
Series A Preferred Stock which such holder has not yet elected to convert
hereunder but which are evidenced in part by the certificate(s) delivered to the
Corporation in connection with such Conversion Notice; the Corporation shall
effect such issuance by delivering certificates representing the appropriate
number of Common Shares to the holder or its designee within three (3) trading
days of the Conversion Date. Conversion pursuant to this Section 3 shall be
deemed to have been made immediately prior to the close of business on the
Conversion Date, regardless of whether the Conversion Notice shall be delivered
subsequent to the close of business on such date. The person or persons entitled
to receive the Common Shares issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such Common Shares at the close
of business on the Conversion Date.
(c) Determination of Conversion Price. Each share of Preferred Stock shall
be converted into the number of shares of Common Shares determined by dividing
the Liquidation Preference thereof by the Conversion Price. The "Conversion
Price" shall be equal to:
(100% minus the Applicable Percentage (as set forth below)) times the
lowest trading price (as defined below) of the Common Stock on any of the
four (4) (subject to adjustment as provided in Sections 4, 5(B), 7(B) and 9
hereof) consecutive "trading days" immediately preceding (but excluding)
the applicable Conversion Date (the "Valuation Period").
The "Applicable Percentage" shall be as follows:
0% during calendar days 1 through 90 following the Initial Issuance
Date of the Initial Shares;
2% during calendar days 91 through 180 following the Initial Issuance
Date of the Initial Shares;
3% during calendar days 181 through 270 following the Initial Issuance
Date of the Initial Shares;
and
4% commencing with the 271st calendar day following the Initial
Issuance Date of the Initial Shares.
The Applicable Percentage shall be subject to adjustment as provided in
Sections 4, 5(B), 7(B) and 9 hereof.
(i) The "lowest trading price" of the Common Stock on any trading day
shall be (A) the lowest reported sale price of the Common Stock as reported
in the consolidated transaction reporting system ("consolidated tape") if
transactions in the Common Stock are included in the consolidated tape or
(B) if the Common Stock is not included in the consolidated tape, the
lowest reported sale price of the Common Stock on the principal automated
securities price quotation system on which sale prices of the Common Stock
are reported, or (C) if the Common Stock is not included in the
consolidated tape and sale prices of the Common Stock are not reported on
an automated quotation system, the lowest bid price
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for the Common Stock as reported by National Quotation Bureau Incorporated
or similar organization; provided that in the event that a holder of Series
A Preferred Stock or any of its affiliates, or any Person acting in concert
with any of them, was a party to the trade that resulted in such lowest
reported sale price or lowest bid price, such trade shall not be recognized
and the lowest trading price with respect to any conversion of Series A
Preferred Stock by such holder or its affiliates only, shall be the next
higher lowest reported sale price or next higher lowest bid price resulting
from a trade in which no such holder or any of its affiliates or any Person
acting in concert with any of them was a party. If none of the foregoing
provisions are applicable, the "lowest trading price" of the Common Stock
on a trading day will be the fair market value of the Common Stock on that
day as determined by a member firm of the New York Stock Exchange, Inc.,
selected in good faith by the Board of Directors of the Corporation and
reasonably acceptable to the holders of more than 50% of Series A Preferred
Stock. The term "trading day" means (x) if the Common Stock is quoted on
the Nasdaq National Market ("Nasdaq"), or listed on the New York Stock
Exchange or the American Stock Exchange, a day on which there is trading on
such market or exchange, (y) if the Common Stock is not quoted on Nasdaq or
listed on either of such stock exchanges but sale prices of the Common
Stock are reported on an automated quotation system, a day on which sales
of the Common Stock are reported, or (z) if the foregoing provisions are
inapplicable, a day on which quotations are reported by National Quotation
Bureau Incorporated. Notwithstanding the foregoing, a day shall not be
considered a trading day if (i) trading of the Common Stock was suspended
during such day or (ii) no reported trades occur on such day.
(ii) In the event that during any period of consecutive trading days
provided for above, an "ex-dividend" date with respect to any dividend on
the Common Stock payable in Common Stock or in rights to acquire Common
Stock shall occur, or the Corporation shall effect a stock split or reverse
stock split, or a combination, consolidation or reclassification of the
Common Stock, then the Conversion Price shall be proportionately decreased
or increased, as appropriate, to give effect to such event.
In no event shall the Conversion Price be less than $0.01 per share.
(d) Notice of Record Date. In the event of any taking by the Corporation
of a record date of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or any
other distribution payable in securities of the Corporation or any of its
subsidiaries other than additional shares of Common Stock, any security or right
convertible into or entitling the holder thereof to receive additional shares of
Common Stock, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Corporation shall deliver to each holder of Series A
Preferred Stock at least 20 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution, security or right and the amount and character of
such dividend, distribution, security or right.
(e) Reservation of Common Shares Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
Common Stock, solely for the purpose of effecting the conversion of Series A
Preferred Stock, not less than the number of shares of its Common Stock
necessary to effect the conversion of all outstanding Series A Preferred Stock,
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all the then outstanding
Series A Preferred Stock, the Corporation will take such corporate action as may
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose, including,
without limitation, engaging in best efforts to obtain any requisite stockholder
approval.
(f) Fractional Shares. No fractional shares of Common Stock shall be
issued upon the conversion of any shares of Series A Preferred Stock. All Common
Shares (including fractions thereof) issuable upon conversion of shares of
Series A Preferred Stock represented by more than one certificate held by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional shares. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a Common Share, the Corporation shall, in lieu of issuing any
fractional share, pay the holder
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otherwise entitled to such fraction a sum in cash equal to the fair market value
of such fraction on the Conversion Date.
(g) Forced Conversion.
(1) Subject to subsection (g)(2) below, each share of Series A Preferred
Stock which shall be outstanding on the Forced Conversion Date shall be
automatically converted into Common Shares on such date pursuant to the
provisions hereof, with such Forced Conversion Date deemed to be the Conversion
Date. The "Forced Conversion Date" is the date which is the fifth (5th)
anniversary of the Initial Issuance Date of the Series A Preferred Stock,
provided that such Forced Conversion Date shall be extended by such number of
days as is equal to 1.5 times the number of days (A) after the 120th day
following the Initial Issuance Date during which the holders are unable but are
required pursuant to the Securities Act of 1933, as amended (the "Act"), to
deliver the Prospectus contained in the Registration Statement (as such term is
defined in the Registration Rights Agreement (the "Registration Rights
Agreement") between the Corporation and the initial holders of the Series A
Preferred Stock) to offer and sell Common Shares; (B) there is not a sufficient
amount of Common Shares available for conversion of all outstanding Series A
Preferred Stock for which the Corporation has received duly executed conversion
notices; (C) for any other reason the Corporation refuses or announces its
refusal to honor conversion of Series A Preferred Stock; (D) the Corporation
suspends the holder's right to convert the Series A Preferred Stock owned by
such holder, in accordance with the terms of the Registration Rights Agreement
in connection with certain public offerings of its Common Stock; (E) during
which the holders are unable but are required pursuant to the Act to deliver the
Prospectus contained in the Registration Statement to offer and sell Common
Shares after the Registration Statement has become effective under the Act
because there is any other suspension, restriction or limitation on the ability
of holders of Series A Preferred Stock to so use the Prospectus to offer and
sell Common Shares; provided, however, that in no event shall an extension of
the Forced Conversion Date pursuant to this clause (E) extend beyond such time
as there are no Registrable Securities (as defined in the Registration Rights
Agreement) outstanding; or (F) that any of the circumstances in Sections 4, 5, 6
(provided that there are Registrable Securities outstanding and if so, without
regard to the applicability of the Suspension Grace Period) or 7, to the extent
not otherwise covered above, exist.
(2) Notwithstanding the preceding subsection (g)(1), Series A Preferred
Stock shall not be automatically converted into Common Shares on the Forced
Conversion Date unless and until each of the following conditions has been
satisfied or exists, each of which shall be a condition precedent to any such
forced conversion:
(A) no material default or breach exists, and no event shall have
occurred which constitutes (or would constitute with notice or the passage
of time or both) a material default or breach of the Securities Purchase
Agreement between the Corporation and the initial holders of the Series A
Preferred Stock (the "Securities Purchase Agreement"), the Registration
Rights Agreement or this Certificate of Designations; and
(B) the Corporation and its direct and indirect subsidiaries on a
consolidated basis has assets with a net realizable fair market value
exceeding its liabilities and is able to pay all its debts as they become
due in the ordinary course of business, and the Corporation has not been
given, and is not required to give, notice of a Liquidation Event.
Such forced conversion shall be subject to and governed by all the provisions
relating to voluntary conversion of the Series A Preferred Stock contained
herein.
(h) Corporation Optional Redemption.
(1) In the event the closing sale price for the Common Stock on the
principal trading market is below $17.50 per share (as appropriately adjusted
for any stock split or reverse stock split, or a combination, consolidation, or
reclassification of the Common Stock) for ten consecutive trading days, the
Corporation, in its sole discretion, may redeem all of the outstanding Series A
Preferred Stock at a redemption price equal to 120% of the Liquidation
Preference; provided, however, that the Corporation shall deliver to all of the
holders
6
<PAGE> 7
of Series A Preferred Stock at least five trading days' prior written notice of
its intention to so redeem the outstanding Series A Preferred Stock.
(2) The Corporation shall have the right to redeem all or part of the
outstanding Series A Preferred Stock upon at least five trading days' prior
written notice to holders of Series A Preferred Stock at a redemption price
equal to 105% of the Liquidation Preference of such shares during calendar days
1 through 90 following the Initial Issuance Date; provided, however, that if the
Corporation redeems less than all of the outstanding shares of Series A
Preferred Stock, it shall do so on a pro-rata basis.
(3) In the event that shares of Common Stock of the Corporation are
delisted from Nasdaq (unless immediately listed on a national securities
exchange) at any time following the Initial Issuance Date, the Corporation may,
at any time during the first 30-day period following such delisting, purchase
all of the outstanding shares of Series A Preferred Stock held by the holders of
such stock at a purchase price equal to 120% of the Liquidation Preference (as
of the date of purchase by the Corporation) of such Series A Preferred Stock;
provided, however, that the Corporation shall deliver at least five trading
days' prior written notice of its intention to so purchase the outstanding
shares of Series A Preferred Stock.
(4) In the event that the Corporation fails or refuses to honor a
conversion of Series A Preferred Stock in full, in accordance with their terms
of this Certificate of Designations for any reason (including, without
limitation, as a result of failure to have a sufficient number of shares of
Common Stock available to satisfy the Corporation's obligations to any holder
upon receipt of a Conversion Notice in accordance with the terms hereof), the
Corporation may, at any time during the first 30-day period following such
failure or refusal to honor a conversion in full, purchase all of the
outstanding shares of Series A Preferred Stock held by such holder at a purchase
price equal to 120% of the Liquidation Preference (as of the date of purchase by
the Corporation) of such Series A Preferred Stock; provided, however, that the
Corporation shall deliver at least five trading days' prior written notice of
its intention to so purchase the outstanding shares of Series A Preferred Stock.
(5) In the event that the Corporation fails or refuses to pay when due any
default payment in accordance with Section 8 hereof, the Corporation may, at any
time during the first 30-day period following such failure or refusal to pay,
purchase all of the outstanding shares of Series A Preferred Stock held by such
holder at a purchase price equal to 120% of the Liquidation Preference (as of
the date of purchase by the Corporation) of such Series A Preferred Stock;
provided, however, that the Corporation shall deliver at least five trading
days' prior written notice of its intention to so purchase the outstanding
shares of Series A Preferred Stock.
(6) In the event that (1) trading in the Common Stock on Nasdaq or any
principal national securities exchange on which the Common Stock is then traded
is suspended for seven consecutive trading days or (2) the Registration
Statement has not been declared effective by the 180th day following the Initial
Issuance Date, the Corporation may, at any time during the first 30-day period
following such suspension in trading or non-effectiveness of the Registration
Statement, as the case may be, purchase all of the outstanding shares of Series
A Preferred Stock held by the holders of such stock at a purchase price equal to
120% of the Liquidation Preference (as of the date of such purchase by the
Corporation) of such Series A Preferred Stock; provided, however, that the
Corporation shall deliver at least five trading days' prior written notice of
its intention to so purchase the outstanding shares of Series A Preferred Stock.
(i) Certificate of Conversion Price Adjustment. The Corporation shall,
upon the written request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a certificate prepared by the
Corporation setting forth any adjustments or readjustments of the Conversion
Price pursuant to this Section 3 or Section 4 hereof.
(j) Specific Enforcement. The Corporation agrees that irreparable damage
would occur in the event that any of the provisions of this Certificate of
Designations were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the holders of Series A
Preferred Stock shall be entitled to specific performance, injunctive relief or
other equitable remedies to prevent or cure breaches of the provisions hereof,
this being in addition to any other remedy to which any of them may be entitled
under agreement, at law or in equity.
7
<PAGE> 8
4. Adjustment of Applicable Percentage. The Corporation has agreed to file
the Registration Statement as soon as practicable following the Initial Issuance
Date and shall use its best efforts to cause such Registration Statement to
become effective within 120 days from the Initial Issuance Date. In the event
that such Registration Statement has not been declared effective within 120 days
from the Initial Issuance Date, then the Applicable Percentages shall be
increased by 1.5% upon the commencement of the 30-day period ("Non-effective
Period") from and after the 120th day following the Initial Issuance Date during
any part of which such Registration Statement is not effective, and such
Applicable Percentage shall be further increased by an additional 1.5% during
and upon the commencement of each additional Non-effective Period thereafter to
a maximum increase of 6%. Any such increase in the Applicable Percentages shall
be permanent, regardless of whether the Registration Statement subsequently is
declared effective.
5. No Listing; Delisting of Common Stock.
(A) In the event that the Corporation fails, refuses or is unable to cause
the Common Shares covered by the Registration Statement to be listed upon notice
of issuance with Nasdaq or any other principal securities exchange on which the
Common Stock is then traded at all times during the period ("Listing Period")
from the 120th day following the Initial Issuance Date until the Forced
Conversion Date then the Corporation shall pay to each holder a default payment
in an amount equal to three percent (3%) of the Liquidation Preference for the
Series A Preferred Stock held by such holder for each 30-day period (pro-rated
for shorter periods) during the Listing Period from and after such failure,
refusal or inability to so list upon notice of issuance the Common Shares until
the Common Shares are so listed.
(B) In the event that shares of Common Stock of the Corporation are
delisted from Nasdaq (unless immediately listed on a national securities
exchange) at any time following the Initial Issuance Date, then the Series A
Preferred Stock shall be convertible in full, notwithstanding the limitations
set forth in Section 3(a) hereof, and holders of Series A Preferred Stock shall
thereafter (i) in accordance with Section 1, be entitled to receive dividends at
the rate of fifteen percent (15%) of the Liquidation Preference of each share of
Series A Preferred Stock until such time as the Corporation shall have listed
the Common Stock on Nasdaq or any other national securities exchange, (ii) the
Applicable Percentage with respect to all subsequent conversions of Series A
Preferred Stock shall, immediately and permanently (notwithstanding any
subsequent listing of the Common Stock on Nasdaq or any other principal
securities exchange), be ten percent (10%), and (iii) the Valuation Period with
respect to all subsequent conversions of Series A Preferred Stock shall be
permanently increased to fifteen (15) consecutive trading days (notwithstanding
any subsequent listing of the Common Stock on Nasdaq or any other principal
securities exchange).
6. Blackout Periods. During the period that holders with registration
rights under the Registration Rights Agreement are required pursuant to the Act
to deliver the Prospectus contained in the Registration Statement to offer and
sell Common Shares if such holder's ability to sell Common Shares under the
Registration Statement is suspended for more than (A) 10 consecutive trading
days in any calendar year or 30 days in the aggregate during any calendar year
(pro-rated for calendar year 1997) (in each case other than as provided in
clauses (B) and (C) below), including without limitation by reason of any
suspension or stop order with respect to the Registration Statement or the fact
that an event (other than an event covered in clauses (B) and (C) below) has
occurred as a result of which the Prospectus (including any supplements thereto)
included in such Registration Statement then in effect contains any untrue
statement of material fact or omits to state any material fact required to be
stated herein or necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the circumstances under
which they were made) not misleading, but other than in connection with a
Permitted Public Offering (as hereinafter defined), (B) 60 consecutive days or
150 days in the aggregate during any calendar year (pro-rated for calendar year
1997) for so long as shares of Series A Preferred Stock are outstanding, in
connection with one or more material acquisitions by the Corporation, which
acquisitions require the Corporation to present the financial statements of the
acquired business in accordance with Rule 3-05 of Regulation S-X under the
Exchange Act, or pro forma financial information in accordance with Rule 11-01
of Regulation S-X under the Exchange Act which presentation requirement shall
result in a holder's inability to use the Registration Statement to offer and
sell Common Shares, or (C) 10 days prior to, and 30 days subsequent to the
pricing of each Permitted Public Offering but not in excess of 80 days in the
aggregate in any calendar year ("Suspension Grace
8
<PAGE> 9
Period"), then the Corporation shall pay to each holder, a default payment in an
amount equal to three percent (3%) of the Liquidation Preference for the Series
A Preferred Stock held by such holder for each 30-day period (pro-rated for
shorter periods) from and after the last day of the Suspension Grace Period
until there are no further restrictions on the holders' ability to sell Common
Shares. With respect to any single Permitted Public Offering, the Corporation
may suspend the holder's right to convert the Series A Preferred Stock for a
period of 10 days prior to, and 30 days subsequent to the pricing of a single
Permitted Public Offering. A "Permitted Public Offering" shall mean a bona fide
public offering of shares of Common Stock which raises gross proceeds of at
least $25 million. The Corporation shall promptly notify the holders of the
filing of a registration statement with respect to a Permitted Public Offering.
7. Failure to Convert. In the event that the Corporation fails to honor a
conversion of Series A Preferred Stock in full, in accordance with the terms of
this Certificate of Designations for any reason (including without limitation as
a result of failure to have a sufficient number of shares of Common Shares
available to satisfy the Corporation's obligations to any holder upon receipt of
a Conversion Notice in accordance with the terms hereof), then:
(A) the Corporation shall pay, in accordance with Section 8, to each
holder a default payment in an amount equal to three percent (3%) of the
Liquidation Preference for the Series A Preferred Stock sought to be
converted held by such holder for each 30-day period (pro-rated for shorter
periods) from and after the Conversion Date, that the Corporation fails or
refuses to issue Common Shares in accordance with the terms hereof; and
(B) if on the 60th day after such failure, the Corporation shall not
have been able to satisfy its obligations to a holder with respect to a
Conversion Notice, then the Series A Preferred Stock shall be convertible
in full, notwithstanding the limitations set forth in Section 3(a) hereof,
and each holder of Series A Preferred Stock shall (i) in accordance with
Section 1, be entitled to receive dividends at the rate of fifteen percent
(15%) of the Liquidation Preference of each share of Series A Preferred
Stock from and after the Conversion Date that the Corporation fails or
refuses to issue Common Shares in accordance with the terms hereof until
the Corporation is able to satisfy its obligations under all outstanding
Conversion Notices, (ii) the Applicable Percentage with respect to all
conversions of Series A Preferred Stock shall, immediately and permanently
(notwithstanding any subsequent conversions by the Corporation) be ten
percent (10%), and (iii) the Valuation Period with respect to all
subsequent conversions of Series A Preferred Stock shall be permanently
increased to fifteen (15) consecutive trading days (notwithstanding the
Corporation's subsequent conversion of shares of Series A Preferred Stock
in full, in accordance with their terms).
8. Default Payments. Each default payment provided for in each of the
foregoing Sections 5 through 7 shall be in addition to each other default
payment; provided, however, that in no event shall the Corporation be obligated
to pay to any holder default payments in an aggregate amount greater than three
percent (3%) of the Liquidation Preference for the Series A Preferred Stock held
by such holder for any 30-day period. All default payments required to be made
in connection with the provisions of Sections 5 and 6 above shall be paid in
cash by the tenth (10th) day of each calendar month (which payments shall be pro
rata on a per diem basis for any period of less than 30 days). Any default
payment required to be made in connection with the provisions of Section 7
above, shall be made by adding the amount of such default payment to the
Liquidation Preference of the shares of Series A Preferred Stock that were not
converted. Default payments shall accrue on Series A Preferred Stock through the
date such shares are purchased by the Corporation in accordance with the
provisions of the Certificate of Designations. In the event that the Corporation
fails or refuses to pay any default payment provided in Sections 5 and 6 when
due, in cash, a holder may request at any time that the Corporation pay any
defaulted payment amount by adding and including the amount of such default
payment to the Liquidation Preference with respect to the Series A Preferred
Stock sought to be converted instead of in cash as required by this Section 8.
If the payment of any such default payments in the form of cash are prohibited
because of a lack of legally available funds, or are prohibited under any of the
Corporation's material credit or loan agreements, indentures or other similar
agreements, or if such default payments in the form of cash would, with the
giving of notice or otherwise, cause the acceleration of any payments due under
such agreements, then, in lieu of such default payments, an amount equal thereto
shall be added to the
9
<PAGE> 10
Liquidation Preference and such failure to pay such default payments in cash
shall not be deemed to be a default or a failure or refusal to pay such default
payment under this Certificate of Designations.
9. Additional Events.
(A) In the event that the Corporation fails or refuses to pay, at any time,
any default payment in accordance with Section 8 when due, then the Series A
Preferred Stock shall be convertible in full, notwithstanding the limitations
set forth in Section 3(a) hereof, and (i) each holder of Series A Preferred
Stock shall be entitled to receive dividends, in accordance with Section 1 at
the rate of fifteen percent (15%) of the Liquidation Preference of each share of
Series A Preferred Stock until such time as the Corporation makes all default
payments in accordance with Section 8, (ii) the Applicable Percentage with
respect to all subsequent conversions of Series A Preferred Stock shall,
immediately and permanently (notwithstanding the Corporation's subsequent
payment of default payments in accordance with Section 8) be ten percent (10%),
and (iii) the Valuation Period with respect to all conversions of Series A
Preferred Stock shall be permanently increased to fifteen (15) consecutive
trading days (notwithstanding the Corporation's subsequent payment of default
payments in accordance with Section 8).
(B) In addition to and without in any way limiting the foregoing, the
Corporation agrees that in the event that (1) trading in the Common Stock on
Nasdaq or any principal national securities exchange on which the Common Stock
is then traded is suspended for 7 consecutive trading days, or (2) the
Registration Statement has not been declared effective by the 180th day
following the Initial Issuance Date, then, in each case, (i) the Series A
Preferred Stock shall be convertible in full, notwithstanding the limitations
set forth in Section 3(a) hereof, (ii) each holder of Series A Preferred Stock
shall, in accordance with Section 1, be entitled to receive dividends at the
rate of fifteen percent (15%) of the Liquidation Preference of each share of
Series A Preferred Stock from and after such trading suspension event or such
180th day until such trading suspension has ceased or the Registration
Statement has become effective, and (iii) the Applicable Percentage with
respect to all subsequent conversions of Series A Preferred Stock shall,
immediately and permanently (notwithstanding the removal of any trading
suspension with respect of the Common Stock or the subsequent effectiveness of
the Registration Statement) be ten percent (10%), and (z) the Valuation Period
with respect to all subsequent conversions of Series A Preferred Stock shall be
permanently increased to fifteen (15) consecutive trading days (notwithstanding
the removal of any trading suspension with respect of the Common Stock or the
subsequent effectiveness of the Registration Statement).
10. Surrender of Stock upon Redemption. One (1) trading day prior to any
date set for the redemption of Series A Preferred Stock, each holder of shares
of Series A Preferred Stock to be redeemed, unless the holder has exercised this
right to convert the shares as provided in Section 3 hereof, shall surrender the
certificate or certificates representing such shares to the Corporation, and
thereupon the redemption price for such shares shall be payable to the order of
the person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired. In the
event less than all of the shares represented by such certificate are redeemed,
a new certificate representing the unredeemed shares shall be issued to the
holder of such shares.
11. No Senior Equity Securities. The Corporation shall not, as long as
there is an aggregate amount in excess of 500 shares (as appropriately adjusted
for any stock split or reverse stock split of the shares of Series A Preferred
Stock) of Series A Preferred Stock outstanding, issue any equity securities or
any equity securities convertible into its Common Stock, which equity securities
are senior to, or pari passu with, in respect of dividends, redemption or
liquidation, the Series A Preferred Stock.
12. Voting Rights. The affirmative vote of 75% in interest of the
Corporation's outstanding Series A Preferred Stock shall be necessary for (i)
any amendment of this Certificate of Designations, or (ii) any amendment to the
Certificate of Incorporation or By-laws of the Corporation that may adversely
affect any of the rights, preferences, or privileges of the Series A Preferred
Stock; provided, however, that holders of Series A Preferred Stock who are
affiliates of the Corporation (and the Corporation itself) shall not participate
in such vote and the Series A Preferred Stock of such holders shall be
disregarded and deemed not to be outstanding for purposes of such vote. In the
event the Corporation provides consideration to any holder in respect of the
obtaining of such affirmative vote it shall provide such consideration to all
holders of Series A Preferred Stock regardless of whether such holders provided
such affirmative vote.
10
<PAGE> 11
13. Notices. The Corporation shall distribute to the holders of Series A
Preferred Stock copies of all notices, materials, annual and quarterly reports,
proxy statements, information statements and any other documents distributed
generally to the holders of shares of Common Stock of the Corporation, at such
times and by such method as such documents are distributed to such holders of
such Common Stock.
14. Replacement Certificates. The certificate(s) representing the Series A
Preferred Stock held by any holder of Series A Preferred Stock may be exchanged
by such holder at any time and from time to time for certificates with different
denominations representing an equal aggregate number of Series A Preferred
Stock, as reasonably requested by such holder, upon surrendering the same. No
service charge will be made for such registration or transfer or exchange.
15. No Reissuance. Except as provided in Section 6.16 of the Securities
Purchase Agreement, no Series A Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued.
Signed on April 8, 1997
/s/ Robert C. Patent
--------------------------------------
Name: Robert C. Patent
Title: Executive Vice President
11
<PAGE> 12
EXHIBIT A
(TO BE EXECUTED BY HOLDER
IN ORDER TO CONVERT SERIES A PREFERRED STOCK)
CONVERSION NOTICE
FOR
6% CONVERTIBLE PREFERRED STOCK, SERIES A
The undersigned, as a holder ("Holder") of shares of 6% Convertible
Preferred Stock, Series A ("Series A Preferred Stock") of Cityscape Financial
Corp., (the "Corporation"), hereby irrevocably elects to convert
Series A Preferred Stock for shares ("Common Shares") of common stock, par value
$0.01 per share (the "Common Stock"), of the Corporation according to the terms
and conditions of the Certificate of Designations for the Series A Preferred
Stock as of the date written below. The undersigned hereby requests that share
certificates for the Common Shares to be issued to the undersigned pursuant to
this Conversion Notice be issued in the name of, and delivered to, the
undersigned or its designee as indicated below. No fee will be charged to the
holder of Series A Preferred Stock for any conversion.
Conversion Date:
- ------------------------
Conversion Information:
NAME OF HOLDER:
--------------------------------------
By:
--------------------------------------
Print Name:
Print Title:
Print Address of Holder:
--------------------------------------
--------------------------------------
Issue Common Stock to:
--------------------------------------
at:
--------------------------------------
--------------------------------------
1
<PAGE> 13
COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED
Number of shares of Series A Preferred Stock converted:
- ------------------------ shares
Number of shares of Series A Preferred Stock converted x Liquidation Preference
(Total dollar amount converted)
$
-----------------------------
The "low trading price"
$
- ------------------------
Date of "low trading price"
- ------------------------
Applicable Percentage as of Conversion Date
- ------------------------ %
<TABLE>
<S> <C> <C>
Conversion Price $ ------------------------
Number of Common Shares = Total dollar amount converted/ $ ------------------------
-------------------------------
Conversion Price $
</TABLE>
Number of Common Shares =
------------------------
If the conversion is not being settled through DTC, please issue and deliver
- ------------ certificate(s) for Common Shares in the following amount(s):
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
If the Holder is receiving certificate(s) for Series A Preferred Stock upon the
conversion, please issue and deliver ------------ certificate(s) for Series A
Preferred Stock in the following amounts:
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
2
<PAGE> 1
EXHIBIT 4.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of April 9, 1997,
between Cityscape Financial Corp., a Delaware corporation ("Cityscape"), and
each person executing a counterpart of the signature page of this Agreement
(each individually an "Investor" and collectively the "Investors").
W I T N E S S E T H:
WHEREAS, Cityscape desires to issue and sell to the Investors, and the
Investors wish to purchase from Cityscape, an aggregate of 5,000 shares of
Cityscape's 6% Convertible Preferred Stock, Series A, par value $0.01 per share
(the "Series A Preferred Stock"), having the rights, designations and
preferences set forth in the Certificate of Designations of Cityscape (the
"Certificate of Designations") in form of Exhibit A attached hereto, and
warrants (the "Warrants") to purchase 500,000 shares of Common Stock (as defined
below) in the form attached as Exhibit B (the shares of Common Stock issuable
upon the exercise of Warrants are hereinafter called the "Warrant Shares"), on
the terms and conditions set forth herein; and
WHEREAS, the Series A Preferred Stock will be convertible into shares (the
"Common Shares") of common stock, par value $0.01 per share, of Cityscape (the
"Common Stock"), pursuant to the terms of the Certificate of Designations, and
the holders of Series A Preferred Stock will have registration rights with
respect to such Common Shares and Warrant Shares pursuant to the terms of the
Registration Rights Agreement to be entered into between Cityscape and the
Investors (the "Registration Rights Agreement");
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SERIES A PREFERRED STOCK
Section 1.1 Purchase and Sale of Series A Preferred Stock. Subject to the
terms and conditions set forth herein (including, without limitation, the
provisions of Article IV hereof), Cityscape hereby agrees to issue and sell to
each of the Investors severally, and each of the Investors severally hereby
agrees to purchase from Cityscape on the date hereof (the "Closing Date") such
number of shares of Series A Preferred Stock as are indicated next to such
Investor's name on the counterpart of the signature page executed by such
Investor, and (ii) such number of related Warrants as are indicated next to such
Investor's name on the counterpart of the signature page executed by such
Investor against payment of the aggregate Purchase Price therefor, as provided
in Section 1.2 hereof. Cityscape shall issue and sell to the Investors an
aggregate of 5,000 shares of Preferred Stock.
Section 1.2 Purchase Price. The purchase price for the Series A Preferred
Stock (and the related Warrants) (the "Purchase Price") shall be $10,000 per
share of Series A Preferred Stock.
Section 1.3 The Closing. (a) The closing of the purchase and sale of the
shares of Series A Preferred Stock and the Warrants (the "Closing"), shall take
place at the offices of Gibson, Dunn & Crutcher, at 10:00 a.m., local time on
the date hereof, provided that all of the conditions set forth in Article IV
hereof and applicable to the Closing shall have been fulfilled or waived in
accordance herewith.
(b) On the Closing Date, Cityscape shall execute, issue and deliver to each
Investor (i) certificates representing the shares of Series A Preferred Stock
purchased hereunder by such Investor registered in the name of such Investor or
its nominee and (ii) certificates representing the related Warrants purchased
hereunder by such Investor registered in the name of Investor or its nominee, in
each case in such denominations as reasonably requested by such Investor, and
such Investor shall deliver to Cityscape the aggregate Purchase Price for the
number of shares of Series A Preferred Stock (and related Warrants) purchased by
such Investor hereunder by wire transfer in immediately available funds to an
account
<PAGE> 2
designated in writing by Cityscape. In addition, Cityscape shall deliver
evidence of filing with, and acceptance by, the Secretary of State of the State
of Delaware of the Certificate of Designations, and each party shall deliver all
documents, instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Cityscape. Cityscape hereby
makes the following representations and warranties to each of the Investors as
of the Closing Date:
(a) Organization and Qualifications; Material Adverse Effect. Each of
Cityscape and its subsidiaries is a corporation duly incorporated and
existing in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to own and operate its
properties and to carry on its business as now being conducted. Each of
Cityscape and its subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so to qualify
would not have a Material Adverse Effect. "Material Adverse Effect" means
any adverse effect on the business, operations, properties or financial
condition of Cityscape and which is material to Cityscape and its
subsidiaries taken as a whole, or any material adverse effect on
Cityscape's ability to consummate the transactions contemplated hereby, and
to execute, deliver and perform its obligations under, each of this
Agreement, the Registration Rights Agreement, the Certificate of
Designations and the Warrants.
(b) Authorization; Enforcement. (i) Cityscape has the requisite
corporate power and authority to enter into and perform its obligations
under each of this Agreement, the Registration Rights Agreement, the
Certificate of Designations and the Warrants and to issue the Series A
Preferred Stock and the Warrants in accordance with the terms hereof and
thereof, (ii) the execution and delivery of this Agreement and the
Registration Rights Agreement, the issuance and delivery of the Series A
Preferred Stock and the Warrant and the filing of the Certificate of
Designations by Cityscape and the consummation and performance by it of the
transactions contemplated hereby and thereby, including the resolutions
contained in the Certificate of Designations, have been duly authorized by
all necessary corporate action, and no further consent or authorization of
Cityscape or its Board of Directors or stockholders is required (other than
any shareholder approval as may be required by the rules applicable to
companies whose common stock is traded on the Nasdaq National Market
("Nasdaq")), (iii) this Agreement, the Registration Rights Agreement, the
Warrants, the Certificate of Designations and the Series A Preferred Stock
have been duly executed and delivered by Cityscape, and (iv) this
Agreement, the Registration Rights Agreement, the Warrants, the Certificate
of Designations and the Series A Preferred Stock constitute valid and
binding obligations of Cityscape enforceable against Cityscape in
accordance with their terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the
enforcement of creditors' rights and remedies or by other equitable
principles of general application.
(c) Capitalization. The authorized capital stock of Cityscape
consists of 50,000,000 shares of Common Stock and 50,000 shares of
preferred stock; there were 29,744,322 shares of Common Stock and no shares
of preferred stock issued and outstanding as of March 25, 1997. Except as
set forth in the SEC Documents (defined below), Cityscape has no other
authorized, issued or outstanding equity securities or securities
containing any equity features, or any other securities convertible into,
exchangeable for or entitling any person to otherwise acquire any other
securities of Cityscape containing any equity features. All of the
outstanding shares of Cityscape Common Stock have been validly issued and
are fully paid and nonassessable. The Series A Preferred Stock, the Common
Shares, the Warrants and the Warrant Shares have been duly and validly
authorized. When issued against payment therefor as provided in this
Agreement, the Series A Preferred Stock will be validly issued, fully paid
and nonassessable and will entitle the holders thereof to the rights
established in the Certificate of
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Designations and the Warrants will be validly issued. A sufficient number
of shares of Common Stock has been duly reserved and will remain available
for issuance upon conversion of the Series A Preferred Stock and upon the
exercise of the Warrants. Except as set forth in this Agreement and in the
SEC Documents, there are no outstanding options, warrants, agreements,
conversion rights, subscription rights, preemptive rights, rights of first
refusal or other rights or agreements of any nature outstanding to
subscribe for or to purchase any shares of capital stock of Cityscape or
any other securities of the Cityscape of any kind. Except as otherwise
required by law or as set forth in the Certificate of Designations,
Cityscape's Certificate of Incorporation (the "Charter") or Cityscape's
By-Laws, as in effect on the date hereof (the "By-Laws"), there are no
restrictions upon the voting or transfer of any shares of Cityscape's
capital stock pursuant to Cityscape's organizational and other governing
documents or any agreement or other instruments to which Cityscape is a
party or by which Cityscape or its properties or assets are bound. The
issuance of the Series A Preferred Stock and the Warrants is not subject to
any preemptive rights, rights of first refusal or other similar limitation.
There are no agreements or other obligations (contingent or otherwise) that
may require Cityscape to repurchase or otherwise acquire any shares of its
capital stock (other than its obligations with respect to the Series A
Preferred Stock).
(d) Corporate Documents. Cityscape has delivered to the Investors
true and correct copies of its Charter and the Certificate of Designations,
each as in effect on the date hereof, and Cityscape has furnished or made
available to the Investors true and correct copies of its By-Laws. The
Certificate of Designations has been duly filed with, and accepted for
filing by, the Secretary of State of the State of Delaware. The terms of
the Certificate of Designations are hereby expressly incorporated by
reference herein, and the form of certificate of Series A Preferred Stock
is attached as Exhibit C.
(e) Issuance of Common Shares. Each of the Common Shares issuable
upon conversion of the Series A Preferred Stock pursuant to the Certificate
of Designations or the Warrant Shares issuable upon the exercise of the
Warrants are, or prior to issuance will be, duly authorized and, prior to
issuance in accordance with the terms of the Series A Preferred Stock or
the Warrants, will be reserved for issuance and, upon conversion in
accordance with the Certificate of Designations and/or exercise in
accordance with the terms of the Warrants such Common Shares and Warrant
Shares, respectively, will be validly issued, fully paid and
non-assessable, free and clear of any and all pre-emptive rights, rights of
first refusal, liens, claims and encumbrances (other than those created or
suffered by the holder thereof), and eligible for inclusion on Nasdaq, and
the holders of such Common Shares and Warrant Shares shall be entitled to
all rights and preferences accorded to a holder of Common Stock.
(f) No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Certificate of
Designation and the Warrants by Cityscape and the consummation by Cityscape
of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Series A Preferred Stock, the Common Shares
and the Warrant Shares, and the filing of the Certificate of Designations,
do not and will not (i) result in a violation of Cityscape's Charter or
By-Laws, (ii) conflict with, result in a breach of, or constitute a default
(or an event that with the giving of notice or the passage of time, or
both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture, or instrument to which Cityscape or any of its subsidiaries is a
party, that could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect, or (iii) result in a violation of any
federal, state, local or foreign law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations)
applicable to Cityscape or any of its subsidiaries or by which any property
or asset of Cityscape or any of its subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or
in the aggregate, have a Material Adverse Effect) nor is Cityscape
otherwise in violation of, conflict with or in default under any of the
foregoing; provided that, for purposes of such representation as to
federal, state, local or foreign law, rule or regulation, no representation
is made herein with respect to any of the same applicable solely to the
Investors and not to Cityscape. The business of Cityscape and its
subsidiaries is not being conducted in violation of any law, ordinance or
regulations of any governmental entity, except for
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violations which either individually or in the aggregate do not and will
not have a Material Adverse Effect. Cityscape is not required under
federal, state, local or foreign law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver
or perform any of its obligations under this Agreement, the Registration
Rights Agreement, the Certificate of Designations and the Warrants or issue
and sell the Series A Preferred Stock in accordance with the terms hereof
and issue the Common Shares upon conversion of the Series A Preferred Stock
or to issue and sell the Warrants in accordance with their terms or issue
the Warrants Shares upon exercise of the Warrants (other than any
shareholder approval as may be required by the rules applicable to
companies whose common stock is quoted on Nasdaq, and other than the
registration statement which is required to file pursuant to the provisions
of the Registration Rights Agreement); provided that, for purposes of the
representation made in this sentence, Cityscape is assuming and relying
upon the accuracy of the relevant representations and agreements of the
Investors herein.
(g) SEC Documents; Financial Statements. The Common Stock of
Cityscape is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, since December
31, 1995, Cityscape has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Securities and Exchange
Commission ("SEC") pursuant to the reporting requirements of the Exchange
Act, including material filed pursuant to Section 13(a) or 15(d) with the
SEC (all of the foregoing including filings incorporated by reference
therein, the "SEC Documents"). Except as set forth in the SEC Documents, as
of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder and other federal, state and
local laws, rules and regulations applicable to such SEC Documents, and
none of the SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Cityscape's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"1996 10-K") as filed with the SEC, contains all material information
concerning Cityscape, and no event or circumstance has occurred or exists
since the date of the 1996 10-K which would require Cityscape to disclose
such event or circumstance in order to make the statements in the SEC
Documents not misleading on the Closing Date but which has not been so
disclosed. The financial statements of Cityscape included in the SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), have been prepared from, and are
consistent with, the books and records of Cityscape and fairly present in
all material respects the consolidated financial position, as at the dates
thereof, and the consolidated results of operations and cash flows of
Cityscape and its subsidiaries for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
Neither Cityscape, nor any of its subsidiaries had at December 31,
1996 any material contingent liabilities, liabilities for taxes or
long-term leases, unusual forward or long-term commitments or unrealized or
unanticipated losses from any unfavorable commitments which are not
reflected or reserved against in the foregoing statements or in the notes
thereto. No events that, individually or in the aggregate, have had or
could reasonably be expected to have a Material Adverse Effect have
occurred since December 31, 1996 except as reflected therein.
(h) Solvency.
(i) Cityscape's fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of Cityscape's
existing debts and other liabilities (including contingent liabilities)
as they mature.
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(ii) Cityscape's assets do not constitute unreasonably small
capital for to carry out its business as now conducted and as proposed
to be conducted including Cityscape's capital needs taking into account
the particular capital requirements of the business conducted by
Cityscape, and projected capital requirements and capital availability
thereof.
(iii) Cityscape does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). The cash
flow together with the proceeds received from the liquidation of
Cityscape's assets after taking into account all anticipated uses of the
cash, will at all times be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid.
(iv) Cityscape does not intend, and does not believe, that final
judgments against Cityscape in actions for money damages will be
rendered at a time when, or in an amount such that, Cityscape will be
unable to satisfy any such judgments promptly in accordance with their
terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). Cityscape's cash flow, after taking
into account all other anticipated uses of the cash (including the
payments on or in respect of debt referred to in paragraph (iii) above),
will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.
(v) Neither Cityscape nor any of its subsidiaries is subject to any
bankruptcy, insolvency or similar proceeding.
(i) No Default. No event has occurred and is continuing that with the
giving of notice or passage of time, or both, constitutes an event of
default under any agreement to which Cityscape is a party or its assets are
bound, which default could reasonably be expected to have a Material
Adverse Effect.
(j) Principal Market. The principal market on which the Common Stock
is currently traded is Nasdaq.
(k) No Material Adverse Change. Since December 31, 1996, no Material
Adverse Effect has occurred or exists, except as otherwise disclosed or
reflected in other SEC Documents prepared through or as of a date
subsequent to December 31, 1996.
(l) No Undisclosed Liabilities. Cityscape and its subsidiaries have
no liabilities or obligations not disclosed in the SEC Documents, other
than those liabilities incurred in the ordinary course of Cityscape's or
its subsidiaries' respective businesses since December 31, 1996, which
liabilities, individually or in the aggregate, do not or would not have a
Material Adverse Effect on Cityscape.
(m) No General Solicitation. Neither Cityscape, nor any of its
affiliates, or, to its knowledge, any person acting on its or their behalf
has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act of 1933, as
amended (the "Act")) in connection with the offer or sale of the Series A
Preferred Stock or Common Shares.
(n) No Integrated Offering. Neither Cityscape, nor any of its
affiliates, nor to its knowledge any person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security other than pursuant to this
Agreement, under circumstances that would require registration under the
Act of the Series A Preferred Stock to be issued under this Agreement.
(o) Form S-3. Cityscape is eligible to use Form S-3 under the Act for
a primary issuance of its securities and to file the Registration Statement
(as defined in the Registration Rights Agreement) on Form S-3.
(p) No Litigation. No litigation or claim (including those for unpaid
taxes), or environmental proceeding against Cityscape or any of its
subsidiaries is pending, threatened or, to Cityscape's best knowledge,
contemplated and no other event has occurred, which if determined adversely
would have a Material Adverse Effect on Cityscape or would materially
adversely affect the transactions contemplated
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hereby. There are no outstanding injunctions or restraining orders
prohibiting consummation of any of the transactions contemplated by this
Agreement and the Registration Rights Agreement.
(q) Brokers. Cityscape has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by any Investor relating to this Agreement or the transactions
contemplated hereby, except for amounts payable to CIBC Wood Gundy
Securities Corp., which amounts shall be paid by Cityscape pursuant to a
separate agreement.
(r) Effectiveness of SEC Filings. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration
involving the securities of Cityscape or its subsidiaries.
(s) No Investment Company. Cityscape is not an "investment company",
or an "affiliated person" of an investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(t) Environmental Matters. Except as otherwise disclosed in the SEC
Documents, Cityscape and each of its subsidiaries is in compliance in all
material respects with all applicable state and federal environmental laws
and no event or condition has occurred that may interfere with the
compliance by Cityscape or any of its subsidiaries with any environmental
law or that may give rise to any liability under any environmental law
that, individually or in the aggregate, would have a Material Adverse
Effect.
(u) Permits. Cityscape and each of its subsidiaries have such
certificates, permits (including, without limitation environmental
permits), licenses, franchises, consents, approvals, authorizations and
clearances that are material to the condition (financial or otherwise),
business or operations of Cityscape and any of its subsidiaries, taken as a
whole ("Permits"), and are in compliance in all material respects with all
applicable laws of all tribunals as are necessary to own, lease or operate
their respective properties and to conduct their businesses in the manner
as presently conducted and all such Permits are valid and in full force and
effect, except for any such Permits as would not, individually or in the
aggregate, have a Material Adverse Effect. Cityscape and each of its
subsidiaries is in compliance in all material respects with its respective
obligations under such Permits and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination of
such Permits, except for any such revocation or termination as would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 2.2 Representations and Warranties of the Investors. Each of the
Investors, severally and not jointly, hereby makes the following representations
and warranties to Cityscape as of the Closing Date:
(a) Authorization; Enforcement. (i) Such Investor has the requisite
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and the Warrant delivered in connection
herewith, and to purchase the Series A Preferred Stock and the Warrants
being sold hereunder and to acquire the Common Shares and the Warrant
Shares, (ii) the execution and delivery of this Agreement and the
Registration Rights Agreement by such Investor and the consummation by it
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate or partnership action, and (iii) this
Agreement and the Registration Rights Agreement constitute valid and
binding obligations of such Investor enforceable against such Investor in
accordance with their terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the
enforcement of creditors' rights and remedies or by other equitable
principles of general application.
(b) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement executed in connection
herewith, and the consummation by such Investor of the transactions
contemplated hereby and thereby, do not and will not (i) result in a
violation of such Investor's organizational documents, or (ii) conflict
with any agreement, indenture or instrument to which such Investor is a
party, or (iii) result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency
applicable to such Investor. Such Investor is not required to obtain any
consent or authorization of any governmental agency in order for it to
perform its obligations under this Agreement and the Registration Rights
Agreement.
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(c) Investment Representation. Such Investor is purchasing the Series
A Preferred Stock and acquiring the Warrants for its own account and not
with a view to distribution in violation of any securities laws. Such
Investor has no present intention to sell the Series A Preferred Stock, the
Warrants, the Common Shares or the Warrant Shares and such Investor has no
present arrangement (whether or not legally binding) to sell the Series A
Preferred Stock, the Warrants, the Common Shares or the Warrant Shares to
or through any person or entity; provided, however, that by making the
representations herein, such Investor does not agree to hold the Series A
Preferred Stock, the Warrants, the Common Shares or the Warrant Shares for
any minimum or other specific term and reserves the right to dispose of the
Series A Preferred Stock, the Warrants, the Common Shares or the Warrant
Shares at any time in accordance with federal and state securities laws
applicable to such disposition.
(d) Accredited Investor. Such Investor is an "accredited investor" as
defined in Rule 501 under the Act. The Investor has such knowledge and
experience in financial and business matters in general and investments in
particular, so that such Investor is able to evaluate the merits and risks
of an investment in the Series A Preferred Stock and the Warrants and to
protect its own interests in connection with such investment. In addition
(but without limiting the effect of Cityscape's representations and
warranties contained herein), such Investor has received such information
as it considers necessary or appropriate for deciding whether to purchase
the Series A Preferred Stock and the Warrants.
(e) Rule 144. Such Investor understands that there is no public
trading market for the Series A Preferred Stock or the Warrant, that none
is expected to develop, and that Series A Preferred Stock and the Warrant
must be held until such Series A Preferred Stock and Warrant are converted
pursuant to the terms of the Certificate of Designations, or exercised in
accordance with its terms, respectively, or registered under the Act or an
exemption from registration is available. Such Investor has been advised or
is aware of the provisions of Rule 144 under the Act.
(f) Brokers. Such Investor has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or
similar payments by Cityscape relating to this Agreement or the
transactions contemplated hereby, except for amounts payable to CIBC Wood
Gundy Securities Corp., which amounts shall be paid by Cityscape pursuant
to a separate agreement.
(g) Manner of Sale. At no time was the Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
ARTICLE III
COVENANTS
Section 3.1 Registration and Listing; Effective Registration. Until such
time as no shares of Series A Preferred Stock or Warrants are subject to resale
restrictions (as to time, volume, manner or otherwise) under Rule 144 under the
Act, Cityscape shall cause the Common Stock to continue to be registered under
Section 12(g) of the Exchange Act, will comply in all material respects with its
reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Exchange Act or the
rules thereunder) to terminate or suspend such reporting and filing obligations.
Until such time as there are no shares of Series A Preferred Stock or Warrants
outstanding, Cityscape shall continue the listing or trading of the Common Stock
on Nasdaq or other national securities exchange and comply in all respects with
Cityscape's reporting, filing and other obligations under the bylaws or rules of
Nasdaq or such other national securities exchange on which the Common Stock is
then trading. Cityscape shall undertake its best efforts to obtain the
stockholder approval referenced in Section 2.1(b) as may be required for the
issuance of the Common Shares issued upon conversion of the Series A Preferred
Stock or Warrant Shares issuable upon exercise of the Warrant as promptly as
practicable. As used herein and in the Registration Rights Agreement, the
Certificate of Designations and the Warrants the term "Effective Registration"
shall mean that all registration obligations of Cityscape pursuant to the
Registration Rights Agreement have been satisfied, such registration is not
subject to any suspension or stop order, the prospectus for the resale of the
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Common Shares issuable upon conversion of the Series A Preferred Stock and the
Warrant Shares issuable upon exercise of the Warrants complies in all material
respects with the requirements of the Act and does not and will not contain 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, in light of
the circumstances under which they were made, not misleading, and such Common
Shares are listed for trading on Nasdaq or such other national securities
exchange on which the Common Stock is then trading, and such trading has not
been suspended for any reason.
Section 3.2 Certificates on Conversion and Warrants on Exercise. (a) Upon
any conversion by an Investor (or then holder of Series A Preferred Stock) of
the Series A Preferred Stock pursuant to the Certificate of Designations,
Cityscape shall issue and deliver to such Investor (or holder) within three (3)
trading days of the Conversion Date (as defined in the Certificate of
Designations) a new certificate or certificates for the number of Series A
Preferred Stock which such Investor (or holder) has not yet elected to convert
but which are evidenced in part by the certificate(s) submitted to Cityscape in
connection with such conversion (with the number of an denomination of such new
certificate(s) designated by such Investor or holder).
(b) In the alternative to physical delivery of certificates for Common
Shares pursuant to Section 3(b) of the Certificate of Designations, if delivery
of the Common Shares pursuant to any conversion thereunder may be effectuated by
electronic book-entry through Depository Trust Company ("DTC"), then delivery of
Common Shares pursuant to such conversion shall, if requested by such Investor
(or holder of Common Shares), settle by book-entry transfer through DTC by the
third trading day following the Conversion Date. The parties agree to coordinate
with DTC to accomplish this objective.
(c) Upon any partial exercise by an Investor (or then holder of the
Warrants) of the Warrants, Cityscape shall issue and deliver to such Investor
(or holder) within three (3) trading days of the Exercise Date (as defined in
the Warrants) a new Warrant or Warrants, representing the number of adjusted
Warrant Shares, in accordance with the terms of Section 2 of the Warrants.
Section 3.3 Replacement Certificates and Warrants. (a) The certificate(s)
representing the Series A Preferred Stock held by any Investor (or then holder)
may be exchanged by such Investor (or such Holder) at any time and from time to
time for certificates with different denominations representing an equal
aggregate number of Series A Preferred Stock, as reasonably requested by such
Investor (or such holder) upon surrendering the same. No service charge will be
made for such registration or transfer or exchange.
(b) The Warrants are exchangeable at the option of the Investor (or then
holder of the Warrants) at the office of Cityscape for other Warrants of
different denominations entitling the holder thereof to purchase in the
aggregate the same number of Warrant Shares as are purchasable under such
Warrants. No service charge will be made for such transfer or exchange.
Section 3.4 Expenses. Cityscape shall pay, at the Closing (or at such
later date as it shall be invoiced by Dorsey & Whitney LLP) and promptly upon
receipt of any further invoices relating to the Closing, all reasonable due
diligence fees and expenses and reasonable attorneys' fees and expenses of
Dorsey & Whitney LLP, including, without limitation, costs and expenses incurred
in connection with review of Cityscape's registration statement on Form S-3 with
respect to the resale of the Common Shares and the Warrant Shares, and other due
diligence activities relating to the effectiveness of such registration
statement, incurred by the Investors in connection with the preparation,
negotiation, execution and delivery of this Agreement, the Registration Rights
Agreement, the Certificate of Designations and the Warrants and the related
agreements and documents and the transactions contemplated hereunder and
thereunder and in connection with the Closing.
Section 3.5 Securities Compliance. Cityscape shall notify each of the SEC
and Nasdaq, in accordance with their respective requirements, of the
transactions contemplated by this Agreement, the Certificate of Designations,
the Registration Rights Agreement and the Warrants and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and
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valid issuance of the Series A Preferred Stock hereunder, the Common Shares
issuable upon conversion thereof and the Warrant Shares issuable upon exercise
of the Warrants.
Section 3.6 Notices. Cityscape agrees to provide all holders of Series A
Preferred Stock with copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to the holders of shares of Common Stock, contemporaneously with
the delivery of such notices or information to such Common Stock holders.
Section 3.7 Use of Proceeds. Cityscape agrees that the proceeds received
by Cityscape from the sale of the Series A Preferred Stock hereunder shall be
used for working capital purposes or retiring the existing bridge debt placed by
CIBC Wood Gundy Securities Corp.
Section 3.8 Reservation of Common Stock Issuable Upon Conversion of the
Series A Preferred Stock and Upon Exercise of the Warrants. Cityscape shall at
all times reserve and keep available out of its authorized but unissued Common
Stock, solely for the purpose of effecting the conversion of the Series A
Preferred Stock and the exercise of the Warrants, free from pre-emptive rights
such number of its Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding Series A Preferred Stock and the
exercise of the Warrants, and if at any time the number of authorized but
unissued shares of Common Stock reserved for such purposes shall not be
sufficient to effect the conversion of all the then outstanding Series A
Preferred Stock and the exercise of the Warrants, Cityscape will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
it authorized but unissued Common Stock to such number of shares as shall be
sufficient for such purpose, including without limitation engaging in best
efforts to obtain the requisite stockholder approval.
Section 3.9 Corporate Existence. Cityscape will take all steps necessary
to preserve and continue its corporate existence.
Section 3.10 Issue Taxes. The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issue of Common Shares upon
conversion of Series A Preferred Stock in accordance with the Certificate of
Designations.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to the Obligation of Cityscape to Sell
the Series A Preferred Stock. The obligation hereunder of Cityscape to issue
and/or sell the Series A Preferred Stock and Warrants to the Investors is
subject to the satisfaction, at or before of the Closing, of each of the
conditions set forth below. These conditions are for Cityscape's sole benefit
and may be waived by Cityscape at any time in its sole discretion.
(a) Accuracy of the Investors' Representations and Warranties. The
representations and warranties of each Investor shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Investors. Each Investor shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
such Investor at or prior to the Closing.
(c) Payment of Purchase Price. At the Closing, each Investor shall deliver
the Purchase Price as indicated next to such Investor's name on the counterpart
of the signature page executed by such Investor as provided in Article I hereof.
(d) No Injunction. No statute, rule regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement, the
Registration Rights Agreement, the Certificate of Designations and the Warrants.
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Section 4.2 Conditions Precedent to the Obligation of the Investors to
Purchase the Series A Preferred Stock. The obligation hereunder of each
Investor to acquire and pay for the Series A Preferred Stock and acquire the
Warrants is subject to the satisfaction, at or before the Closing, of each of
the conditions set forth below. These conditions are for the Investors' sole
benefit and may be waived by the Investors at any time in their sole discretion.
(a) Accuracy of Cityscape's Representations and Warranties. The
representation and warranties of Cityscape shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by Cityscape. Cityscape shall have performed, satisfied,
and complied in all material respects with all covenants, agreement and
conditions required to be performed or satisfied by Cityscape on or prior to the
Closing.
(c) Nasdaq. As of the Closing Date, trading in Cityscape's Common Stock
shall not have been suspended by the SEC or Nasdaq, and trading in securities
generally as reported by Nasdaq shall not have been suspended or limited.
(d) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or materially adversely affects any of the transactions
contemplated by this Agreement, the Registration Rights Agreement, the
Certificate of Designations or the Warrants and no proceeding shall have been
commenced which is reasonably likely to have the effect of prohibiting or
adversely affecting any of the transactions contemplated by this Agreement, the
Registration Rights Agreement, the Certificate of Designations or the Warrants.
(e) Opinion of Counsel. At the Closing the Investors shall have received
an opinion of counsel to Cityscape in the form attached hereto as Exhibit D.
(f) Other Documents. At the Closing the Investors shall have received such
other certificates and documents as the Investors or their counsel shall
reasonably require.
(g) Registration Rights Agreement. Cityscape shall have executed and
delivered to the Investors the Registration Rights Agreement.
(h) Officer's Certificate. Cityscape shall have delivered to the Investors
a certificate in form and substance of Exhibit E executed by an officer of
Cityscape.
(i) Certificate of Designations Filed. The Investors shall have received
copies of the filed Certificate of Designations.
(j) Certificates. The Investors shall have received certificates
evidencing the Series A Preferred Stock and the Warrants.
ARTICLE V
LEGEND; RESTRICTIONS ON TRANSFER
Each certificate representing the Series A Preferred Stock, the Common
Shares, the Warrants and the Warrant Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES EVIDENCED OR CONSTITUTED BY THIS CERTIFICATE HAVE BEEN
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED IN CONNECTION WITH SUCH
10
<PAGE> 11
DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO RULE
144 PROMULGATED UNDER THE ACT."
Each Investor agrees that it shall not sell, offer for sale, transfer,
pledge or hypothecate any of the Series A Preferred Stock, the Common Shares,
the Warrants and the Warrant Shares without registration under the Act unless
either (i) Cityscape has received an opinion of counsel, in form and substance
reasonably satisfactory to Cityscape, to the effect that registration is not
required in connection with such disposition or in connection with the
conversion or exercise of the securities so disposed or (ii) such disposition
involves the sale of Common Shares or Warrant Shares and is made pursuant to
Rule 144 promulgated under the Act.
Cityscape agrees to reissue certificates representing the Series A
Preferred Stock, Common Shares, Warrants and Warrant Shares without the legend
set forth above at such time as (i) the holder thereof is permitted to dispose
of such Series A Preferred Stock, Common Shares, Warrants and/or Warrant Shares
pursuant to Rule 144(k) under the Act, (ii) such Series A Preferred Stock,
Common Shares, Warrants and/or Warrant Shares are sold to a purchaser or
purchasers who (in the opinion of counsel to the seller or such purchaser(s), in
form and substance reasonably satisfactory to Cityscape and its counsel) are
able to dispose of such securities publicly without registration under the Act,
or (iii) such Series A Preferred Stock, Common Shares, Warrants and/or Warrant
Shares are sold in a registered offering under the Act.
If on a Conversion Date (as defined in the Certificate of Designations), or
within three (3) trading days of such Conversion Date, the Investor notifies
Cityscape that it has resold Common Shares underlying the Series A Preferred
Stock being converted, so long as the Registration Statement (as defined in the
Registration Rights Agreement) is effective, Cityscape agrees to issue
certificates representing such Common Shares resold by the Investor without the
legend set forth above to or upon the instructions of the Investor.
Upon the sale of any Common Shares sold pursuant to an effective
Registration Statement, Cityscape or its transfer agent, shall promptly, but no
later than three trading days thereafter, issue new certificates representing
such Common Shares free and clear of any legends transfer restrictions and stop
orders. In order to facilitate this, Cityscape agrees to deliver to its transfer
agent, upon the Registration Statement being declared effective, instructions
authorizing the transfer agent to effect the transfer of, and removal of legend
from, any Common Shares sold pursuant to the Registration Statement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Specific Enforcement; Consent to Jurisdiction.
(a) Cityscape and the Investors acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) Cityscape and each of the Investors (i) hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court, the New York
State courts and other courts of the United States sitting in New York county,
New York for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement and (ii) hereby waives, and agrees not to assert in
any such suit action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Cityscape and each of the Investors consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
11
<PAGE> 12
Section 6.2 Entire Agreement; Amendment. This Agreement, together with
the Registration Rights Agreement, the Warrants and the Certificate of
Designations and the agreements and documents executed in connection herewith
and therewith, contains the entire understanding of the parties with respect to
the matters covered hereby and thereby and, except as specifically set forth
herein or therein, neither Cityscape nor any Investor makes any representation,
warranty, covenant or undertaking with respect to such matters.
Section 6.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective upon
actual receipt of such mailing. The addresses for such communications shall be:
<TABLE>
<S> <C>
to Cityscape: Cityscape Financial Corp.
565 Taxter Road
Elmsford, New York 10523-2300
Fax: (914) 592-7101
Attn: Chief Executive Officer
General Counsel
with copies to: Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Fax: (212) 351-4035
Attn: Sean P. Griffiths, Esq.
to the Investor: at the address and/or fax number set forth on Schedule I of this
Agreement
</TABLE>
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
Section 6.4 Indemnity. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees but
excluding consequential damages) incurred as a result of such parties' breach of
any representation, warranty, covenant or agreement in this Agreement.
Section 6.5 Waivers. Any term of this Agreement may be amended and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of Cityscape and the holders of more than 66 2/3% of the Series A
Preferred Stock. Any amendment or waiver effected in accordance with this
Section shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities and
Cityscape; provided, however, that no conditions set forth in Section 4.2 may be
waived with respect to an Investor without such Investor's prior written
consent.
Section 6.6 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 6.7 Successors and Assigns. Except as otherwise provided herein,
this Agreement shall be binding upon and insure to the benefit of the parties
and their successors and permitted assigns. Cityscape may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of all Investors (which consent may be withheld for any reason in their
sole discretion), except that Cityscape may assign this Agreement in connection
with the sale of all or substantially all of its assets provided that Cityscape
is not released from any of its obligations hereunder, such assignee assumes all
obligations of Cityscape hereunder, and appropriate adjustment of the provisions
contained in this Agreement, the Registration Rights Agreement, the Certificate
of Designations and the Warrants is made, in form and substance satisfactory to
the Investors, to place the Investors in the same position as they would have
been but for such assignment, in accordance with the terms of the Certificate of
Designations and the Warrants. Any Investor may assign this Agreement (in whole
or in part) or any rights or obligations hereunder without the consent of
Cityscape in connection with any sale or transfer of all or any portion of the
Series A Preferred Stock or the Warrants held by such Investor, provided such
sale or transfer is in compliance with Article V hereof and that no Investor
12
<PAGE> 13
may assign this Agreement prior to the Closing Date without Cityscape's prior
written consent except to an affiliate or affiliates of such Investor, provided
such affiliate or affiliates agrees in writing to be bound by the terms hereof.
Section 6.8 No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 6.9 Governing Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the internal
laws of the State of New York without regard to such state's principles of
conflict of laws.
Section 6.10 Survival. The representations ant warranties and the
agreements and covenants of Cityscape and each Investor contained herein shall
survive the Closing.
Section 6.11 Execution. This Agreement may be executed in counterparts,
all of which shall be considered one the same agreement, it being understood
that all parties need not sign the same counterpart.
Section 6.12 Publicity. Cityscape agrees that it will not disclose, and
will not include in any public announcement the name of any Investor without its
express written consent, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement. Except
as may be required by law, Cityscape and each Investor shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement and shall not issue any press release or make any
such public statement prior to such consultation.
Section 6.13 (a) Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
(b) Obligations Several and Not Joint. The parties acknowledge and agree
that the Investors are not agents, affiliates or partners of each other, that
all representations, warranties, covenants and agreements of the Investors
hereunder are several and not joint, that no Investor shall have any
responsibility or liability for the representations, warrants, agreements, acts
or omissions of any other Investor, and that any rights granted to "Investors"
hereunder shall be enforceable by each Investor hereunder.
Section 6.14 Covenant of the Investor. Each of the Investors, severally
and not jointly, hereby covenants and agrees that it will not, directly or
through an affiliate create the "lowest trading price" (as defined in the
Certificate of Designations) for the Common Stock on any of the four (4) (or
fifteen (15) if applicable) consecutive trading days immediately preceding the
day of delivery by such Investor of a Conversion Notice (as defined in the
Certificate of Designations).
Section 6.15 Limitations on Investor's Right to Convert shares of Series A
Preferred Stock. Notwithstanding anything to the contrary contained herein, no
shares of Series A Preferred Stock may be converted by an Investor to the extent
that, after giving effect to Common Shares to be issued pursuant to a Conversion
Notice (as such term is defined in the Certificate of Designations), the total
number of Common Shares deemed beneficially owned by such Investor, together
with all Common Shares deemed beneficially owned by the Investor's "affiliates"
(as defined in Rule 144 of the Act) that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities Exchange Act
of 1934 exists, would exceed 4.9% of the total issued and outstanding shares of
the Corporation's Common Stock, provided that each Investor shall have the right
to waive this restriction, in whole or in part, immediately in the case of a
pending Change of Control Transaction (as such term is defined in the
Certificate of Designations) and in any other case upon 61 days prior notice to
the Corporation. The delivery of a Conversion Notice by any Investor shall be
deemed a representation by such Investor that it is in compliance with this
paragraph.
Section 6.16 Ineffective Conversion of shares of Series A Preferred Stock.
A conversion by an Investor of shares of Series A Preferred Stock into Common
Shares shall be deemed ineffective, pursuant to an election by such Investor, to
the extent that, during the period commencing on the date such Common Shares are
delivered to the Investor upon such conversion and ending 5 trading days
thereafter (i) such Investor is unable to resell all or a portion of such
13
<PAGE> 14
Common Shares because the Registration Statement shall, for any reason, not be
available or (ii) Cityscape notifies the Investors of its intent to purchase, in
accordance with Sections 3(h)(3) or 3(h)(6) of the Certificate of Designations,
all of the outstanding shares of Series A Preferred Stock held by the Investors
at the time of such notice. The Investor shall promptly, but no later than 5
trading days from the end of the 5 trading day period specified in the previous
sentence, give Cityscape notice of an election pursuant to this Section 6.16.
Cityscape shall, upon receipt of such notice of election from the Investor,
re-issue shares of Series A Preferred Stock to such Investor as promptly as
practicable upon surrender by the Investor of the Common Shares held by such
Investor which are the subject of this Section 6.16.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
CITYSCAPE FINANCIAL CORP.
By: /s/ Robert C. Patent
--------------------------------------
Name: Robert C. Patent
Title: Executive Vice President
INVESTOR:
Credit Suisse First Boston Corp.
By: /s/ John McAvey
Name: John McAvey
Title: Managing Director
Number of shares of Series A Preferred
Stock Purchased at the Closing: 300
Number of Warrants Purchased: 30,000
-------------------------------------
Address for Notices:
Attn: Allan Weine
11 Madison Ave.
3rd Floor
New York, NY 10010
INVESTOR:
CIBC Wood Gundy Securities Corp.
By: /s/ Neil I. Thomas
Name: Neil I. Thomas
Title: Managing Director
Number of shares of Series A Preferred
Stock Purchased at the Closing: 850
Number of Warrants Purchased: 85,000
-------------------------------------
Address for Notices:
Neal I. Thomas
CIBC Wood Gundy Securities Corp.
425 Lexington Avenue, 5th Floor
New York, New York 10017
INVESTOR:
Bear, Stearns & Co. Inc.
By: /s/ Yan Erlikh
Name: Yan Erlikh
Title: Senior Managing Director
Number of shares of Series A Preferred
Stock Purchased at the Closing: 300
Number of Warrants Purchased: 30,000
-------------------------------------
Address for Notices:
INVESTOR:
Paloma Securities L.L.C.
By: /s/ Michael J. Berner
Name: Michael J. Berner
Title: Executive Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 1,050
Number of Warrants Purchased: 105,000
-------------------------------------
Address for Notices:
Two American Lane
Greenwich, CT 06836-2571
Attn: Michael J. Berner
INVESTOR:
SoundShore Partners L.P.
*-BY: AIG International Asset Management
Ltd, as General Partner of SoundShore
Partners L.P.
By: /s/ Thomas J. Leishman
Name: Thomas J. Leishman
Title: Vice-President*
Number of shares of Series A Preferred
Stock Purchased at the Closing: 50
Number of Warrants Purchased: 5,000
-------------------------------------
Address for Notices:
INVESTOR:
Halifax Fund, L.P.
By: THE PALLADIN GROUP, L.P., as
attorney-in-fact
By: PALLADIN CAPITAL
MANAGEMENT L.L.C., General Partner
By: /s/ Andrew Kaplan
Name: Andrew Kaplan
Title: Sr. Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 1,000
Number of Warrants Purchased: 100,000
-------------------------------------
Address for Notices:
Halifax Fund L.P.
c/o Palladin Group, L.P.
40 West 57th St.
New York, N.Y. 10019
Attn: Andrew Kaplan
INVESTOR:
Hick Investment Ltd.
By: THE PALLADIN GROUP, L.P., as
attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT L.L.C.,
General Partner
By: /s/ Andrew Kaplan
Name: Andrew Kaplan
Title: Sr. Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 50
Number of Warrants Purchased: 5,000
-------------------------------------
Address for Notices:
Halifax Fund L.P.
c/o Palladin Group, L.P.
40 West 57th St.
New York, N.Y. 10019
Attn: Andrew Kaplan
INVESTOR:
Colonial Penn Insurance Co.
By: THE PALLADIN GROUP, L.P., as
attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT L.L.C.,
General Partner
By: /s/ Andrew Kaplan
Name: Andrew Kaplan
Title: Sr. Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 50
Number of Warrants Purchased: 5,000
---------------------------------------
Address for Notices:
Halifax Fund L.P.
c/o Palladin Group, L.P.
40 West 57th St.
New York, N.Y. 10019
Attn: Andrew Kaplan
INVESTOR:
Colonial Penn Insurance Co.
By: THE PALLADIN GROUP, L.P., as
attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/ Andrew Kaplan
Name: Andrew Kaplan
Title: Sr. Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 50
Number of Warrants Purchased: 5,000
----------------------------------------
Address for Notices:
Halifax Fund L.P.
c/o Palladin Group, L.P.
40 West 57th St.
New York, N.Y. 10019
Attn: Andrew Kaplan
INVESTOR:
Gleneagles Fund Company
By: THE PALLADIN Group, L.P.,
as attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT L.L.C.,
General Partner
By: /s/ Andrew Kaplan
Name: Andrew Kaplan
Title: Sr. Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 150
Number of Warrants Purchased: 15,000
----------------------------------------
Address for Notices:
Halifax Fund L.P.
c/o Palladin Group, L.P.
40 West 57th St.
New York, N.Y. 10019
Attn: Andrew Kaplan
INVESTOR:
Galileo Capital LLC
By: /s/ Jeffry Devers
Name: Jeffrey Devers
Title: Manager
Number of shares of Series A Preferred
Stock Purchased at the Closing: 150
Number of Warrants Purchased: 15,000
-------------------------------------
Address for Notices:
INVESTOR:
FROLEY REVY INVESTMENT CO. INC.
ACCOUNT: NASCO CHEMICAL
COMPANY RETIREMENT TRUST
By: /s/ Andrea O'Connor
Name: Andrea O'Connor
Title: Managing Director
Number of shares of Series A Preferred
Stock Purchased at the Closing: 20
Number of Warrants Purchased: 2,000
-------------------------------------
Address for Notices:
INVESTOR:
FROLEY REVY INVESTMENT CO. INC.
ACCOUNT: PENSION RESERVES
INVESTMENT MANAGEMENT BOARD
By: /s/ Andrea O'Connor
Name: Andrea O'Connor
Title: Managing Director
Number of shares of Series A Preferred
Stock Purchased at the Closing: 130
Number of Warrants Purchased: 13,000
-------------------------------------
Address for Notices:
INVESTOR:
FROLEY REVY INVESTMENT CO. INC.
ACCOUNT: STATE OF OREGON
EQUITY FUND
By: /s/ Andrea O'Connor
Name: Andrea O'Connor
Title: Managing Director
Number of shares of Series A Preferred
Stock Purchased at the Closing: 350
Number of Warrants Purchased: 35,000
-------------------------------------
Address for Notices:
INVESTOR:
Continental Casualty Company,
Designated High Yield
By: /s/ Richard W. Dubberke
Name: Richard W. Dubberke
Title: Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 50
Number of Warrants Purchased: 5,000
-------------------------------------
Address for Notices:
INVESTOR:
Continental Casualty Company
By: /s/ Richard W. Dubberke
Name: Richard W. Dubberke
Title: Vice President
Number of shares of Series A Preferred
Stock Purchased at the Closing: 450
Number of Warrants Purchased: 45,000
-------------------------------------
Address for Notices:
<PAGE> 15
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Certificate of Designations of Cityscape
Exhibit B Form of Warrant
Exhibit C Form of Certificate of Series A Preferred
Stock
Exhibit D Form of Opinion of Counsel
Exhibit E Form of Officer's Certificate
</TABLE>
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
April 9, 1997 between Cityscape Financial Corp., a Delaware corporation
("Cityscape") and each person executing a counterpart of the signature page of
this Agreement (each individually an "Investor" and collectively the
"Investors").
W I T N E S S E T H:
WHEREAS, pursuant to the Securities Purchase Agreement by and between
Cityscape and the Investors (the "Securities Purchase Agreement"), Cityscape has
agreed to sell and issue to the Investors, and the Investors have agreed to
purchase from Cityscape, up to an aggregate of 5,000 shares, par value $0.01 per
share of Cityscape's 6% Convertible Preferred Stock, Series A (the "Series A
Preferred Stock") on the terms and conditions set forth therein and five-year
warrants issued as of the date hereof exercisable from time to time from the
date of issuance (the "Warrants"), for the purchase of up to 500,000 shares of
Common Stock, par value $0.01 per share of Cityscape (the "Common Stock"), at a
price specified in such Warrants (the shares of Common Stock issuable upon the
exercise of Warrants are hereinafter called the "Warrant Shares");
WHEREAS, the Investors may convert their Series A Preferred Stock into
shares of Common Stock at a conversion price to be calculated pursuant to and
upon such terms as are provided in the Certificate of Designations (the
"Certificate of Designations") of the Series A Preferred Stock; and
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Securities Purchase Agreement, Cityscape
has agreed to provide the holders of Series A Preferred Stock with certain
registration rights with respect to the shares of Common Stock to be issued upon
conversion of the Series A Preferred Stock (such shares of Common Stock together
with the Warrant Shares are hereinafter referred to as the "Common Shares") and
certain other rights and remedies with respect to the Series A Preferred Stock
as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Securities Purchase
Agreement and this Agreement, Cityscape and the Investors agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Securities Purchase
Agreement or the Certificate of Designations. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Holder" and "Holders" shall include an Investor or the Investors for
so long as they own any Registrable Securities, respectively, and any
assignee or transferee of Registrable Securities to whom the registration
rights conferred by this Agreement have been transferred in compliance with
this Agreement.
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Securities Purchase Agreement.
"Liquidation Preference" shall have the meaning ascribed to such term
in the Certificate of Designations. For clarification purposes,
"Liquidation Preference" hereunder shall include any accrued and unpaid
dividends on the Series A Preferred Stock on a per diem basis through the
date of any event for which default payments are payable pursuant to
Section 2(b) below and thereafter.
"Registrable Securities" shall mean: (i) the Common Shares issued to
each Holder or its permitted transferee or designee upon conversion of the
Series A Preferred Stock or exercise of the Warrants or upon any stock
split, stock dividend, recapitalization or similar event with respect to
such Common
<PAGE> 2
Shares; (ii) any securities issued or issuable to each Holder upon the
exchange or conversion of any Series A Preferred Stock, Warrants or Common
Shares; and (iii) any other security of Cityscape issued as a dividend or
other distribution with respect to, in exchange of or in replacement of the
securities listed in (i) and (ii) above, until in the case of any such
securities (a) a registration statement under the Securities Act covering
the offering of such Registrable Securities has been declared effective by
the Commission and such Registrable Securities have been disposed of
pursuant to such effective registration statement, (b) such Registrable
Securities are sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (c) such Registrable Securities have
been otherwise transferred and Cityscape has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive
legend, or (d) such time as, such Registrable Securities may be sold
without any time, volume or manner limitation pursuant to Rule 144(k) (or
any similar provision then in effect) under the Securities Act.
The terms "register," registered" and "registration" shall 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.
"Registration Expenses" shall mean all expenses to be incurred by
Cityscape in connection with each Holder's registration rights under this
Agreement, including without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for Cityscape, blue
sky fees and expenses, reasonable fees and disbursements of counsel to
Holders (using a single counsel selected by a majority in interest of the
Holders) for a "due diligence" examination of Cityscape and review of the
Registration Statement and related documents, and the expense of any
special audits incident to or required by any such registration (but
excluding the compensation of regular employees of Cityscape, which shall
be paid in any event by Cityscape).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees
and disbursements of counsel for Holders not included with "Registration
Expenses."
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
2. Registration Requirements. Cityscape shall use its diligent best
efforts to effect the registration of the Registrable Securities (including
without limitation the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as would permit or facilitate the sale or distribution
of all the Registrable Securities in the manner (including manner of sale) and
in all states reasonably requested by the Holder. Such best efforts by Cityscape
shall include the following:
(a) Cityscape shall, as expeditiously as reasonably practicable after
the Closing Date:
(i) Prepare and file with the Commission pursuant to Rule 415 under
the Securities Act a registration statement on Form S-3 under the
Securities Act (or in the event that Cityscape is ineligible to use such
form, such other form as Cityscape is eligible to use under the
Securities Act) covering the Registrable Securities ("Registration
Statement"). Thereafter, Cityscape shall use its best efforts to cause
such Registration Statement and other filings to be declared effective
prior to 120 days following the Closing Date. Cityscape shall provide
Holders reasonable opportunity to review any such Registration Statement
or amendment or supplement thereto prior to filing.
(ii) Prepare and file with the Commission such amendments and
post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for so long as
there are any Registrable Securities outstanding; cause the related
prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed pursuant to
2
<PAGE> 3
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement for so
long as there are any Registrable Securities outstanding in accordance
with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement or supplement to such prospectus;
(iii) Furnish to each Holder such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as
such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
(iv) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or
"Blue sky" laws of such jurisdictions as shall be reasonably requested
by each Holder and keep each such registration or qualification
effective, including through new filings or amendments or renewals, for
so long as there are any Registrable Securities outstanding and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered
by the applicable Registration Statement; provided that Cityscape shall
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.
(v) For so long as there are any Registrable Securities outstanding
notify each Holder immediately, and confirm such notice in writing, (A)
when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement
or any post-effective amendment, when the same has become effective, (B)
of any request by the Commission for amendments or supplements to a
Registration Statement or related prospectus or for additional
information, (C) of the receipt by Cityscape of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose, and (D) of Cityscape's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate or that there exist circumstances not yet
disclosed to the public which make further sales under such Registration
Statement inadvisable pending such disclosure and post-effective
amendment.
(vi) Notify each Holder immediately, and confirm such notice in
writing of the happening of any event as a result of which the
prospectus (including any supplements thereto or thereof) included in
such Registration Statement, as then in effect, contains any untrue
statement of material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, and use its
best efforts to promptly update and/or correct such prospectus.
(vii) Notify each Holder immediately, and confirm such notice in
writing of the issuance by the Commission or any state securities
commission or agency of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose. Cityscape shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement,
or the lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
possible moment.
(viii) Permit Dorsey & Whitney LLP (or such other counsel,
designated as Holders' counsel by a majority of the Registrable
Securities included in the Registration Statement and which is
reasonably acceptable to Cityscape), to review the Registration
Statement and all amendments and supplements thereto within a reasonable
period of time prior to each filing, and shall not file any document in
a form to which such counsel reasonably objects.
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<PAGE> 4
(ix) Cause all Registrable Securities that are shares of Common
Stock covered by such Registration Statement to be listed, by the date
of the first sale of Registrable Securities pursuant to such
Registration Statement, with the principal securities exchange(s) and/or
markets on which the Common Stock is then listed and prepare and file
any required filings with the National Association of Securities
Dealers, Inc. or any exchange or market where the Common Shares are
traded.
(x) Take all steps necessary to enable Holders to avail themselves
of the prospectus delivery mechanism set forth in Rule 153 (or successor
thereto) under the Act, if available.
(b) If the Holder(s) intend to distribute the Registrable Securities
by means of an underwriting, the Holder(s) shall so advise Cityscape. Any
such underwriting may only be administered by investment bankers reasonably
satisfactory to Cityscape. Cityscape shall only be obligated to permit one
underwritten offering, which offering shall be determined by a 66 2/3%
majority-in-interest of the Holders.
(c) Cityscape shall enter into such customary agreements for an
underwritten secondary offering (including a customary underwriting
agreement with the underwriter or underwriters), and take all such other
actions reasonably requested by the Holders in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities and in such connection:
(i) make such representations and warranties to the Holders and the
underwriter or underwriters in form, substance and scope as are
customarily made by issuers to underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable Securities
and the underwriter or underwriters opinions of independent counsel to
Cityscape, on and dated the date of delivery of any Registrable
Securities sold pursuant to the Registration Statement, which counsel
and opinion (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s) and their counsel and
covering, without limitation, such matters as the due authorization and
issuance of the securities being registered and compliance with
securities laws by Cityscape in connection with the authorization,
issuance and registration thereof and other matters that are customarily
given to underwriters in underwritten offerings, addressed to the
Holders and each underwriter;
(iii) cause to be delivered, immediately prior to the time of
delivery of any Registrable Securities sold pursuant to the Registration
Statement, a "comfort" letter from Cityscape's independent certified
public accountants addressed to the Holders and each underwriter,
stating that such accountants are independent public accountants within
the meaning of the Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and covering
such financial and accounting matters as are customarily covered by
letters of the independent certified public accountants delivered in
connection with secondary offerings;
(iv) any underwriting agreement is entered into shall include
customary indemnification and contribution provisions to and from the
Company and the underwriters;
(v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Registrable Securities being sold or the
managing underwriter or underwriters, if any, to evidence compliance
with clause (i) above and with any customary conditions contained in the
underwriting agreement, if any.
(e) Cityscape shall make available for inspection by the Holders,
representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and
any attorney or accountant retained by any Holder or underwriter, all
financial and other records customary for purposes of the Holders' due
diligence examination of Cityscape and review of any Registration
Statement, all SEC Documents (as defined in the Securities Purchase
Agreement) filed subsequent to the Closing, pertinent corporate documents
and properties of Cityscape, and cause Cityscape's officers, directors and
employees to supply all information reasonably requested by any such
4
<PAGE> 5
representatives, underwriter, attorney or accountant in connection with
such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, Cityscape may suspend the use of
any prospectus used in connection with the Registration Statement only (i)
in the event, and for such period of time as, such a suspension is required
by the rules and regulations of the Commission, or (ii) as otherwise
provided in the Certificate of Designations. Cityscape will use its best
efforts to cause such suspension to terminate at the earliest possible
date.
(g) In the event Cityscape is required to file an additional
registration statement with respect to newly authorized and/or reserved
shares of Common Stock (the "New Shares") in order to comply with its
obligations under the Series A Preferred Stock or the Warrant, Cityscape
shall file an additional registration statement within five (5) business
days of any shareholders meeting authorizing the New Shares and shall use
its best efforts to cause such registration statement to become effective
within sixty (60) days of such shareholders meeting. If the Holders become
entitled, pursuant to an event described in clause (iii) of the definition
of Registrable Securities, to receive any securities in respect of
Registerable Securities that were already included in a registration
statement, subsequent to the date such registration statement is declared
effective, and Cityscape is unable under the securities laws to add such
securities to the then effective registration statement, Cityscape shall
promptly file, in accordance with the procedures set forth herein, an
additional registration statement with respect to such newly Registrable
Securities. Cityscape shall use its best efforts to (i) cause any such
additional registration statement, when filed, to become effective under
the Securities Act, and (ii) keep such additional registration statement
effective during the period described in Section 5 below.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by Cityscape, and all Selling Expenses
of a Holder shall be borne by such Holder.
4. Registration on Form S-3. Cityscape shall use its best efforts to
remain eligible for registration on Form S-3 or any comparable or successor form
or forms, or in the event that Cityscape is ineligible to use such form, such
form as Cityscape is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by
Cityscape pursuant to this Agreement, Cityscape will use its best efforts to
keep such registration effective until the Holders have completed the sales or
distribution described in the Registration Statement (or additional registration
statement filed pursuant to Section 2(g) above) relating thereto or, if earlier,
until such time as, such Registrable Securities may be sold without any time,
volume or manner limitation pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act (provided that Cityscape's transfer
agent has accepted an instruction from Cityscape to such effect).
6. Indemnification.
(a) Cityscape Indemnity. Cityscape will indemnify each Holder, each of its
officers, directors and partners, and each person controlling each Holder,
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on 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 any violation by Cityscape of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to Cityscape and relating to action or inaction required of Cityscape in
connection with any such registration, qualification or compliance, and will
reimburse each Holder, each of its officers, directors and partners, and each
person controlling such Holder, each such underwriter and each person who
5
<PAGE> 6
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that Cityscape will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission based
upon and in conformity with written information furnished to Cityscape by such
Holder or the underwriter (if any) therefor and stated to be specifically for
use therein. The indemnity agreement contained in this Section 6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of Cityscape (which
consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify
Cityscape, each of its directors, officers, partners, and each underwriter, if
any, of Cityscape's securities covered by such a registration statement, each
person who controls Cityscape or such underwriter within the meaning of Section
15 of the Securities Act and the rules and regulations thereunder, each other
Holder (if any), and each of their officers, directors and partners, and each
person controlling such other Holder(s) against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading, and will reimburse Cityscape and such other Holder(s) and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to Cityscape by such Holder and
stated to be specifically for use therein, and provided that the maximum amount
for which such Holder shall be liable under this indemnity shall not exceed the
net proceeds received by such Holder from the sale of the Registrable Securities
pursuant to such registration statement. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this Article
(the "Indemnified Party") shall 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 shall
permit the Indemnifying Party to assume the defense of any such claim in any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article except to the extent
that the Indemnifying Party is materially and adversely affected by such failure
to provide notice. The Indemnifying Party shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for such Indemnified Party, provided, however, that if separate firm(s)
of attorneys are required due to a conflict of interest, then the Indemnifying
Party shall be liable for the reasonable fees and expenses of each such separate
firm. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which 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 shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
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<PAGE> 7
7. Contribution. If the indemnification provided for in Section 6 herein
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between Cityscape on the one hand and any Holder on the other, in
such proportion as is appropriate to reflect the relative fault of Cityscape and
of such Holder in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of Cityscape on the one hand and of
any Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
Cityscape or by such Holder.
In no event shall the obligation of any Indemnifying Party to contribute
under this Section 7 exceed the amount that such Indemnifying Party would have
been obligated to pay by way of indemnification if the indemnification provided
for under Section 6(a) or 6(b) hereof had been available under the
circumstances.
Cityscape and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Holders or the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraphs.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraphs shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of Cityscape referred to
in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Securities Purchase
Agreement or any underwriting agreement, (ii) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of Cityscape, and (iii) the
consummation of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to Cityscape such
information regarding such Holder and the distribution and/or sale proposed by
such Holder as Cityscape may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. Replacement Certificates. The certificate(s) representing the Common
Stock or Warrant Shares held by any Investor (or then Holder) may be exchanged
by such Investor (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Stock or Warrant Shares, as reasonably requested by such Investor (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
11. Transfer or Assignment. The rights granted to the Investors by
Cityscape under this Agreement to cause Cityscape to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Series A Preferred Stock or Warrants, and all other rights
granted to the Investors by Cityscape hereunder may be transferred or assigned
to any transferee or assignee of any Series A Preferred
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Stock or Warrants; provided in each case that Cityscape must be given written
notice by such Investor at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned; and provided further that the
transferee or assignee of such rights agrees in writing to be bound by the
registration provisions of this Agreement and such transfer or assignment is
permitted by and made in compliance with the Securities Purchase Agreement.
12. Miscellaneous.
(a) Remedies. Cityscape and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) Jurisdiction. Cityscape and each of the Investors (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the New York State courts and other courts of the United States sitting
in New York County, New York for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Cityscape and each of the Investors consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
(c) Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective upon actual receipt
of such mailing. The addresses for such communications shall be:
<TABLE>
<S> <C> <C>
to Cityscape: Cityscape Financial Corp.
565 Taxter Road
Elmsford, New York 10523-2300
Fax: (914) 592-7101
Attn: Chief Executive Officer
General Counsel
with copies to: Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Fax: (212) 351-4035
Attn: Sean P. Griffiths, Esq.
to the Investors: To each Investor at the address and/or fax number set forth on the
executed counterpart of the signature page of this Agreement.
</TABLE>
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
(d) Waivers. Any term of this Agreement may be amended and the observance
of any term hereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
Cityscape and the holders of more than 66 2/3% of the Registrable Securities.
Any amendment or waiver effected in accordance with this Section shall be
binding upon each holder of any Registrable Securities at the time outstanding,
each future holder of all such securities and Cityscape.
(e) Execution. This Agreement may be executed in counterparts, all of
which shall considered one and the same agreement, it being understood that all
parties need not sign the same counterpart.
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<PAGE> 9
(f) Publicity. Cityscape agrees that it will not disclose, and will not
include in any public announcement, the name of any Investor without its
consent, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement. Except as may be
required by law, Cityscape and each Investor shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement and shall not issue any press release or make any such
public statement prior to such consultation.
(g) Entire Agreement. This Agreement, together with the Securities
Purchase Agreement, the Certificate of Designations and the Warrants and the
agreements and documents contemplated hereby and thereby, contains the entire
understanding and agreement of the parties, and may not be modified or
terminated except by a written agreement signed by both parties.
(h) Governing Law. This Agreement and the validity and performance of the
terms hereof shall be governed by, interpreted under, and construed in
accordance with the laws of the State of New York, without regard to such
state's principles of conflict of laws.
(i) Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.
(j) Obligations Several and not Joint. The parties acknowledge and agree
that the Investors are not agents, affiliates or partners of each other, that
all representations, warranties, covenants and agreements of the Investors
hereunder are several and not joint, that no Investor shall have any
responsibility or liability for the representations, warrants, agreements, acts
or omissions of any other Investor, and that any rights granted to "Investors"
hereunder shall be enforceable by each Investor hereunder.
(k) Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
(l) Rule 144. Cityscape covenants that it will file all reports required
to be filed by it under the Securities Act and the Exchange Act and that it will
take such further action as holders of Registrable Securities may reasonably
request, all to the extent required from time to time to enable the Investor to
sell Registrable Securities without registration under the Act within the
limitation of the exemptions provided by (a) Rule 144, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. If at any time Cityscape is not required to file such
reports, it will, upon the request of the Investor, make publicly available
other information so long as necessary to permit sales pursuant to Rule 144.
Upon the request of the Investor, Cityscape will deliver to the Investor a
written statement as to whether it has complied with such requirements.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
CITYSCAPE FINANCIAL CORP.
By: /s/ ROBERT C. PATENT
------------------------------------
Name: Robert C. Patent
Title: Executive Vice President
INVESTOR:
Credit Suisse First Boston Corp.
By: /s/ JOHN McAVEY
------------------------------------
Name: John McAvey
Title: Managing Director
INVESTOR:
CIBC Wood Gundy Securities Corp.
By: /s/ NEIL I. THOMAS
------------------------------------
Name: Neil I. Thomas
Title: Managing Director
INVESTOR:
Bear, Stearns & Co. Inc.
By: /s/ YAN ERLIKH
------------------------------------
Name: Yan Erlikh
Title: Senior Managing Director
INVESTOR:
Palona Securities L.L.C.
By: /s/ MICHAEL J. BERNER
------------------------------------
Name: Michael J. Berner
Title: Executive Vice President
INVESTOR:
SoundShore Partners L.P.
*By: AIG International Asset
Management Ltd. as General Partner
of Soundshore Partners L.P.
By: /s/ THOMAS J. LEISHMAN
------------------------------------
Name: Thomas J. Leishman
Title: Vice-President*
INVESTOR:
Halifax Fund, L.P.
By: THE PALLADIN GROUP, L.P.,
as attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/ ANDREW KAPLAN
------------------------------------
Name: Andrew Kaplan
Title: Sr. Vice President
INVESTOR:
Hick Investment Ltd.
By: THE PALLADIN GROUP, L.P.,
as attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/ ANDREW KAPLAN
--------------------------------
Name: Andrew Kaplan
Title: Sr. Vice President
INVESTOR:
Colonial Penn Insurance Co.
By: THE PALLADIN GROUP, L.P.,
as attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/ ANDREW KAPLAN
--------------------------------
Name: Andrew Kaplan
Title: Sr. Vice President
INVESTOR:
Colonial Penn Insurance Co.
By: THE PALLADIN GROUP, L.P.,
as attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/ ANDREW KAPLAN
--------------------------------
Name: Andrew Kaplan
Title: Sr. Vice President
INVESTOR:
Gleneagles Fund Company
By: THE PALLADIN GROUP, L.P.,
as attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/ ANDREW KAPLAN
--------------------------------
Name: Andrew Kaplan
Title: Sr. Vice President
INVESTOR:
Galileo Capital LLC
By: /s/ JEFFREY DEVERS
------------------------------------
Name: Jeffrey Devers
Title: Manager
INVESTOR:
FROLEY REVY INVESTMENT CO. INC.
ACCOUNT: NASCO CHEMICAL COMPANY
RETIREMENT TRUST
By: /s/ ANDREA O'CONNER
------------------------------------
Name: Andrea O'Conner
Title: Managing Director
INVESTOR:
FROLEY REVY INVESTMENT CO. INC.
ACCOUNT: PENSION RESERVES INVESTMENT
MANAGEMENT BOARD
By: /s/ ANDREA O'CONNOR
------------------------------------
Name: Andrea O'Connor
Title: Managing Director
INVESTOR:
FROLEY REVY INVESTMENT CO. INC.
ACCOUNT: STATE OF OREGON EQUITY FUND
By: /s/ ANDREA O'CONNOR
------------------------------------
Name: Andrea O'Connor
Title: Managing Director
INVESTOR:
Continental Casualty Company
Designated High Yield
By: /s/ RICHARD W. DUBBERKE
------------------------------------
Name: Richard W. Dubberke
Title: Vice President
INVESTOR:
Continental Casualty Company
By: /s/ RICHARD W. DUBBERKE
------------------------------------
Name: Richard W. Dubberke
Title: Vice President
10
<PAGE> 1
EXHIBIT 4.4
THE SECURITIES EVIDENCED OR CONSTITUTED BY THIS CERTIFICATE HAVE BEEN
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE
PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.
RIGHT TO PURCHASE SHARES OF COMMON STOCK
OF CITYSCAPE FINANCIAL CORP.
------------------------------------------------------
COMMON STOCK PURCHASE WARRANT
NO.
------------------------------
Cityscape Financial Corp., a Delaware corporation (the "Company"), hereby
certifies that for $10.00 and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, ,
(the "Purchaser") or any other Warrant Holder is entitled, on the terms and
conditions set forth below, to purchase from the Company at any time after the
date hereof (subject to the provisions of Section 2 hereof) and ending at 5:00
p.m. (New York City time) on April 9, 2002, up to fully paid and
nonassessable shares of Common Stock, $0.01 par value, of the Company together
with any associated Common Stock Purchase Rights (the "Common Stock") at the
Purchase Price, as the same may be adjusted pursuant to Section 5 herein.
1. Definitions.
(a) the term "Warrant Holder" shall mean the Purchaser or any permitted
assignee of all or any portion of this Warrant at any given time who, at the
time of assignment, acquired the right to purchase at least 1000 Warrant Shares
(such number being subject to adjustment after the date of original issuance of
this Warrant pursuant to Section 4 herein).
(b) the term "Warrant Shares" shall mean the shares of Common Stock or
other securities (other than Common Stock), or assets issuable upon exercise of
this Warrant.
(c) the term "Purchase Price" shall mean $ .
(d) other terms used herein which are defined in the Securities Purchase
Agreement dated as of April 9, 1997 (the "Securities Purchase Agreement"), the
Registration Rights Agreement, dated as of April 9, 1997 (the "Registration
Rights Agreement"), or in the Certificate of Designations (the "Certificate of
Designations") establishing the terms of the Company's 6% Convertible Preferred
Stock, Series A, shall have the same meanings herein as therein.
2. Exercise or Exchange of Warrant.
This Warrant may be exercised by Warrant Holder, in whole or in part, at
any time and from time to time, by surrender of this Warrant, together with the
Purchase Price (as defined in Section 1) for each share of Common Stock as to
which the Warrant is exercised, and the form of subscription attached hereto as
Exhibit A duly executed by Warrant Holder, to the Company at its principal
office. This Warrant is exchangeable for its value in Common Stock based upon
the Fair Market Value of the Common Stock on the date of notice of exercise. In
the event the Warrant is exchanged for Warrant Shares, by surrender of the
Warrant to the Company at its principal office, the value of the Warrant (or
portion thereof) so exchanged shall equal the Fair Market Value on the date of
delivery of notice of exercise, less the Purchase Price
<PAGE> 2
multiplied by the number of Warrant Shares included in such notice of exercise.
In the event that the Warrant is not exercised or exchanged in full, the number
of Warrant Shares shall be reduced by the number of such Warrant Shares for
which this Warrant is exercised or exchanged, as applicable, and the Company, at
its expense, shall forthwith issue and deliver to the Warrant Holder a new
Warrant of like tenor in the name of the Warrant Holder or as Warrant Holder
(upon payment by the Warrant Holder of any applicable transfer taxes) may
request, reflecting such adjusted Warrant Shares.
(a) Subject to the terms of conditions of this Warrant, as soon as
practicable after the exercise or exchange of this Warrant in full or in part,
and in any event within three (3) Trading Days thereafter, the Company at its
expense (including, without limitation, the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to Warrant
Holder, or as Warrant Holder (upon payment by Warrant Holder of any applicable
transfer taxes) may lawfully direct, certificate or certificates for the number
of fully paid and non-assessable shares of Common Stock to which Warrant Holder
shall be entitled on such exercise or exchange, together with any other stock or
other securities or property (including cash, where applicable) to which Warrant
Holder is entitled upon such exercise or exchange.
(b) This Warrant may not be exercised or exchanged as to fractional shares
of Common Stock. In the event that the exercise or exchange of this Warrant, in
full or in part, would result in the issuance of any fractional share of Common
Stock, then in such event the Warrant Holder shall be entitled to cash equal to
the Fair Market Value of such fractional share. For purposes of this Warrant,
Fair Market Value equals the closing sale price of the Common Stock on the
Nasdaq National Market, the New York Stock Exchange or the American Stock
Exchange whichever is the principal trading exchange or market for the Common
Stock (the "Principal Market") on the date of determination or, if the Common
Stock is not listed or quoted in the Nasdaq National Market or admitted to
trading on any national securities exchange, the average of the closing bid and
asked prices on the over-the-counter market as furnished by any New York Stock
Exchange member firm that makes a market in the Common Stock reasonably selected
from time to time by the Company for that purpose, or, if the Common Stock is
not listed or quoted on the Nasdaq National Market or admitted to trading on any
national securities exchange or traded over-the-counter and the average price
cannot be determined as contemplated above, the Fair Market Value of the Common
Stock shall be as reasonably determined in good faith by the Company's Board of
Directors.
(c) Notwithstanding any provision of this Section 2, as of any date of
exercise or exchange of this Warrant or any portion thereof, the aggregate
number of shares of Common Stock into which this Warrant, all other warrants and
all other securities convertible into or exchangeable for Common Stock held by
the Warrant Holder and its affiliates shall be convertible or exchangeable,
together with the shares of Common Stock then beneficially owned (as such term
is defined in the Exchange Act) by such Warrant Holder and its affiliates, shall
not exceed 4.9% of the total outstanding shares of Common Stock as of such date.
In order to assure the availability of an exemption from registration under
federal or applicable state securities laws, the Company may condition the
exercise of this Warrant upon the Warrant Holder (other than the Purchaser)
delivering to the Company a letter confirming that it has acquired the Warrant
in a transaction exempt from the registration requirements of the Act. It is
further understood that certificates for the Warrant Shares, if any, to be used
upon exercise of the Warrant may contain legends to the extent contemplated by
Section 12.
3. Covenants of the Company.
(a) The Company shall use its reasonable best efforts to insure that a
Registration Statement under the Securities Act covering the resale of other
disposition thereof of the Warrant Shares by Warrant Holder is effective to the
extent as provided in the Registration Rights Agreement.
(b) The Company shall take all necessary actions and proceedings as may be
required and permitted by applicable law, rule and regulation, including,
without limitation the notification of Nasdaq National Market, for the legal and
valid issuance of this Warrant and the Warrant Shares to the Warrant Holder
under this Warrant.
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<PAGE> 3
(c) From the date hereof through the last date on which this Warrant is
exercisable, the Company shall take all steps reasonably necessary and within
its control to insure that the Common Stock remains listed on the Principal
Market and shall not amend its Certificate of Incorporation or Bylaws so as to
constitute a breach of the Company's obligations hereunder.
(d) The Company shall at all times reserve and keep available, solely for
issuance and delivery as Warrant Shares hereunder, such shares of Common Stock
as shall from time to time be issuable as Warrant Shares.
(e) The Warrant Shares, when issued in accordance with the terms hereof,
will be duly authorized and, when paid for or issued in accordance with the
terms hereof, shall be validly issued, fully paid and non-assessable. The
Company has, and will continue to have, authorized and reserved for issuance to
the Warrant Holder the requisite number of shares of Common Stock to be issued
pursuant to this Warrant.
(f) With a view to making available to the Warrant Holder the benefits of
Rule 144 promulgated under the Securities Act and any other rule or regulation
of the SEC that may at any time permit the Warrant Holder to sell securities of
the Company to the public without registration, the Company agrees to use its
reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood an defined in Rule 144, at all times;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and Exchange
Act; and
(iii) furnish to any Warrant Holder forthwith upon request a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as may be reasonably
requested to permit any such Warrant Holder to take advantage of any rule
or regulation of the SEC permitting the selling of any such securities
without registration.
4. Adjustment of Purchase Price and Number of Shares.
The number of, and kind of, securities purchasable upon exercise of this
Warrant and the Purchase Price shall be subject to adjustment from time to time
as follows (provided, however, that in no event shall the Purchase Price be less
than $0.01 per share of Common Stock):
(a) Subdivisions, Combinations and Other Transactions. If the Company
shall at any time after the date of original issuance of this Warrant
subdivide its outstanding securities as to which purchase rights under this
Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant
exist, the number of Warrant Shares as to which this Warrant is exercisable
as of the date of such subdivision, split-up, spin-off or combination shall
forthwith be proportionately increased or proportionately decreased, as
applicable. Appropriate adjustments shall also be made to the Purchase
Price payable per share, but the aggregate Purchase Price payable for the
total number of Warrant Shares issuable under this Warrant as of such date
shall remain the same.
(b) Stock Dividend. If at any time after the date of original
issuance of this Warrant the Company declares a dividend or other
distribution on Common Stock payable in Common Stock or other securities or
rights convertible into Common Stock ("Common Stock Equivalents") without
payment of any consideration by holders of Common Stock for the additional
shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon exercise or conversion
thereof), then the number of shares of Common Stock for which this Warrant
may be exercised shall be increased as of the record date (or the date of
such dividend distribution if no record date is set) for determining the
holders of Common Stock entitled to receive such dividends, in proportion
to the increase in the number of outstanding shares (and shares of Common
Stock issuable upon conversion of all such securities convertible into
Common Stock) of Common Stock as a result of such dividend, and the
Purchase Price per share shall be adjusted so that the aggregate Purchase
Price
3
<PAGE> 4
payable for the total number of Warrant Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if
applicable), for such dividend shall equal the aggregate Purchase Price
payable for the total number of Warrant Shares issuable under this Warrant
immediately before such record date (or on the date of such distribution,
if applicable).
(c) Other Distributions. If at any time after the date of original
issuance of this Warrant the Company distributes to holders of its Common
Stock, other than as part of its dissolution, liquidation or the winding up
of its affairs, any shares of its capital stock, any evidence of
indebtedness or any of its assets (other than cash, Common Stock or
securities convertible into or exchangeable for Common Stock), then the
Company shall decrease the per share Purchase Price of this Warrant and/or
increase the number of shares of Common Stock for which this Warrant may be
exercised by an appropriate amount based upon the value distributed on each
share of Common Stock as determined in good faith by the Company's Board of
Directors such that the Warrant Holder is in an economically equivalent
position immediately subsequent to such distribution (or, if applicable,
the record date therefore) as such Warrant Holder was in immediately prior
to such distribution (or, if applicable, the record date therefor).
(d) Merger, etc. If at any time after the date hereof there shall be
a merger or consolidation of the Company with or into or a transfer of all
or substantially all of the assets of the Company to another entity, then
the Warrant Holder shall be entitled to receive upon payment of the
aggregate Purchase Price then in effect, the number of shares or other
securities or property of the Company or of the successor corporation
resulting from such merger or consolidation, which would have been received
by Warrant Holder for the total number of Warrant Shares issuable under
this Warrant had this Warrant been exercised just prior to such transfer,
merger or consolidation becoming effective or to the applicable record date
thereof, as the case may be; provided, however, that if the consideration
being paid to the holders of Common Stock in such merger or consolidation
or such transfer of all or substantially all of the assets of the Company
consists primarily of cash (a "Cash-Out Transaction"), then provision shall
be made in the agreements for such Cash-Out Transaction to the effect that
upon consummation thereof, the Warrant Holder shall be entitled to receive
cash in an amount equal to the excess, if any, of the cash consideration
(plus the fair market value of any non-cash consideration) per share of
Common Stock over the Purchase Price multiplied by the total number of
Warrant Shares issuable under this Warrant and, following the consummation
of such Cash-Out Transaction, this Warrant shall only represent the right
to receive such cash.
(e) Reclassification, Etc. If at any time after the date hereof there
shall be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant Holder
shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Purchase Price
then in effect, the number of shares or other securities or property
resulting from such reorganization or reclassification, which would have
been received by the Warrant Holder for the Warrant Shares issuable under
this Warrant had this Warrant at such time been exercised.
5. No Impairment.
The Company will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Warrant Holder against impairment. Without limiting
the generality of the foregoing, the Company (a) will not increase the par value
of any Warrant Share above the amount payable therefor on such exercise and (b)
will take all such action as may be reasonably necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise or exchange of this Warrant and the payment of
the Purchase Price, if applicable.
4
<PAGE> 5
6. Notice of Adjustments.
Whenever the Purchase Price or number of Warrant Shares issuable hereunder
shall be adjusted pursuant to Section 4 hereof, the Company shall execute and
deliver to the Warrant Holder a certificate setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Purchase Price and number of shares
issuable hereunder after giving effect to such adjustment, and shall cause a
copy of such certificate to be mailed (by first class mail, postage prepaid) to
the Warrant Holder.
7. Rights as Stockholder.
Prior to exercise of this Warrant, the Warrant Holder shall not be entitled
to any rights as a stockholder of the Company with respect to the Warrant
Shares, including (without limitation) the right to vote such shares, receive
dividends or other distributions thereon or be notified of stockholder meetings.
However, in the event of any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Company shall mail to each Warrant Holder, at least 10 days
prior to the date specified, therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
8. Replacement of Warrant.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of the Warrant and, in the case of any
such loss, theft or destruction of the Warrant, on delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
9. Specific Enforcement; Consent to Jurisdiction; Waiver of Jury Trial.
(a) The Company and the Warrant Holder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Warrant were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Warrant and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) Each of the Company and the Warrant Holder hereby (i) agree that all
actions or proceedings arising directly or indirectly from or in connection with
this Warrant shall be litigated only in the Supreme Court of the Sate of New
York or the United States District Court for the Southern District of New York
located in New York County, New York and (ii) to the extent permitted by
applicable law, consent to the jurisdiction and venue of the foregoing courts
and consent that any process or notice of motion or other application to either
of said courts or a judge thereof may be served inside or outside the State of
New York or the Southern District of New York by registered mail, return receipt
requested, directed to the such party at its address, set forth in this Warrant
(and service so made shall be deemed complete five (5) days after the same has
been posted as aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. The parties hereby waive any
right to a jury trial in connection with any litigation pursuant to this
Warrant.
10. Entire Agreement; Amendments.
This Warrant, the Securities Purchase Agreement, the Registration Rights
Agreement and the Certificate of Designations contain the entire understanding
of the parties with respect to the matters covered hereby and thereby and except
as specifically set forth herein and therein. This Warrant and any term thereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
5
<PAGE> 6
11. Restricted Securities.
Section 3.15 and Article V of the Securities Purchase Agreement are
incorporated herein by reference and hereby made a part hereof.
12. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery or
delivery by telex (with correction answer back received), telecopy or facsimile
at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be:
to the Company:
Cityscape Financial Corp.
565 Taxter Road
Elmsford, New York 10523-2300
Fax: (914) 592-7101
Attn: Chief Executive Officer
General Counsel
with copies to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Fax: (212) 351-4035
Attn: Sean P. Griffiths, Esq.
and to each Warrant Holder at the address set forth on the signature
page.
Either party hereto may from time to time change its address for notices
under this Section 12 by giving written notice of such changed address to the
other party hereto.
13. Miscellaneous.
This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of New York. The headings in this Warrant are
for purposes of reference only, and shall not limit otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provisions.
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<PAGE> 7
14. Expiration.
The right to exercise this Warrant shall expire at 5:00 p.m. (New York City
time) on April 9, 2002.
Dated: April 9, 1997 CITYSCAPE FINANCIAL CORP.
By: /s/ ROBERT C. PATENT
------------------------------------
Name: Robert C. Patent
Title: Executive Vice President
[CORPORATE SEAL]
Attest:
By:
-------------------------------------------------------------
Its:
WARRANT HOLDER:
By:
------------------------------------
Name:
Title:
7
<PAGE> 8
EXHIBIT A
FORM OF WARRANT EXERCISE
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO:
- --------------------------------------
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to [exercise][exchange] this Warrant for, and to purchase thereunder,
shares of Common Stock of Cityscape Financial Corp., a Delaware
corporation (the "Company"), and herewith makes payment [in full in cash of
$ therefor][in full in the form of this Warrant in an amount equal to
the amount set forth in the Warrant [or such portion thereof] to be canceled in
connection with such exchange], and requests that the certificates for such
shares be issued in the name of, and delivered to
, whose address is
.
Dated:
--------------------------------------
(SIGNATURE MUST CONFORM TO NAME OF
HOLDER AS
SPECIFIED ON THE FACE OF THE WARRANT)
--------------------------------------
(ADDRESS)
<PAGE> 9
EXHIBIT B
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers
unto the right represented by the within Warrant
to purchase shares of Common Stock of Cityscape Financial Corp., a
Delaware corporation, to which the within Warrant relates, and appoints
Attorney to transfer such right on the books
of Cityscape Financial Corp., a Delaware corporation, with full power of
substitution the premises.
Dated:
--------------------------------------
(SIGNATURE MUST CONFORM TO NAME OF
HOLDER AS
SPECIFIED ON THE FACE OF THE WARRANT)
--------------------------------------
ADDRESS
Signed in the presence of:
- ---------------------------------------------------------
