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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
ACC Consumer Finance Corporation
________________________________________________________________________________
(Name of Issuer)
Common Stock
________________________________________________________________________________
(Title of Class of Securities)
00079HAA6
_______________________________________________________________
(CUSIP Number)
Phillip M. Fantle, Esq.
Cargill, Incorporated
15615 McGinty Road West
Wayzata, MN 55391
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
1/31/97
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 00079HAA6 PAGE 2 OF 60 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cargill, Incorporated
15615 McGinty Road West
Wayzata, MN 55391
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
Not Applicable (b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF - See Item 3 on Schedule 13D Statement
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,132,450
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,132,450
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,132,450
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
13.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 00079HAA6 PAGE 3 OF 60 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cargill Financial Services Corporation
6000 Clearwater Drive
Minnetonka, MN 55343-9497
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
Not Applicable (b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC and OO - See Item 3 on Schedule 13D Statement
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,132,450
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,132,450
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,132,450
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
13.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D STATEMENT
Item 1. Security and Issuer
-------------------
This statement on Schedule 13D (the "Statement") relates to the shares of
common stock, par value $.001 per share (the "Shares"), of ACC Consumer Finance
Corporation ("the Issuer"). The Issuer is a Delaware corporation and has its
principal executive offices located at 12750 High Bluff Drive, Suite 320, San
Diego, California 92130.
Item 2. Identity and Background
-----------------------
(a) This statement is being filed by the following persons:
(i) Cargill Financial Services Corporation, a Delaware corporation
("CFSC"), which is a wholly-owned subsidiary of Cargill,
Incorporated; and
(ii) Cargill, Incorporated, a Delaware corporation.
Each of the persons listed in (i) and (ii) above is hereinafter referred to
individually as a "Reporting Person" and collectively as the "Reporting
Persons." The Reporting Persons collectively may be deemed to be a group
beneficially owning, in the aggregate, 1,132,450 Shares or approximately 13.4%
of the outstanding Shares within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Act").
Neither the filing of this Statement nor any of its contents shall be
construed as an admission that the directors or executive officers of the
Reporting Persons are beneficial owners of any of the Shares, either for
purposes of Section 13(d) of the Act or for any other purpose, and such
beneficial ownership is expressly disclaimed.
(b), (c), (f) The address of CFSC is 6000 Clearwater Drive, Minnetonka, MN
55343-9497. The principal business of CFSC is financial trading and investment
activities conducted on a proprietary basis. The address of Cargill,
Incorporated is 15407 McGinty Road West, Wayzata, MN 55391-2399. The principal
business of Cargill, Incorporated is the international marketing and processing
of agricultural, industrial and financial commodities.
The name, address, citizenship and present principal occupation or
employment, and the name, address and principal business of any corporation or
other organization in which such employment is conducted, of each of the
executive officers and directors of the Reporting Persons are set forth on
Exhibit A attached hereto and incorporated herein by reference.
<PAGE>
(d) During the last five years, none of the Reporting Persons, and to the
best of the Reporting Persons knowledge, none of the persons named on Exhibit A,
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) During the last five years, none of the Reporting Persons, and to the
best of the Reporting Persons' knowledge, none of the persons named on Exhibit
A, has been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction which resulted in, and was and is not subject to, a
judgment, decree or final order against it enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The source of funds for Shares acquired by CFSC prior to January 31, 1997
was working capital. On January 31, 1997, CFSC granted to the Issuer the option
to terminate the exclusive financing facility provided by CFSC to the Issuer
(the "Option"). In consideration for the Option, the Issuer issued to CFSC
174,500 Shares.
Item 4. Purpose of Transaction
----------------------
The purchases/acquisitions representing an aggregate of 1,132,450 Shares
were for investment purposes. The Reporting Persons from time to time evaluate
their investments and, based on such evaluation, may determine to acquire or
dispose of Shares. The amount and timing of any additional purchases or sales of
Shares will depend upon a variety of factors, including, without limitation,
current and anticipated future trading prices for the Shares, the financial
condition and prospects of Issuer and general economic, financial market and
industry conditions.
Except as set forth herein, the Reporting Persons do not have any plans or
proposals which would relate to or result in any of the transactions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) As of the date hereof, the Reporting Persons beneficially owned
1,132,450 Shares, constituting approximately 13.4% of the outstanding Shares as
of October 31, 1996 (as reported in Issuer's Form 10-Q for the quarter ended
October 31, 1996 and after giving effect to the issuance of 174,500 Shares by
Issuer to CFSC - see Item 3).
(b) CFSC has the power, and Cargill, Incorporated may be deemed to share
the power, to vote and dispose of 1,132,450 Shares.
<PAGE>
(c) The only transaction in Shares effected during the past 60 days by the
Reporting Persons is the acquisition of 174,500 Shares reported in Item 3. To
the best of the Reporting Persons' knowledge, except as set forth herein, none
of the persons listed on Exhibit A hereto has purchased or sold any Shares
during the past 60 days.
(d) No person other than CFSC has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
securities covered by this Statement.
(e) Not applicable.
Item 6. Contracts, Arrangements, Undertakings or Relationships with
Respect to Securities of the Issuer
-----------------------------------------------------------
CFSC entered into an Investors Rights Agreement, dated July 15, 1993, with
Issuer (formerly American Credit Corporation), Strome Partners, a Delaware
limited partnership, Strome Offshore Limited, a Cayman Island corporation, Gary
Burdick, Rellen Stewart, Rocco J. Fabiano and Heidi L. Berk, as amended (the
"IRA"). The IRA describes the restrictions applicable to transfers of Shares
held by CFSC and the conditions to be satisfied in order to transfer Shares. In
addition, the IRA provides the stockholders of Issuer that are parties thereto
with demand and incidental registration rights with respect to their Shares,
subject to the terms and conditions of the IRA.
The foregoing summary of certain provisions of the IRA is not intended to
be complete and is qualified in its entirety by the complete text of such
document, a copy of which is filed herewith as Exhibit B, which is incorporated
herein by this reference.
Except as set forth herein, none of the Reporting Persons and (to the best
of the Reporting Persons' knowledge) none of the persons named in Exhibit A
hereto, has any contracts, arrangements, understandings or relationships (legal
or otherwise) with any persons with respect to any securities of the Issuer,
including but not limited to any contracts, arrangements, understandings or
relationships concerning the transfer or voting of such securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
--------------------------------
Exhibit A: List of Executive Officers and Directors of CFSC and Cargill,
Incorporated.
Exhibit B: Investors Rights Agreement, dated July 15, 1993, among Issuer
(formerly American Credit Corporation), Strome Partners, Strome Offshore
Limited, Gary Burdick, Rellen Stewart, Rocco J. Fabiano, Heidi L. Berk and
CFSC, as amended.
<PAGE>
Exhibit C: Joint Filing Agreement, dated as of February 6, 1997, between
CFSC and Cargill, Incorporated.
Signature page follows.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, each
of the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
CARGILL FINANCIAL SERVICES CORPORATION
By: /s/ Jeffery D. Leu
---------------------
Jeffery D. Leu
Senior Vice President
CARGILL, INCORPORATED
By: /s/ Linda L. Cutler
--------------------
Linda L. Cutler
Vice President, Assistant General Counsel
and Assistant Secretary
Date: February 10, 1997
<PAGE>
EXHIBIT A
CARGILL FINANCIAL SERVICES CORPORATION
<TABLE>
<CAPTION>
Occupation or
Name and Address Office Held Employment Citizenship
- ---------------- ----------- ------------- -----------
<S> <C> <C> <C>
Robert A. Kruchoski Executive President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
David W. Rogers Executive Executive Vice U.K.
6000 Clearwater Drive Officer and President, and
Minnetonka, MN 55343 Director Chief Operating
Officer
Kenneth M. Duncan Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Gary W. Jarrett Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Jeffery D. Leu Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Michael B. Moore Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Robert D. Beach Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Rae A. Lesmeister Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Linda L. Cutler Executive Secretary U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
William W. Veazey Executive Treasurer U.S.
6000 Clearwater Drive Officer and
Minnetonka, MN 55343 Director
Robert L. Lumpkins Director Chief Financial U.S.
6000 Clearwater Drive Officer, Cargill,
Minnetonka, MN 55343 Incorporated
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Ernest S. Micek Director President and U.S.
6000 Clearwater Drive Chief Executive
Minnetonka, MN 55343 Officer, Cargill,
Incorporated
David W. Raisbeck Director Executive Vice U.S.
6000 Clearwater Drive President,
Minnetonka, MN 55343 President (Trading
Sector), Cargill,
Incorporated
Philip J. Martini Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Michael B. Moore Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Wendell Spence Executive Senior Vice U.S.
6000 Clearwater Drive Officer President
Minnetonka, MN 55343
Bruce H. Barnett Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
David E. Dines Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Elizabeth C. Gruber Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Martin Guyot Executive Vice President Argentina
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Thomas F. Haller, Jr. Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Patrick J. Halloran Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Jeffrey A. Hilligoss Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Ian M.C. Kerr Executive Vice President Canada
6000 Clearwater Drive Officer
Minnetonka, MN 55343
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Guilherme Schmidt Netto Executive Vice President Brazil
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Gary G. O'Hagan Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
J. Kirk Ogren, Jr. Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Jeffrey A. Parker Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Steven C. Pumilia Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Gregory T. Zoidis Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
Diannah Shurtleff Executive Vice President U.S.
6000 Clearwater Drive Officer
Minnetonka, MN 55343
CARGILL, INCORPORATED
Occupation or
Name and Address Office Held Employment Citizenship
- ---------------- ----------- ------------- -----------
Ernest S. Micek Executive Chairman of the U.S.
15615 McGinty Road West Officer and Board, President
Wayzata, MN 55391 Director and Chief Executive
Officer
Robert L. Lumpkins Executive Vice Chairman of U.S.
15615 McGinty Road West Officer and the Board and Chief
Wayzata, MN 55391 Director Financial Officer
F. Guillaume Bastiaens Executive Executive Vice Belgium
15615 McGinty Road West Officer and President and
Wayzata, MN 55391 Director President (Food
Sector)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
David W. Raisbeck Executive Executive Vice U.S.
15615 McGinty Officer and President and
Road West Director President (Trading
Wayzata, MN 55391 Sector)
Warren R. Staley Executive Executive Vice U.S.
15615 McGinty Officer and President and
Road West Director President (Western
Wayzata, MN 55391 Hemisphere and Meat
Sectors)
Daniel R. Huber Executive President (Asia and U.S.
15615 McGinty Officer Agricultural
Road West Sectors)
Wayzata, MN 55391
Everett W. MacLennan Executive Senior Vice U.S.
15615 McGinty Officer President (Human
Road West Resources)
Wayzata, MN 55391
James D. Moe Executive Corporate Vice U.S.
15615 McGinty Officer President, General
Road West Counsel and
Wayzata, MN 55391 Secretary
Michael R. Bonsignore Director Chairman and CEO, U.S.
Honeywell Plaza Honeywell, Inc.
MN 12-5279 (Manufacturing
Minneapolis, MN 55408 Company)
Austen S. Cargill II Director Vice President, U.S.
15407 McGinty Admin. Div.,
Road West Cargill, Incorporated
Wayzata, MN 55391-2398
Livio D. DeSimone Director Chairman and CEO, U.S.
3M Bldg 3M (Manufacturing
220-14W-05 Company)
St. Paul, MN 55144
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lloyd P. Johnson Director Chairman (Retired), U.S.
4900 IDS Center Norwest Corporation
80 South Eighth Street
Minneapolis, MN 55479
Marianne C. Liebmann Director President, Liebmann U.S.
15407 McGinty Florist, Inc.
Road West
Wayzata, MN 55391
David D. MacMillan Director Private Investor U.S.
15407 McGinty
Road West
Wayzata, MN 55391
W. Duncan MacMillan Director Vice President, U.S.
15407 McGinty Waycrosse, Inc.
Road West
Wayzata, MN 55391
Cargill MacMillan, Jr. Director Senior Advisory U.S.
15615 McGinty Director, Cargill,
Road West Inc.
Wayzata, MN 55391
Lucy M. Stitzer Director Private Investor U.S.
15407 McGinty
Road West
Wayzata, MN 55391
Michael H. Armacost Director President, The U.S.
1775 Massachusetts Brookings Institute
Avenue NW (Non-Profit
Washington, DC 20036 Organization)
Michael W. Wright Director Chairman, CEO and U.S.
11840 ValleyView Road President,
Eden Prairie, MN 55344 SuperValu, Inc.
(Grocery Business)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Whitney MacMillan Director CEO (Retired), U.S.
2050 One Financial Plaza Emeritus Cargill, Inc.
120 South Sixth Street
Minneapolis, MN 55402
William B. MacMillen Director None U.S.
15407 McGinty
Road West
Wayzata, MN 55391
Ronald L. Christenson Executive Corporate Vice U.S.
15615 McGinty Officer President and Chief
Road West Technology Officer
Wayzata, MN 55391
Robbin S. Johnson Executive Corporate Vice U.S.
15615 McGinty Officer President, Public
Road West Affairs
Wayzata, MN 55391
Lloyd B. Taylor Executive Corporate Vice U.S.
15615 McGinty Officer President,
Road West Information
Wayzata, MN 55391 Technology
Edward J. Toth Executive Corporate Vice U.S.
15615 McGinty Officer President and
Road West Controller
Wayzata, MN 55391
Tyrone K. Thayer Executive Corporate Vice U.S.
15407 McGinty Officer President,
Road West Worldwide Cargill
Wayzata, MN 55391 Foods and
Procurement
William W. Veazey Executive Treasurer U.S.
15615 McGinty Officer
Road West
Wayzata, MN 55391
</TABLE>
<PAGE>
EXHIBIT C
JOINT FILING AGREEMENT
Cargill Financial Services Corporation and Cargill, Incorporated, each
hereby agrees, in accordance with Rule 13d-1(f) under the Securities Exchange
Act of 1934 (the "Act"), as amended, that the Schedule 13D filed herewith, and
any amendments thereto, relating to the shares of common stock, par value $.001
per share, of ACC Consumer Finance Corporation are, and will be, filed jointly
on behalf of each such person, and that this Agreement be included as on exhibit
to such joint filing.
IN WITNESS WHEREOF, the undersigned hereby executes this Agreement this 6th
day of February, 1997.
Dated: February 6, 1997 CARGILL FINANCIAL SERVICES CORPORATION
By: /s/ Jeffery D. Leu
-------------------------------------
Jeffery D. Leu
Senior Vice President
CARGILL, INCORPORATED
By: /s/ Linda L. Cutler
------------------------------------
Linda L. Cutler
Vice President, Assistant General Counsel
and Assistant Secretary
<PAGE>
AMERICAN CREDIT CORPORATION
INVESTORS RIGHTS AGREEMENT
July 15, 1993
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<C>
<S>
SECTION 1.
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.......................... 1.
1.1 Restrictions on Transferability............................... 1.
1.2 Certain Definitions........................................... 1.
1.3 Restrictive Legend............................................ 3.
1.4 Notice of Proposed Transfers.................................. 3.
1.5 Demand Registration Rights.................................... 4.
1.6 Company Registration.......................................... 5.
1.7 Form S-3 Registration Rights.................................. 6.
1.8 Expenses of Registration...................................... 7.
1.9 Registration Procedures....................................... 8.
1.10 Indemnification............................................... 8.
1.11 Information by Holder......................................... 10.
1.12 Rule 144 Reporting............................................ 11.
1.13 Transfer of Registration Rights............................... 11.
1.14 Termination of Registration Rights............................ 11.
1.15 "Market Stand Off" Agreement.................................. 11.
SECTION 2.
AFFIRMATIVE COVENANTS OF THE COMPANY................................... 12.
2.1 Financial Information......................................... 12.
2.2 Assignment of Rights to Financial Information................. 12.
2.3 Charter Amendments............................................ 12.
2.4 Termination of Covenants...................................... 13.
2.5 Observer Rights............................................... 13.
SECTION 3.
AFFIRMATIVE COVENANTS OF SHAREHOLDER; RIGHT OF FIRST REFUSAL........... 14.
3.1 Confidential Information, etc................................. 14.
3.2 Rights of First Refusal....................................... 14.
SECTION 4.
MISCELLANEOUS.......................................................... 16.
4.1 Governing Law................................................. 16.
4.2 Successors and Assigns........................................ 16.
4.3 Entire Agreement.............................................. 16.
4.4 Rights of Shareholder......................................... 16.
4.5 Notices, etc.................................................. 16.
4.6 Counterparts.................................................. 16.
4.7 Severability.................................................. 17.
4.8 Approval of Amendments and Waivers............................ 17.
i.
</TABLE>
<PAGE>
AMERICAN CREDIT CORPORATION
INVESTORS RIGHTS AGREEMENT
This Investors Rights Agreement (the "Agreement") is entered into July 15,
1993 between AMERICAN CREDIT CORPORATION, a California corporation (the
"Company") with its principal office located at 3405 Hermosa Avenue, Hermosa
Beach, California 90254, Rocco J. Fabiano, Gary Burdick and Rellen Stewart
(collectively, the "Founders"), Heidi L. Berk (the "Consultant"), Cargill
Financial Services Corporation, a Delaware corporation ("Cargill"), with its
principal office located at 6000 Clearwater Drive, Minnetonka, Minnesota 55343-
9497 and Strome Partners, a Delaware limited partnership, with its principal
office located at 1250 4th Street, Suite 420, Santa Monica, California 90401,
and Strome Offshore Limited, a Cayman Island corporation with its principal
office located at 1250 4th Street, Suite 420, Santa Monica, California 90401,
(collectively, the "Shareholders") With respect to the Founders, the Consultant
and the Shareholders, this Agreement is being entered into pursuant to Section
4.8 of that certain Series A Preferred Stock Purchase Agreement of even date
herewith between the Company and the Shareholders (the "Series A Agreement").
In consideration of the mutual agreements, covenants and conditions
contained herein, the Company, the Founders, the Consultant, Cargill and the
Shareholders hereby agree as follows:
SECTION 1.
RESTRICTIONS ON TRANSFER: REGISTRATION RIGHTS
1.1 Restrictions on Transferability. The shares of the Company's Series A
Preferred Stock (the "Preferred") purchased by the Shareholders pursuant to the
Series A Agreement and which may be purchased by Cargill pursuant to the Warrant
(defined in Section 1.2 below) (and any Common Stock into which the Preferred
may be converted) shall not be transferable except upon the conditions specified
in this Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act (as defined below), or upon such other terms as
are in the opinion of counsel to the Company satisfactory to comply with the
provisions of the Securities Act. Except for transfers made pursuant to Rule 144
of the Securities Act, the Shareholders and Cargill will cause any proposed
transferee of Preferred (and any Common Stock into which the Preferred may be
converted) held by such Shareholders and Cargill to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement and it will be a condition precedent to the effectiveness of any such
transfer that the Company shall have secured a written agreement in form and
substance satisfactory to the Company to that effect, if so requested by the
Company.
1.2 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
1.
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Form S-3" shall mean Form S-3 under the Securities Act as in effect on the
date of this Agreement, or any substantially similar, equivalent or successor
form under the Securities Act.
"Holder" shall mean the Shareholders, each Founder, the Consultant, Cargill
and any transferee or registration rights under Section 1.13 hereof who then
holds any outstanding Preferred or Registrable Securities.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (i) shares of the Company's Common Stock
held by each Founder, the Consultant and shares of the Company's Common Stock
issued pursuant to the conversion of the Company's Series A Preferred Stock
(including shares of Series A Preferred Stock issued upon exercise of the
Warrant), which shares have not been sold to the public and (ii) shares of the
Company's Common Stock issued in respect of shares of the Company's Common Stock
held by each Founder or the Consultant, Series A Preferred Stock or Common Stock
issued pursuant to the conversion of the Company's Series A Preferred Stock, or
upon any stock split, stock dividend, recapitalization, or similar event, which
have not been sold to the public.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Sections 1.5, 1.6 and 1.7 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the Company required
to bear the legend set forth in Section 1.3 hereof or a legend substantially
similar thereto and all shares of Common Stock outstanding on the date of this
Agreement.
"Restricted Stock Purchase Agreement" shall mean that certain Stock
Purchase and Restriction Agreement of even date herewith entered into between
the Company and the Shareholders and the Founders.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
2.
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"Selling Expense" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
"Warrant" shall mean that certain Warrant to purchase 35,294 shares of
Series A Preferred Stock of the Company issued by the Company to Cargill on July
15, 1993 in connection with the establishment of a program between the Company
and Cargill for the origination, purchase, financing and subsequent
securitization of non-prime automobile installment contracts.
1.3 Restrictive Legend. Each certificate representing (i) the Preferred,
(ii) the Warrant, (iii) shares of the Company's Common Stock issued upon
conversion of the Preferred or upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable California or other state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR ANY EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1.4. Prior to any proposed
transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in transactions in compliance with Rule 144 promulgated
under the Securities Act) by either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to the Company addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, or (ii) a "no action" letter from
the Commission, a copy of any holder's request (together with all supplements or
amendments thereto) for which shall have been provided to the Company, at or
prior to the time of first delivery to the Commission's staff, to the effect
that the transfer of such securities without registration will not result in a
recommendation by such staff that action be taken with respect thereto,
whereupon the holder of such Restricted Securities shall be entitled to transfer
such Restricted Securities in accordance with the terms of the notice delivered
by the holder to the Company. Each certificate evidencing the Restricted
Securities transferred as provided for above shall bear the appropriate
restrictive legend set forth in Section 1.3 above, except that such certificate
shall not bear such restrictive legend if, in the opinion of counsel for
3.
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the Company or counsel for such holder, which opinion and counsel shall be
satisfactory to counsel for the Company, such legend is not required in order to
establish compliance with any provisions of the Securities Act.
1.5 Demand Registration Rights.
(a) Commencing on the earlier of (i) six months after the effective
date of the first registration statement filed by the Company covering an
underwritten offering of any of its securities to the general public and (ii)
January 1, 1997, if the Company shall receive a written request (specifying that
it is being made pursuant to this Section 1.5) from the Holders of more than
fifty percent (50%) of the Registrable Securities (including Holders of
securities that are convertible into Registrable Securities) (the "Initiating
Holders") that the Company file a registration statement or similar document
under the Securities Act covering the registration of the lesser of (i) at least
fifty percent (50%) of the then outstanding Registrable Securities and (ii)
Registrable Securities the expected price to the public of which exceeds
$5,000,000, then the Company shall promptly notify all other Holders of such
request and shall use its best efforts to cause all Registrable Securities that
such Holders have requested, within 15 days after receipt of such written
notice, be registered in accordance with this Section 1.5 to be registered under
the Securities Act.
Notwithstanding the foregoing, (i) the Company shall not be obligated to
effect a registration pursuant to this Section 1.5 during the period starting
with the date sixty (60) days prior to the Company's estimated date of filing
of, and ending on a date sixty (60) days following the effective date of, a
registration statement pertaining to an underwritten public offering of the
Company's securities, provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective and that the Company's estimate of the date of filing such
registration statement is made in good faith and (ii) if the Company shall
furnish to such Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its shareholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best efforts to file a registration statement shall be deferred for a period
not to exceed six (6) months; provided, however, that the Company shall not
obtain such a deferral more than once in any 12-month period.
The Company shall be obligated to effect not more than one registration
pursuant to this Section 1.5.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to this Section 1.5,
and the Company shall include such information in the notice referred to in
Section 1.5(a). In such event, the right of any Holder to registration pursuant
to this Section 1.5 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless
4.
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otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein.
The Company shall, together with all Holders proposing to distribute their
securities through such underwriting, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by a majority of
interest of the Initiating Holders and reasonably satisfactory to the Company.
Notwithstanding any other provision of this Section 1.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then the Company shall so
advise all Holders of Registrable Securities that would otherwise be registered
and underwritten pursuant hereto, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated pro rata among such Holders thereof in proportion, as nearly as
practicable, to the respective amounts or Registrable Securities held by such
Holders at the time of filing the registration statement; provided that shares
of restricted stock purchased by the Founders on the date hereof which are
unvested shall be counted as if held by the Shareholders. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of the underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company, the underwriter,
and the Initiating Holder. The Registrable Securities so withdrawn shall also be
withdrawn from registration. If by the withdrawal of such Registrable Securities
a greater number of Registrable Securities held by other Holders may be included
in such registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account (or for
the account of other stockholders) in such registration if the underwriter so
agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited.
1.6 Company Registration.
(a) If, at any time or from time to time, the Company shall determine
to register any of its securities, either for its own account or the account of
a security holder or holders exercising their respective demand registration
rights, other than a registration relating solely to employee benefit plans on
Form S-8 or similar forms which may be promulgated in the future or a
registration on Form S-4 or similar forms which may be promulgated in the future
relating solely to a Securities and Exchange Commission Rule 145 or similar
transaction, the Company will (i) promptly give to each Holder written notice
thereof and (ii) include in such registration (and any related qualification
under Blue Sky laws or other compliance), and in any underwriting
5.
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involved therein, all Registrable Securities of such Holders as specified in a
written request or requests made within 15 days after receipt of such written
notice from the Company.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so indicate in the notice given pursuant to Section 1.6(a). In
such event the right of any Holder to registration pursuant to this Section 1.6
shall be conditioned upon such Holder's agreeing to participate in such
underwriting and in the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company or by other holders
exercising any demand registration rights. Notwithstanding any other provision
of this Section 1.6, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities or other securities from such
registration and underwriting (hereinafter an "Underwriter Cutback"). In the
event of an Underwriter Cutback, the Company shall so advise all Holders and the
other holders distributing their securities through such underwriting, and the
number of Registrable Securities and other securities that may be included in
the registration and underwriting shall be allocated among all holders thereof
(other than those holders who are exercising their demand registration rights)
on the basis that the holders who are not Holders shall be cut back before any
cutback of Holders. If the limitation determined by the underwriter requires a
cut-back of the Holders, the cut-back shall be in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement; provided that shares
of restricted stock purchased by the Founders on the date hereof which are
unvested shall be counted as if held by the Shareholders. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
Notwithstanding the foregoing, the Holders of a majority of the then
outstanding shares of Registrable Securities may waive the rights of all Holders
under this Section 1.6 to include shares in a registration; provided that such
waiver shall apply equally and with the same affect on all Holders. In
determining the total number of such shares of Registrable Securities
outstanding and the number of such shares consenting or not consenting, all
shares previously disposed of by the Holders or their respective transferees
pursuant to one or more registration statements under the Securities Act or
pursuant to Rule 144 or Rule 701 thereunder, shall be excluded. Any such waiver
effected in accordance with this section shall be binding upon each Holder and
the Company.
1.7 Form S-3 Registration Rights. After the Company's initial registered
underwritten public offering, the Company shall use its best efforts to qualify
for registration on Form S-3, and to that end the Company shall use its best
efforts to comply with the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act"), within
6.
<PAGE>
twelve (12) months following the effective date of the first registration of any
securities of the Company for an underwritten registered public offering. After
the Company has qualified for the use of Form S-3, and subject to the provisions
of Section 1.14, each Holder shall have the right to request a registration on
Form S-3 (such requests shall be in writing and shall state the number of shares
of Registrable Securities to be disposed of and the intended method of
disposition of such shares by each such Holder), subject only to the following
limitations:
(a) The Company shall not be obligated to cause a registration on Form
S-3 to become effective prior to one hundred eighty (180) days following the
effective date of a Company initiated registration (other than a registration
effected solely to qualify an employee benefit plan or to effect a business
combination pursuant to Rule 145);
(b) The Company shall not be required to effect a registration
pursuant to this Section 1.7 unless the Holder or Holders requesting such a
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $1,000,000;
(c) The Company shall not be required to effect a registration
pursuant to this Section 1.7 if the Company shall furnish to the requesting
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company or its shareholders for the registration
statement to be filed at the date filing would be required, in which case the
Company shall have an additional period of not more than 120 days within which
to file such registration statement; provided however, that the Company shall
not use this right more than once in any twelve (12) month period;
(d) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred and twenty
(120) days from the effective date thereof;
(e) The Company shall not be obligated to cause a registration on Form
S-3 if in the prior twelve-month period the Company has caused a registration on
Form S-3 to become effective; and
(f) The Company shall not be required to effect more than three
registrations pursuant to this Section 1.7, one each for the Shareholders,
Cargill and the Founders (the Founders being treated collectively as a single
entity).
The Company shall give notice to all Holders of the receipt of a request
for registration pursuant to this Section 1.7 and shall use its best efforts to
cause all Registrable Securities that any Holders have requested, within 15 days
after receipt of such written notice, be registered in accordance with this
Section 1.7 to be registered under the Securities Act. Subject to the foregoing,
the Company will use its best efforts to effect promptly any registration
pursuant to
7.
<PAGE>
this Section 1.7. The provisions of Section 1.5(b) shall apply to any
registration effected pursuant to this Section 1.7
1.8 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses and fees and expenses
of any special counsel to the selling Holders, which shall be borne by the
selling Holders pro rata based on the number of their shares registered) shall
be borne by the Company. Notwithstanding anything to the contrary herein, the
Company shall not be required to pay for any expenses of any registration
proceeding under Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered, unless such Holders agree to forfeit their
right to a demand registration pursuant to Section 1.5 (in which event such
right shall be forfeited by all Holders). In the absence of such an agreement to
forfeit, the Holders of Registrable Securities to have been registered shall
bear all such expenses pro rata on the basis of the Registrable Securities to
have been registered. Notwithstanding the foregoing, however, if at the time of
the withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses
and shall retain their rights pursuant to Section 1.5.
1.9 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to be initiation of each
registration, qualification and compliance and as to the completion thereof. At
it expense the Company will:
(a) Keep such registration, qualification or compliance effective for
a period of 120 days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.
1.10 Indemnification.
(a) The Company will indemnify each Holder, each of its officers,
directors, partners, employees, and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1, and to the extent required by the respective underwriting
8.
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agreement, each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in resect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, 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, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of its officers, directors, partners, employees and each person controlling
such Holder, and to the extent required by the respective underwriting
agreement, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of our is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors,
officers and employees, to the extent required by the respective underwriting
agreement, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder whose Registrable Securities are included in the securities as
to which registration and qualification or compliance is being effected, each of
its officers, directors, partners, employees and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof) including any of the foregoing incurred in settlement of any litigation
commenced or threatened, 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 amendment or
supplement thereto, 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, in the light of the circumstances in which they were made, not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification, or compliance, and will reimburse the
Company, such Holders, such directors, officers, partners, employees, control
persons or, to the extent required by the respective underwriting agreement,
underwriters for any legal or any other expenses reasonably incurred in
connection with investigation, preparing or defending any
9.
<PAGE>
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 or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders hereunder shall be limited to an amount equal to the proceeds to each
such Holder of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 1.10
(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 or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
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 Section 1 unless such failure resulted in actual
detriment to the Indemnifying Party. 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 a release from all liability in respect of
such claim or litigation.
1.11 Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section 1.
1.12 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(b) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Exchange Act at any time after it has become subject to such
reporting requirements; and
10.
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(c) So long as a Shareholder owns any Restricted Securities, to
furnish to such Shareholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Securities Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as a Shareholder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Shareholder to
sell any such securities without registration.
1.13 Transfer of Registration Rights. The rights to cause the Company to
register securities granted under Sections 1.5, 1.6 and 1.7 may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder" for purposes of this Section 1, provided that (a)
such transfer is effected in accordance with applicable federal and state
securities laws and (b) such transferee or assignee (i) is a Holder, (ii) is an
affiliate of a Holder, including a wholly-owned subsidiary or constituent
partner (including limited partners and partners who retire from a transferror
partnership after the date hereof) of the transferring Holder, (iii) is a family
member of the transferring Holder, (iv) is a trust for the benefit of an
individual transferror or his family members, or (v) acquires at least 10,000
shares (as presently constituted) of the Registrable Securities held by the
transferring Holder and, provided further, that the Company is given written
notice by such Holder at the time of or within a reasonable time after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned.
1.14 Termination of Registration Rights. The registration rights granted
pursuant to this Section 1 shall terminate (i) upon the second anniversary of
the effective date of the first registration statement filed by the Company
covering an underwritten offering of its securities to the general public or
(ii) as to any individual Holder, at such time after the Company's initial
registered public offering as all Registrable Securities held by such Holder can
be sold without compliance with the registration requirements of the Securities
Act pursuant to Rule 144 (including Rule 144(k)) or Rule 701 promulgated
thereunder.
1.15 "Market Stand Off" Agreement. Each Holder hereby agrees that it shall
not, to the extent requested by the Company and an underwriter of Common Stock
(or other securities) of the Company, sell or otherwise transfer or dispose
(other than to those who agree to be similarly bound) of any Registrable
Securities during the one hundred twenty (120) day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such agreement shall only be applicable
to the first such registration statement of the Company which covers shares (or
securities) to be sold on its behalf to the public in an underwritten offering.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Registrable Securities held by the
Holders (and the shares or
11.
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securities of every other person subject to the foregoing restriction) until the
end of such one hundred twenty (120) day period.
SECTION 2.
AFFIRMATIVE COVENANTS OF THE COMPANY
2.1 Financial Information. The Company will furnish the following reports
to each Shareholder and Cargill for so long as each Shareholder and/or Cargill
is a holder of the Warrant, Preferred or Common Stock issued upon conversion of
the Preferred or a combination thereof:
(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, audited consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and surplus and consolidated statements of
changes in financial position of the Company and its subsidiaries, if any, for
such year, prepared in accordance with generally accepted accounting principles
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and certified by independent public
accountants of recognized national standing selected by the Company; and
(b) As soon as practicable after the end of every fiscal quarter and
in any event within 45 days thereafter, an unaudited consolidated balance sheet
of the Company and its subsidiaries, if any, as of the end of each such quarter,
and consolidated statements of income and consolidated statements of changes in
financial condition of the Company and its subsidiaries for such period, all in
reasonable detail and signed, subject to changes resulting from year-end audit
adjustments, by the principal financial or accounting officer of the Company.
2.2 Assignment of Rights to Financial Information. The rights granted
pursuant to Section 2.1 may be assigned by the Shareholders and Cargill (or by
any permitted transferee of any such rights) only in connection with the
transfer to a single transferee of not less than 10,000 shares of Preferred
(including any Warrant to acquire at least 10,000 shares of Preferred or Common
Stock), or a combination thereof (including, for such purposes transfers by
affiliates of a transferror) and only so long as (i) the Company is given notice
of any such assignment within thirty (30) days of the date the same is effected,
which notice shall disclose the name of such assignee and provide a reasonably
detailed description of such assignee's business and the circumstances
surrounding such assignment, (ii) the assignee is not a competitor or potential
competitor of the Company and (ii) if the Company reasonably believes that it is
necessary to protect proprietary information, the Company may require that the
assignee execute a confidentiality agreement as a condition to receiving such
information.
2.3 Charter Amendments. The Company shall not, without first obtaining the
affirmative vote or written consent of the holder of the Warrant, amend the
Company's Articles of Incorporation to modify or change the rights, preferences
or privileges of the Series A Preferred
12.
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Stock materially or adversely. Notwithstanding the foregoing, the Warrant
holder's consent shall not be required if such modification or change would
apply equally and with the same affect on the Warrant holder and all holders of
then outstanding shares of Series A Preferred Stock and provided that some or
all of the holders of the Series A Preferred Stock are not otherwise directly or
indirectly being paid special compensation or consideration for agreeing to such
modification or change, which compensation or consideration is not also being
offered to the Warrant holder. For purposes of determining the Warrant holder's
consent, if part of the Warrant shall have been transferred, then only the vote
or consent of holders of warrants to purchase at least a majority of the shares
of Series A Preferred Stock then subject to all such outstanding warrants shall
be required to effect a proposed change or modification.
2.4 Termination of Covenants. The covenants set forth in Sections 2.1 and
2.3 shall terminate and be of no further force or effect after the closing of a
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act, covering the offer and sale of
Common Stock (whether for the account of the Company or for the account of one
or more shareholders of the Company) to the public at an aggregate offering
price of not less than $7,500,000 and at a public offering price (prior to
underwriters' discounts and expenses) equal to or exceeding $50 per share of
Common Stock (as adjusted for any stock dividends, combinations or splits with
respect to such shares) (the "Company IPO").
2.5 Observer Rights. The Company shall permit two representatives of
Cargill to attend all meetings of it Board of Directors in a nonvoting observer
capacity, and such observers shall receive within a reasonable time prior to
each Board meeting, or any action to be taken by written consent, copies of all
materials sent to Board members in connection with such meeting or written
consent, as well as, all materials to which Board members are entitled under
Section 1602 of the California General Corporations Law; provided, however, that
each such representative shall agree to hold all information obtained in
connection with such meetings or written consent in confidence and trust
pursuant to Section 3.1 below; and, provided, further, that the Company reserves
the right to withhold any information and to exclude such representatives from
any meeting or portion thereof, or with respect to any written consent, if
access to such information or attendance at such meeting would materially and
adversely affect the attorney-client privilege between the Company and its
counsel. The observer rights set forth in this Section 2.4 shall terminate and
be of no further force or effect upon the earliest of (i) the Company IPO, (ii)
upon termination of the financing commitment described in Section 1 of the
Definitive Commitment Agreement dated as of July 15, 1993, between Cargill and
the Company, prior to the fifth anniversary of the Definitive Commitment
Agreement, if such termination is due to a material breach thereof by Cargill,
or (iii) upon the closing date for the sale (whether by merger, consolidation or
sale of assets) of all or substantially all of the Company's business, assets or
capital stock to a non-affiliated corporation, entity or person. The observer
rights set forth herein shall not be transferrable without the consent of the
Company's Board of Directors.
13.
<PAGE>
SECTION 3.
AFFIRMATIVE COVENANTS; RIGHT OF FIRST REFUSAL
---------------------------------------------
3.1 Confidential Information, etc. The Shareholders and Cargill agree that
all information received by it pursuant to Section 2, and any other information
relating to the Company's trade secrets and proprietary information that is
disclosed by the Company to the Shareholders or Cargill in writing and is marked
"Confidential," shall be considered confidential information. The Shareholders
and Cargill each agree that it shall hold all confidential information relating
to the Company in confidence and shall not disclose any such confidential
information to any third party other than its counsel or accountants nor shall
such Shareholders or Cargill use such confidential information for any purpose
other than evaluation of its investment in the Company; provided, however, that
the foregoing obligation to hold in confidence and not to disclose confidential
information shall not apply to any such information that (a) was known to the
public prior to disclosure by the Company, (b) becomes known to the public
through no fault of such Shareholders or Cargill, (c) is disclosed to such
Shareholders or Cargill on a non-confidential basis by a third party having a
legal right to make such disclosure, (d) is independently developed by such
Shareholders or Cargill, or (e) must be disclosed pursuant to any legal
requirement. In the event that either the Shareholders or Cargill receives
notice that it may be required to disclose Confidential Information in
accordance with applicable law, each agrees (i) to give the Company prompt
notice of such fact so that it may seek an appropriate protective order and (ii)
to cooperate with the Company in any proceeding to obtain a protective order.
If, in the absence of a protective order, either of the Shareholders or Cargill
is nonetheless compelled to disclose Confidential Information it may disclose
such information without liability hereunder; provided, however, that it gives
the Company written notice of the information to be disclosed as far in advance
of the required disclosure as is practicable.
3.2 Right of First Refusal. The Company hereby grants to each Purchaser
(as defined in this Section 3.2) the right of first refusal to purchase its Pro
Rata Share, as defined below, of all (or any part) of the New Securities (as
defined in this Section 3.2) that the Company may from time to time propose to
sell and issue. Such Purchaser's "Pro Rata Share," for purposes of this right of
first refusal, is the ratio of the number of shares of Common Stock (assuming
conversion of all shares of the Preferred, including those shares issuable upon
the exercise of the Warrant) then held by such Purchaser to the total number of
shares of Common Stock then outstanding (assuming conversion of all outstanding
shares of shares of the Company's Preferred Stock, including those shares
issuable upon exercise of the Warrant); provided that shares of restricted
stock purchased by the Founders on the date hereof which have not vested
pursuant to the performance vesting provisions (Section 2(b)(ii) of the
Restricted Stock Purchase Agreement shall be counted as if held by the
Shareholders. This right of first refusal shall be subject to the following
provisions:
(a) "Purchaser" shall mean, with respect to any issuance of New
Securities of the Company, a Shareholder, each Founder, Cargill and any
permitted transferee who then holds any Warrant, Preferred (or Common Stock
issued upon conversion thereof).
14.
<PAGE>
(b) "New Securities" shall mean any Common Stock or Preferred Stock of
the Company, whether now authorized or not, and rights, options, or warrants to
purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
Common Stock or Preferred Stock; provided, however, that "New Securities" does
not include (i) securities issuable upon conversion of or with respect to Series
A Preferred Stock or any future series of preferred stock; (ii) securities
offered to the public pursuant to a registration statement filed under the
Securities Act; (iii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets, or other reorganization; (iv) shares of the Company's Common Stock (or
related options) issued to directors, officers or employees of, or consultants
to, the corporation pursuant to an agreement or an option or purchase plan or
another director, officer, employee or consultant stock incentive program
approved by the Board of Directors of the Company; and (v) shares of the
Company's Common Stock or Preferred Stock issued in connection with any stock
split, stock dividend, or recapitalization by the Company.
(c) In the event that the Company proposes to undertake an issuance of
New Securities, it shall give each Purchaser written notice of its intention,
describing the type of New Securities, the price, and the general terms upon
which the Company proposes to issue the same. Each Purchaser shall have ten (10)
business days from the date of mailing of any such notice to agree to purchase
his pro rata share of such New Securities for the price and upon the general
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased. Each Purchaser
shall have a right of overallotment such that if any Purchaser fails to exercise
his right hereunder to purchase his pro rata portion of New Securities, the
other Purchasers may purchase the non-purchasing Purchaser's portion on a pro
rata basis, within five (5) days from the date such nonpurchasing Purchaser
fails to exercise his right hereunder to purchase his pro rata share of New
Securities.
(d) In the event that Purchasers fail to exercise in full the right of
first refusal within said ten (10) plus five (5) business day period, the
Company shall have one hundred twenty (120) business days thereafter to sell (or
enter into an agreement pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within one hundred twenty (120) business
days from the date of said agreement) the New Securities respecting which the
Purchasers' rights were not exercised, at a price and upon general terms no more
favorable to the purchasers thereof than specified in the Company's notice. In
the event the Company has not sold the New Securities within said one hundred
twenty (120) business day period (or sold and issued new Securities in
accordance with the foregoing within one hundred twenty (120) business days from
the date of said agreement), the Company shall not thereafter issue or sell any
New Securities, without first offering such securities to the Purchasers in the
manner provided above.
(e) The right of first refusal granted under this Agreement shall
expire upon the Company IPO.
15.
<PAGE>
(f) This right of first refusal is nonassignable except to any other
Purchaser or to any parent, subsidiary, affiliate or general or limited partner
of any Purchaser.
SECTION 4.
MISCELLANEOUS
4.1 Governing Law. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California.
4.2 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
4.4 Rights of Shareholders. Each Holder shall have the absolute right to
exercise or refrain from exercising any right or rights that such Holders may
have by reason of this Agreement or the ownership of any capital stock,
including without limitation the right to consent to the waiver of any
obligation of the Company under this Agreement to such Holder and to enter into
an agreement with the Company for the purpose of modifying this Agreement or any
agreement affecting any such modification, and such Holder shall not incur any
liability to any other party with respect to exercising or refraining from
exercising any such right or rights.
4.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addresses (a) if to a Holder, at such person's address set forth below or at
such other address as such Holder shall have furnished to the Company in
writing, (b) if to any other holder of Preferred, at such address as such holder
shall have furnished the Company in writing or (c) if to the Company, one copy
shall be sent to its address set forth above and addressed to the attention of
the Corporate Secretary, or at such other addresses as the Company shall have
furnished to the Holders. All notices and other communications mailed pursuant
to the provisions of this Section 4.5 shall be deemed delivered when received.
4.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
16.
<PAGE>
4.7 Severability. In the event that any provision of this Agreement
becomes or is declared by a court or competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
4.8 Approval of Amendments and Waivers. Any term of this agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and Holders of at least a
majority of the then outstanding shares of Registrable Securities, excluding
from the determination of such a majority (both in determining the total number
of such shares outstanding and the number of such shares consenting or not
consenting) all shares previously disposed of by the Holders or their respective
transferees pursuant to one or more registration statements under the Securities
Act or pursuant to Rule 144 or Rule 701 thereunder; provided, however, unless
all Holders will be similarly affected by any such amendment or waiver and
except as provided in the second paragraph of Section 1.6(b) above, the rights
of a Holder cannot be adversely affected by any such amendment or waiver without
its consent. Any amendment, termination or waiver effected in accordance with
this section shall be binding upon each Holder and the Company.
17.
<PAGE>
The foregoing Agreement is hereby executed as of the date first above
written.
THE COMPANY:
AMERICAN CREDIT CORPORATION
By /s/ Gary S. Burdick
------------------------
Title CEO
---------------------
THE SHAREHOLDERS:
STROME PARTNERS,
A Delaware limited partnership
By /s/ Jeff Lambert
------------------------
Title CFO
---------------------
STROME OFFSHORE LIMITED,
A Cayman Island corporation
By /s/ Jeff Lambert
------------------------
Title Attorney-In-Fact
---------------------
18.
<PAGE>
THE FOUNDERS:
/s/ Gary S. Burdick
- -------------------------------
Gary S. Burdick
3405 Hermosa Avenue
Hermosa Beach, California 90245
/s/ Rellen Stewart
- -------------------------------
Rellen Stewart
Eureka Bank
950 Tower Lane
Foster City, California 94404
/s/ Rocco J. Fabiano
- -------------------------------
Rocco J. Fabiano
14735 Caminito Porta Delgada
Del Mar, California 92014
THE CONSULTANT:
/s/ Heidi L. Berk
- -------------------------------
Heidi L. Berk
- -------------------------------
- -------------------------------
CARGILL
Cargill Financial Services Corporation
6000 Clearwater Drive
Minnetonka, MN 55343-9497
By /s/ Kenneth M. Duncan
----------------------------
Title Vice President
---------------------
19.
<PAGE>
AGREEMENT TO PURCHASE PREFERRED STOCK
AND AMENDMENT OF EXISTING AGREEMENTS
This AGREEMENT TO PURCHASE PREFERRED STOCK AND AMENDMENT OF EXISTING
AGREEMENTS ("Agreement") is entered into as of this 24th day of June, 1994 by
and among AMERICAN CREDIT CORPORATION, a California corporation (the "Company"),
STROME PARTNERS, a Delaware limited partnership ("Strome Partners"), STROME
OFFSHORE LIMITED, a Cayman Island corporation ("Strome Offshore") (Strome
Partners and Strome Offshore are hereinafter collectively referred to as the
"Purchaser"), Rocco J. Fabiano, Gary S. Burdick, Rellen M. Stewart (Messrs.
Fabiano, Burdick and Stewart are hereinafter collectively referred to as the
"Founders"), and CARGILL FINANCIAL SERVICES CORPORATION, a Delaware corporation
("CFSC").
WHEREAS, the Purchaser desires to commit to buy from the Company up to
$1,500,000 of the Company's Preferred Stock (the "Preferred") at a price equal
to the fair market value per share of the Preferred on the date of purchase as
determined in good faith by the Board of Directors of the Company (the "Purchase
Price"), as requested by the Company pursuant to the terms of this Agreement;
and
WHEREAS, in order to allow the parties to this Agreement to maintain their
respective percentage interests in the Company, the parties desire that (i) the
Founders and CFSC shall have the right to purchase a pro rata portion of such
shares of Preferred as are issued pursuant to the terms of this Agreement and
(ii) under certain circumstances Purchaser shall have the right to purchase a
portion of the shares issued to the Founders pursuant to their respective Stock
Purchase and Restriction Agreements dated July 15, 1993 (the "1993 Stock
Restriction Agreements"), all as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree and covenant as follows:
1. SALE OF PREFERRED STOCK. Subject to the terms and conditions hereof,
the Purchaser agrees to purchase and the Company agrees to sell and issue to the
Purchaser up to $1,500,000 of the Preferred (the "Commitment Amount") at the
Purchase Price per share, as requested by the Company pursuant to Draw-Down
Notices (defined below) delivered to the Purchaser at any time and from time to
time during the Commitment Period (defined below), as follows:
a. Draw-Down Notice by Company. If at any time during the Commitment
Period the Company shall desire to sell shares of Preferred to the Purchaser
pursuant to this Agreement (a "Draw-Down"), the Company shall deliver written
notice thereof to the Purchaser (a "Drawn-Down Notice") specifying (i) the
number of shares to be sold and the Purchase Price as determined in good faith
by the Board of Directors but in no event less than $33.17 per share and (ii) a
date for the closing of such Draw-Down, which date shall be not less than thirty
(30) but not more than forty-five (45) days following the date of such delivery
of the Draw-Down
1.
<PAGE>
Notice (the "Closing"). Concurrently with the delivery of any Draw-Down Notice
to the Purchaser, the Company shall deliver a copy of such Notice to the
Founders and CFSC. The Company shall not be entitled to require Draw-Downs other
than in multiples of $250,000 (subject to rounding for fractional shares) of
Preferred.
b. Founders' Option to Purchase
i. Each Founder shall have the right to purchase at each Closing
his respective Founder Percentage (defined below) of the shares of Preferred to
be issued at such Closing on the same terms and conditions as such shares are
sold to the Purchaser and CFSC within twenty-five (25) days after the receipt by
such Founder of the applicable Draw-Down Notice. If any Founder fails to deliver
such notice within such twenty-five (25) day period, then such Founder shall not
be entitled to purchase shares of Preferred at the Closing; provided, however,
that the failure of such Founder to deliver such notice with respect to such
Closing shall not affect such Founder's right to participate in any other
Closing pursuant to this Agreement. The number of shares of Preferred to be
issued to the Purchaser at such Closing shall be reduced share-for-share to the
extent the Founders elect to purchase shares of Preferred pursuant to this
paragraph (b).
ii. For purposes of this Agreement, the "Founder Percentage" with
respect to any Founder shall be determined as follows:
<TABLE>
<CAPTION>
Founder
Founder Percentage
------- ----------
<S> <C>
Rocco J. Fabiano 9.60%
Gary S. Burdick 8.59%
Rellen M. Stewart 6.06%
</TABLE>
c. Amendment of Articles of Incorporation. Upon receipt of any
Draw-Down Notice, each party to this Agreement agrees to use its best efforts to
cause the Company's Articles of Incorporation to be amended prior to the Closing
of such Draw-Down in the following respects:
i. To authorize the issuance of additional shares of the
Company's Common Stock and Preferred Stock as required for such Closing
(including the shares of Common Stock into which the shares of Preferred to be
issued at such Closing will be convertible);
ii. If the Purchase Price with respect to such Closing is equal
to $33.17 per share (the "Series A Purchase Price"), to designate additional
shares of the Company's Series A Preferred Stock as required for such Closing;
and
iii. If the Purchase Price with respect to such Closing is a
price other than the Series A Purchase Price per share, to designate the number
of shares and the rights, preferences and privileges of a new series of the
Company's Preferred Stock to be issued at such
2.
<PAGE>
Closing. Any such new series of Preferred Stock shall have rights, preferences
and privileges substantially the same as Company's Series A Preferred Stock,
except that (A) the rights, preferences and privileges of such new series
relating to dividend rights, liquidation preference and redemption at the option
of the holder of shares shall be determined based upon the Purchase Price
applicable at such Closing and (B) with respect to liquidation preferences,
voting rights and other similar rights of the holders of the Company's Preferred
Stock, the holders of all outstanding shares of Preferred Stock shall be treated
as a single class and such rights shall be allocated pro rata among such holders
of Preferred Stock. Without limiting the foregoing, in no event shall the
holders of the outstanding shares of Preferred Stock be entitled to elect more
than two directors of the Company pursuant to such amended Articles of
Incorporation.
d. Closing. Each Closing of the purchase and sale of shares of
Preferred pursuant to this Section 1 shall be held at the offices of Cooley
Godward Castro Huddleson & Tatum, 4365 Executive Drive, Suite 1200, San Diego,
California 92121 at 10:00 a.m., California time, on the date specified in the
applicable and Draw-Down Notice. At each Closing, each Founder that elects to
participate in such Closing and the Purchaser (collectively, the "Participants")
shall deliver to the Company, by check or wire transfer of immediately available
funds, the amount of the purchase price of the shares of Preferred to be issued
and sold to such Participant at such Closing, and the Company shall deliver to
each Participant a certificate representing the shares of Preferred being
purchased at such Closing by such Participant less such Participant's CFSC
Option Shares as provided for in paragraph (e) below. Each Founder participating
in any Closing shall be entitled to require the Company to issue any shares of
Preferred being issued to such Founder at such Closing into the name of any
family member of such Founder, any trust of which such Founder or family member
is a beneficiary or any individual retirement, 401(k), custodial or similar
account of such Founder or family member.
e. Delivery of CFSC Option Shares into Escrow.
i. In order to secure performance of the Participants'
obligations with respect to the CFSC Option provided for under Section 2, at
each Closing, (A) the Company shall deliver certificates representing the CFSC
Option Shares (defined below) being issued to each Participant at such Closing
to the Escrow Agent (the "Escrow Agent") named in the Joint Escrow Instructions
among the Company, the Founders, CFSC and the Escrow Agent of even date herewith
(the "Escrow Agreement") to be held pursuant to the Escrow Agreement and (B)
each Participant shall deliver to the Escrow Agent two Stock Assignments in the
form attached as Exhibit A to the Escrow Agreement executed in blank by such
Participant. The certificates representing such CFSC Option Shares shall be
issued in the names of the respective Participants (or such other person or
entity in whose name such certificates may be issued pursuant to the last
sentence of paragraph (d) above) and shall be held by the Escrow Agent pursuant
to the terms of the Escrow Agreement.
ii. If, from time to time prior to the expiration of the CFSC
Exercise Period, there is any stock dividend or dividend of cash and/or
property, stock split, or other change in the character or amount of any of the
outstanding securities of the Company, or any consolidation, merger or sale of
all or substantially all of the assets of the Company (other than
3.
<PAGE>
securitization or similar transactions in ordinary course of business), then, in
such event, any and all new, substituted or additional securities or other
property to which any Optionor is entitled by reason of his ownership of any
CFSC Options Shares then held in escrow pursuant to this paragraph (e) shall be
immediately subject to the CFSC Option and be included in the word "CFSC Option
Shares" for all purposes of the CFSC Option with the same force and effect as if
such new, substituted or additional securities or other property were CFSC
Option Shares subject to the CFSC Option under the terms of Section 2. While the
total Purchase Price payable by CFSC Option upon exercise of the CFSC Option
shall remain the same after each such event, the Purchase Price per share of the
CFSC Option Shares upon exercise of the CFSC Option shall be appropriately
adjusted.
f. Conditions to Closing. Each Participant's obligation to purchase
and the Company's obligation to issue and sell shares of Preferred at each
Closing pursuant to this Agreement shall be subject to the satisfaction on or
prior to such Closing of the following conditions:
i. The Company's Articles of Incorporation shall have been
appropriately amended as provided for under paragraph (c) above;
ii. There shall have been no material adverse change in the
business or financial condition of the Company within the sixty (60) days
immediately preceding the delivery of the Draw-Down Notice;
iii. Each party hereto shall have executed and delivered the
Escrow Agreement concurrently herewith; and
iv. There shall not have occurred as of such Closing any
termination event, event of default or material breach under the CFSC Agreements
(defined below) which has not been cured or waived within the applicable grace
period.
g. Commitment Period. For purposes of this Agreement, "Commitment
Period" shall mean the period beginning on the date of this Agreement and
expiring on the earlier of any of the following:
i. June 30, 1995;
ii. The occurrence of a default under the terms of the
Definitive Commitment dated July 15, 1993, by and among the Company, CFSC and
OFL-A Receivables Corp., or the Master Contract Repurchase Agreement, the Master
Contract Servicing Agreement or the Master Contract Custodial Agreement entered
into pursuant thereto (collectively, the "CFSC Agreements"), which default has
resulted in the termination of the Definitive Commitment or the Master Contract
Repurchase Agreement;
iii. The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Company in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state,
4.
<PAGE>
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of any
substantial part of their respective properties or ordering the winding up or
liquidation of the affairs of the Company;
iv. The closing of a firmly underwritten public offering by the
Company of shares of the Company's Common Stock pursuant to an effective
Registration Statement of Form S-1 filed with the Securities and Exchange
Commission (an "IPO"); or
v. The closing of a "Sales" of the Company, defined as (i) any
consolidation or merger of the Company with or into any other corporation (other
than a corporation that controls, is controlled by or is under common control
with the Company ("Affiliate")), other entity or person in which the Company
shall not be the continuing of surviving entity of such consolidation or merger
(other than a consolidation or merger undertaken solely to change the Company's
state of incorporation), (ii) any transaction or series of transactions by the
Company in which in excess of ninety percent (90%) of the Company's voting
securities are transferred to another non-Affiliated corporation, other entity
or person or (iii) a sale of all or substantially all of the assets of the
Company to a non-Affiliated corporation, other entity or person (other than any
sale of disposition of assets in the ordinary course of business, such as
securitizations or whole-loan sales).
2. CFSC'S OPTION TO PURCHASE PREFERRED STOCK
a. Grant of Option. Each of Purchaser and each Founder (each
hereinafter referred to as an "Optionor") hereby grants to CFSC an option (the
"CFSC Option") to purchase from such Optionor at any time during the CFSC
Exercise Period (defined below), at a price equal to the Purchase Price per
share paid by such Optionor for such shares (or as adjusted in accordance with
the last sentence of Section 1(e)(ii)), fifteen percent (15%) (but not less than
such amount) of the shares of Preferred purchased by such Optionor pursuant to
this Agreement (the "CFSC Option Shares"). For purposes of this Agreement, the
"CFSC Exercise Period" means the period beginning upon the expiration of the
Commitment Period and ending on the Expiration Date provided for in that certain
Warrant to Purchase 35,294 Shares of Series A Preferred Stock of the Company
dated as of July 15, 1993 issued by the Company to CFSC (the "CFSC Warrant").
Notwithstanding any other provision of this Agreement, however, CFSC shall not
be entitled to exercise the CFSC Option with respect to any Optionor unless
concurrently therewith CFSC exercises the CFSC Option in full with respect to
each other Optionor.
b. Manner of Exercise. CFSC may exercise the CFSC Option by giving
written notice (the "Option Exercise Notice") to each Optionor prior to the
expiration of the CFSC Exercise Period, with a copy to the Company and the
Escrow Agent, indicating CFSC's intent to exercise the CFSC Option and
specifying the closing date for the purchase of the CFSC Option Shares;
provided, however, that such closing date shall not be less than 15 days and not
more than 30 days after the date on which the Option Exercise Notice has been
given to each Optionor. At such closing, the Escrow Agent shall deliver to CFSC
certificates representing the CFSC Option Shares being purchased, duly endorsed
or accompanied by stock powers duly executed in blank, against delivery by CFSC
to the Escrow Agent of the purchase price therefor
5.
<PAGE>
by check payable to each Optionor, as applicable, or wire transfer of
immediately available funds for the account of each Optionor, as applicable.
3. PURCHASER'S OPTION TO PURCHASE FOUNDERS' TIME VESTING STOCK
a. Grant of Option. Each Founder hereby grants to Purchaser an
option (the "Strome Option") to purchase from such Founder at any time during
the Strome Exercise Period (defined below), at a price equal to three dollars
fifty cents ($3.50) per share, all (but not less than all) of the Strome Option
Shares (defined below) then held by such Founder. Notwithstanding any other
provision of this Agreement, however, Purchaser shall not be entitled to
exercise the Strome Option with respect to any Founder unless concurrently
therewith Purchaser exercises the Strome Option in full with respect to each
other Founder.
b. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
i. "Strome Exercise Period" shall mean the thirty (30) day
period following the expiration of the Commitment Period, as provided in Section
1(g) above.
ii. "Strome Option Shares" shall mean such number of shares, if
any, of such Founder's Time Vesting Stock (as defined in such Founder's 1993
Stock Restriction Agreement) which, if purchased by Purchaser pursuant to this
Section 3, would reduce such Founder's aggregate percentage ownership of
non-performance vesting shares of the Company's outstanding stock (determined as
provided below) to the percentage that would have been owned by such Founder
assuming that all shares of Preferred issued pursuant to this Agreement had been
issued at a Purchase Price equal to $33.17 per share. Any Strome Option shares
purchased by Purchaser hereunder shall be allocated among Founder's vested and
unvested Time Vesting Stock in the same proportion as Founder's vested and
unvested non-performance vesting shares.
The determination of the number of each Founder's Strome Option Shares
shall be made according to the following formula:
S = B X (A/B - X/Y)
"S" is the number of Time Vesting Shares held by each Founder to be treated
as Strome Option Shares for the purposes of this Section 3.
"A" is all shares of Common Stock (including shares of Common Stock
issuable upon conversion of Preferred Stock) of the Company then owned by the
Founder with respect to which the determination is being made (plus 2,000
shares), excluding all Performance Vesting Stock issued to such Founder pursuant
to such Founder's Stock Purchase and Restriction Agreement of even date herewith
(the "1994 Stock Restriction Agreement") and pursuant to such Founder's 1993
Stock Restriction Agreement (collectively, the "Excluded Shares").
6.
<PAGE>
"B" is all shares of Common Stock (including shares of Common Stock
issuable upon conversion of Preferred Stock) of the Company then outstanding,
determined on a fully diluted basis.
"X" is the sum of (i) all shares of Common Stock (including shares of
Common Stock issuable upon conversion of Preferred Stock, other than shares of
Preferred issued pursuant to this Agreement) of the Company then owned by the
Founder with respect to which the determination is being made (plus 2,000
shares), excluding all of such Founder's Excluded Shares, and (ii) all shares of
Common Stock issuable upon conversion of Preferred that would be owned by such
Founder, assuming that such Founder had been issued shares of Preferred at a
price equal to the Series A Purchase Price in exchange for the actual aggregate
amount paid by such Founder to purchase shares of Preferred pursuant to this
Agreement, if any.
"Y" is the sum of (i) all shares of Common Stock (including shares of
Common Stock issuable upon conversion of Preferred Stock, other than shares of
Preferred issued pursuant to this Agreement) of the Company then outstanding,
determined on a fully diluted basis and (ii) all shares of Common Stock issuable
upon conversion of Preferred that would be issued pursuant to this Agreement,
assuming that such shares had been issued at a price equal to the Series A
Purchase Price in exchange for the actual aggregate amount paid by Purchaser and
the Founders to purchase shares of Preferred pursuant to this Agreement, if any,
determined on a fully diluted basis.
c. Manner of Exercise. The Purchaser may exercise the Strome Option by
giving written notice (the "Option Exercise Notice") to each Founder prior to
the expiration of the Strome Exercise Period, with a copy to the Company,
indicating the Purchaser's intent to exercise the Strome Exercise Option and
specifying the closing date for the purchase of the Strome Option Shares;
provided that such closing date shall not be subsequent to the expiration of the
Strome Exercise Period. At such closing, each Founder, as applicable, shall
deliver to the Purchaser certificates representing such Founder's Strome Option
Shares being purchased hereunder against payment of the purchase price therefor
by check payable to such Founder or wire transfer of immediately available
funds.
4. AMENDMENT OF EXISTING AGREEMENTS
a. 1993 Stock Restriction Agreements. Each of the 1993 Stock
Restriction Agreements is hereby amended by replacing Sections 2(b)(ii) and
(iii) of each 1993 Stock Restriction Agreement in its entirety with the
following:
"(ii) All of the shares of Performance Vesting Stock shall vest
on and as of the tenth anniversary of the date hereof; provided, however,
that such vesting shall be accelerated and the Performance Vesting Stock
shall vest prior to such tenth anniversary in accordance with the following
schedule: 20% of the total number of shares of Performance Vesting Stock
shall vest for each 20% increment of IRR (defined below) realized by the
Investor, determined as of the end of each calendar quarter (or, if such
determination is being made in connection with the termination of the
Shareholder's
7.
<PAGE>
employment with the Company or the completion of the two-year extended
vesting period referred to in paragraph 2(d) below, determined as of the
end of the first calendar quarter following such termination or completion,
as applicable). Thus, upon realizing a cumulative IRR of 20%, the
Performance Vesting Stock will be 20% vested, upon realizing a cumulative
IRR of 40%, the Performance Vesting Stock will be 40% vested, upon
realizing a cumulative IRR of 60%, the Performance Vesting Stock will be
60% vested, upon realizing a cumulative IRR of 80%, the Performance Vesting
Stock will be 80% vested and upon realizing a cumulative IRR of 100%, the
Performance Vesting Stock will be fully vested. Shares of Performance
Vesting Stock that have vested as aforesaid shall not thereafter be subject
to the Performance Vesting Purchase Option, notwithstanding subsequent
declines, if any, in the Investor's cumulative IRR. Notwithstanding the
foregoing, the Company shall not make any quarterly IRR calculation
hereunder, and no shares of Performance Vesting Stock shall vest under this
Section 2(b)(ii), until the expiration of the Commitment Period, as
provided in Section 1(g) of that certain Agreement to Purchase Preferred
Stock (defined below).
(iii) For purposes of subparagraph (ii) of Section 2(a) above, the
Investor shall be deemed to have realized as of the date the determination
is being made ("Determination Date") the "IRR" that is obtained by solving
for IRR in the formula below:
x
___
\ [Investment Amount\t\ x (1+IRR)/n/\t\] = (Company Value x Investor
Percentage) + Option Proceeds
/__
t=1
"Company Value" shall reflect the market capitalization of the Company and
shall be determined as follows:
(A) Prior to the first underwritten public offering of securities by the
Company (the "IPO"), Company Value shall be calculated by multiplying 15 by net
income for the preceding four quarters ending on the determination date. Net
income shall be calculated after taxes, on a consolidated basis in accordance
with generally accepted accounting principles, and adjusted for payment of any
bonuses to be paid with respect to the four quarter period.
(B) After the Company's IPO, Company Value shall be calculated by
multiplying (i) the total number of shares of common equivalents outstanding on
the determination date calculated on a fully-diluted basis, assuming full
conversion or exercise of all then outstanding convertible securities, options
and warrants by (ii) the market price for the Company's Common Stock calculated
as follows:
(a) if the Company's Common Stock is traded on a securities exchange,
including the NASDAQ National Market System, the average closing price for
the Company's Common Stock on such exchange for the nine trading
8.
<PAGE>
days following the second business day after the Company issues its
earnings release for the quarter; or
(b) if the Company's Common Stock is traded over-the-counter, the
average closing bid price for the Company's Common Stock for the nine
trading days following the second business day after the Company issues its
earnings release for the quarter.
"Investment Amount" means the amount paid to the Company by the Investor
for each investment ("Investment") (i) pursuant to that certain Series A
Preferred Stock Purchase Agreement dated as of July 15, 1993 among the Company
and Investor and (ii) at each Closing pursuant to that certain Agreement to
Purchase Preferred Stock and Amendment of Existing Agreements dated as of June
24, 1994 among the Company, the Investor and the other parties named therein
(the "Agreement to Purchase Preferred Stock").
"Investor Percentage" shall equal Investor's ownership percentage of the
Company's outstanding voting stock on the Determination Date, calculated on a
fully diluted basis. For purposes of calculating the Investor Percentage, the
following shall apply:
(i) All shares of Performance Vesting Stock that have not vested as of
the applicable Determination Date pursuant to Section 2(b)(ii) of each of the
1993 Stock Restriction Agreements among the Company, the Investor and Rocco J.
Fabiano, Gary S. Burdick and Rellen M. Stewart, respectively (the "Founders")
and Sections 2(a)(ii) and 2(c) of each of the 1994 Stock Restriction Agreements
among the Company, the Investor and the Founders, respectively, shall be treated
as being owned by Investor; provided that all such shares of Performance Vesting
Stock that would vest pursuant to such Agreements upon achievement of the IRR
percentage being tested shall be treated as having vested for purposes of this
paragraph (disregarding, for purposes of this calculation, the vesting
limitations provided in the last sentence of paragraph 2(a)(ii) of the 1994
Stock Restriction Agreements - i.e., such Performance Vesting Stock shall
nonetheless be treated as having vested and thus not owned by Investor); and
(ii) The Investor's ownership percentage of the Company's outstanding
voting stock shall not include any shares purchased by Investor that are subject
to the CFSC Option pursuant to the Agreement to Purchase Preferred Stock.
"Option Proceeds" means the amount payable to the Investor by CFSC upon
exercise of the CFSC Option pursuant to the Agreement to Purchase Preferred
Stock.
"n" means, with respect to each Investment, the number of years elapsed
from the date of such Investment through the Determination Date, with partial
years expressed as a decimal value, n shall be calculated by dividing (i) the
total number of days elapsed from the date of each such Investment by (ii) 365.
Thus, it would equal 2.21 (807
9.
<PAGE>
divided by 365) if the Determination Date were September 30, 1995 after an
Investment date of July 15, 1993.
"t" shall mean each Investment.
"x" shall mean total number of Investments."
b. 1993 Stock Restriction Agreements. Subparagraph (iii) of the
"Sale of the Company" definition set forth in Section 5(c) of each of the 1993
Stock Restriction Agreements is hereby amended in full as follows:
"(iii) a sale of all or substantially all of the assets of the
Company to a non-Affiliated corporation, other entity or person (other than
any sale or disposition of assets in the ordinary course of business, such
as securitizations or whole-loan sales)."
c. Investors Rights Agreement. The Investors Rights Agreement dated
July 15, 1993 among the Company, the Founders, the Purchaser, CFSC and the other
parties named therein (the "Investors Rights Agreement") is hereby amended as
follows:
i. The definition of "Preferred" set forth in Section 1.1 of
the Investors Rights Agreement shall include for all purposes of the Investors
Rights Agreement the shares of Preferred issued pursuant to this Agreement and
held by any of the parties to this Agreement, and the restrictions on
transferability with respect to such Preferred shall also apply to the Founders.
ii. The definition of "Registrable Securities" set forth in
Section 1.2 of the Investors Rights Agreement shall also include for all
purposes of the Investors Rights Agreement shares of the Company's Common Stock
(i) issued upon conversion of Preferred issued pursuant to this Agreement and
held by any of the parties to this Agreement or (ii) issued in respect of shares
of the Company's Common Stock issued upon conversion of such Preferred upon any
stock split, stock dividend, recapitalization, or similar event, which have not
been sold to the public.
iii. The second sentence of Section 3.2 of the Investors Rights
Agreement is hereby amended and restated to read in full as follows:
"Such Purchaser's "Pro Rata Share," for purposes of this right of first
refusal, is the ratio of the number of shares of Common Stock (assuming
conversion of all shares of the Preferred, including those shares issuable
upon the exercise of the Warrant) then held by such Purchaser to the total
number of shares of Common Stock then outstanding (assuming conversion of
all outstanding shares of shares of the Company's Preferred Stock,
including those shares issuable upon exercise of the Warrant); provided,
however, that (i) shares of restricted stock purchased by the Founders (A)
on July 15, 1993 which have not vested pursuant to the performance vesting
provisions (Section 2(b)(ii)) of the Restricted Stock Purchase Agreement
and (B) pursuant to those certain Stock Purchase
10.
<PAGE>
and Restriction Agreements dated as of June 24, 1994 which have not vested
pursuant to both of Sections 2(a)(ii) and 2(c) thereof shall be counted as
if held by the Shareholders and (ii) any shares of Preferred Stock
purchased by the Shareholders and/or the Founders pursuant to that certain
Agreement to Purchase Preferred Stock dated as of June 24, 1994 (the
"Agreement to Purchase Preferred Stock") that are then subject to the CFSC
Option (as defined in the Agreement to Purchase Preferred Stock) shall be
treated as being owned by Cargill and not by the Shareholders and/or the
Founders, as applicable."
d. CFSC Warrant. The CFSC Warrant is hereby amended by adding the
following parenthetical to the end of clause (iii) in the definition of "Sale of
the Company" on page 2 of the CFSC Warrant: "(other than any sale or disposition
of assets in the ordinary course of business, such as securitizations or whole-
loan sales)".
e. Waiver of Rights of First Refusal and Co-Sale. The parties to
this Agreement hereby acknowledge and agree that the transactions contemplated
by this Agreement and those certain Stock Purchase and Restriction Agreements
dated as of June 24, 1994 among the Company, the Purchaser and the Founders and
the issuance of shares of the Company's Series A Preferred Stock and Common
Stock pursuant to the CFSC Warrant shall be exempt from the provisions of
Section 3.2 of the Investors Rights Agreement and Sections 2 and 3 of the
Shareholders Agreement dated as of July 15, 1993 (the "Shareholders
Agreement").
f. Effect of Amendments. Except as expressly amended hereby, each
of the 1993 Stock Restriction Agreements, the Investors Rights Agreement and the
Shareholders Agreement shall continue in full force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser and CFSC as follows:
a. Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has all
requisite corporate power to own and operate its assets and to carry on its
business as presently conducted and as proposed to be conducted. The Company is
qualified to do business as a foreign corporation in each jurisdiction in which
the failure to so qualify would have a material adverse affect on the Company or
its business or prospects.
b. Corporate Power. The Company has all requisite legal and
corporate power to execute and deliver this Agreement, to issue the Preferred
issuable hereunder, to issue the Common Stock issuable upon conversion of such
Preferred and to carry out and perform its obligations under this Agreement.
c. Subsidiaries. The Company does not own or control, directly or
indirectly, any other corporation, association or business entity, other than
OFL-A Receivables Corp.
11.
<PAGE>
d. Capitalization. The authorized capital stock of the Company
consists of 246,598 shares of Common Stock, of which 91,304 shares are issued
and outstanding, and 155,294 shares of Preferred Stock, all of which are
designated Series A Preferred Stock and 120,000 of which are issued and
outstanding. No other shares of capital stock are outstanding. All such issued
and outstanding shares have been duly authorized and validly issued and are
fully paid and nonassessable. The Company has reserved 35,294 shares of Series
A Preferred Stock for issuance pursuant to the CFSC Warrant and 35,294 shares of
Common Stock for issuance upon conversion of shares of Series A Preferred Stock
issuable upon exercise of the CFSC Warrant. Such Series A Preferred Stock has
the rights,preferences and privileges set forth in the Company's Amended and
Restated Articles of Incorporation (the "Restated Articles"). Except as provided
for in this Agreement, each of the 1994 Stock Restriction Agreements, the
Financing Agreements (as defined in the CFSC Warrant), the conversion privileges
of the Series A Preferred Stock specified in the Restated Articles and the
shares issuable pursuant to the CFSC Warrant, there are no options, warrants,
conversion privileges or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's capital
stock or other securities of the Company.
e. Authorization. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of the Preferred pursuant to this Agreement (and the
Common Stock issuable upon conversion of such Preferred) and the performance of
the Company's obligations hereunder has been taken. This Agreement, when
executed and delivered by the Company, will constitute a valid and binding
obligation of the Company enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency, the relief of
debtors, general equity principles, and limitations upon rights to indemnity.
The Preferred, when issued in compliance with the provisions of this Agreement,
will be duly and validly issued, fully paid and nonassessable. The Common Stock
issuable upon conversion of such Preferred will be duly and validly reserved
and, when issued in compliance with the provisions of this Agreement and the
Restated Articles, will be duly and validly issued, fully paid and
nonassessable; provided, however, that the Preferred (and the Common Stock
issuable upon conversion of the Preferred) may be subject to restrictions on
transfer under state and/or federal securities laws.
f. Compliance with Other Instruments, etc. The Company is not, and
will not by virtue of executing, delivering and performing this Agreement and
the transactions contemplated hereunder be, in violation of any term of its
Restated Articles or Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of executing,
delivering and performing this Agreement and the transactions contemplated
thereunder be, in violation of any order addressed specifically to the Company
nor, to the best of the Company's knowledge, any material order, statute, rule
or regulation applicable to the Company, other than any of the foregoing such
violations that do not, either individually or in the aggregate, have a material
adverse affect on the Company's business as presently conducted or planned to be
conducted.
12.
<PAGE>
g. Litigation, etc. There are no actions, suits, proceedings or
investigations pending against the Company before any court or governmental
agency (nor, to the best of the Company's knowledge, is there any overt threat
thereof).
h. Registration Rights. Except as set forth in the Investors Rights
Agreement, as amended hereby, the Company is not under any obligation to
register (as defined in the Investors Rights Agreement) any of its presently
outstanding securities or any of its securities that may hereafter be issued.
i. Governmental Consent, etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution, issuance
and delivery of this Agreement, or the offer, sale or issuance of the Preferred
hereunder (and the Common Stock issuable upon conversion of the Preferred) or
the consummation of any other transaction contemplated hereby, except i. filing
of appropriate amendments to the Restated Articles in the Office of the
Secretary of State of the State of California as provided for under Section
1(c), ii. qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the issuance of the Preferred
(and the Common Stock issuable upon conversion of the Preferred) under the
California Corporate Securities Law and any other applicable blue sky laws,
which filing and qualification, if required, will be accomplished in a timely
manner prior to or promptly upon issuance of any Preferred hereunder, and (c)
such filings as may be determined by counsel to the Company to be necessary to
secure an exemption from registration under the Securities Act of 1933, as
amended (the "Securities Act") which filings, if required, will be accomplished
in a timely manner prior to or upon issuance of any Preferred hereunder.
j. Offering. The offer, sale and issuance of the Preferred pursuant
to this Agreement and the issuance of the Common Stock to be issued upon
conversion of such Preferred constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act.
k. Operating Rights. The Company has all operating authority,
licenses, franchises, permits, certificates, consents, rights and privileges as
are necessary or appropriate for the operation of its business as currently
conducted and as planned to be conducted.
l. Employees. To the best of the Company's knowledge, no employee of
the Company is obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency that would conflict with
such employee's obligation to use his or her best efforts to promote the
interests of the Company or that would conflict with the Company's business as
conducted or as proposed to be conducted. To the best of the Company's
knowledge, no employee of the Company is in violation of any term of or any
other contract or agreement relating to the relationship of any such employee
with the company or any previous employer.
m. No Defaults. The Company has, in all material respects, performed
all material obligations required to be performed by it to date and is not in
default under any of the
13.
<PAGE>
contracts, loans, notes, mortgages, indentures, licenses, security agreements,
agreements, leases, documents, commitments or other arrangements to which it is
a party or by which it is otherwise bound, except for such defaults which in the
aggregate would not have a material adverse affect on the Company's business as
presently conducted or planned to be conducted, and no event or condition has
occurred which, with the lapse of time or the giving of notice, or both, would
constitute such a default.
n. Brokers or Finders. The Company has not incurred, and will not
incur, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with the transactions contemplated by this
Agreement.
o. No Dividends. The Company has not made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.
6. MISCELLANEOUS
a. Compliance with Securities Laws. In connection with any transfer
of securities pursuant to this Agreement, if the transferror or its counsel
reasonably deems it necessary, such transfer may be conditioned upon the
transferee making reasonable investment representations to the transferror to
comply with applicable state or federal securities laws. The parties to this
Agreement acknowledge and agree that all certificates representing shares of
Preferred issued pursuant to this Agreement (and the shares of Common Stock
issuable upon conversion of such Preferred) shall bear appropriate legends as
deemed necessary by the Company in order to comply with applicable federal and
state securities laws and to reflect the applicability of the CFSC Option.
b. Entire Agreement. This Agreement and all Exhibits and attachments
hereto set forth the entire agreement of the parties with respect to the subject
matter hereof and supersede all prior agreements relating thereto, written or
oral.
c. Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns;
provided, however, that neither this Agreement nor any rights hereunder shall be
assigned or assignable by any party without the prior written consent of the
other parties.
d. Miscellaneous. This Agreement (i) shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts entered into and performed entirely within the State of California
among California residents, (ii) may be amended only by a writing signed by each
of the parties hereto (provided that any party may waive any of its rights
hereunder applicable solely to such party without the consent of any other
party) and (iii) may be executed in one or more counterparts, each of which
shall be considered one and the same agreement.
14.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THE COMPANY:
AMERICAN CREDIT CORPORATION
By /s/ Rellen M. Stewart
---------------------------
Title President
------------------------
THE PURCHASER:
STROME PARTNERS,
A Delaware Limited Partnership
By /s/ Jeffrey Susskind
---------------------------
Title Vice President
------------------------
STROME OFFSHORE LIMITED
A Cayman Island Corporation
By /s/ Jeffrey Susskind
---------------------------
Title Vice President
------------------------
THE FOUNDERS:
/s/ Rocco J. Fabiano
- ------------------------------
Rocco J. Fabiano
/s/ Gary S. Burdick
- ------------------------------
Gary S. Burdick
/s/ Rellen M. Stewart
- ------------------------------
Rellen M. Stewart
CARGILL FINANCIAL SERVICES CORPORATION,
A Delaware corporation
By /s/ Jeffrey A. Hilligoss
---------------------------
Title Assistant Vice President
------------------------
15.
<PAGE>
Consent of Spouse:
I acknowledge that I have read the foregoing Agreement to Purchase
Preferred Stock and Amendment of Existing Agreements, and the related Joint
Escrow Instructions, to which a copy of this Consent is attached, and that I
know and agree to their respective contents. I am aware that by the provisions
therein I and my spouse have agreed to certain obligations and restrictions with
respect to the shares of the Company's capital stock that may be issued to us
pursuant to the Agreement to Purchase Preferred Stock, including my community
interest in such shares, if any, and the options to purchase such shares
provided for in Sections 2 and 3 therein will apply. I hereby agree that those
shares and my interest in them, if any, are subject to the provisions of the
Agreement to Purchase Preferred Stock, and the Joint Escrow Instructions, and
that I will take no action at any time to hinder operation of, or violate, the
Agreement to Purchase Preferred Stock, or the Joint Escrow Instructions. I
understand that the parties to the foregoing Agreement to Purchase Preferred
Stock, and the Joint Escrow Instructions, relied on my promise herein when
entering into such Agreement to Purchase Preferred Stock, and the Joint Escrow
Instruction.
Date: 6/26/94 /s/ Mary B. Burdick
------------------------ ------------------------
Mary B. Burdick
(Signature)
1.
<PAGE>
I acknowlege that I have read the foregoing Agreement to Purchase Preferred
Stock and Amendment of Existing Agreements, and the related Joint Escrow
Instructions, to which a copy of this Consent is attached, and that I know and
agree to their respective contents. I am aware that by the provisions therein I
and my spouse have agreed to certain obligations and restrictions with respect
to the shares of the Company's capital stock that may be issued to us pursuant
to the Agreement to Purchase Preferred Stock, including my community interest in
such shares, if any, and the options to purchase such shares provided for in
Sections 2 and 3 therein will apply. I hereby agree that those shares and my
interest in them, if any, are subject to the provisions of the Agreement to
Purchase Preferred Stock, and the Joint Escrow Instructions, and that I will
take no action at any time to hinder operation of, or violate, the Agreement to
Purchase Preferred Stock, or the Joint Escrow Instructions. I understand that
the parties to the foregoing Agreement to Purchase Preferred Stock, and the
Joint Escrow Instructions, relied on my promise herein when entering into such
Agreement to Purchase Preferred Stock, and the Joint Escrow Instructions.
Date: 6/26/94 /s/ Claudia A. Stewart
--------- -----------------------
(signature)
1.
<PAGE>
AMENDMENT AND AGREEMENT CONCERNING EXISTING AGREEMENTS
THIS AMENDMENT AND WAIVER CONCERNING EXISTING AGREEMENTS ("Amendment")
is entered into as of January 23, 1996 by and among ACC Consumer Finance
Corporation, a Delaware corporation (the "Company"), Strome Partners, a Delaware
limited partnership ("Strome Partners"), Strome Offshore Limited, a Cayman
Island corporation ("Strome Offshore"), Rocco J. Fabiano, Gary S. Burdick,
Rellen M. Stewart (Fabiano, Burdick and Stewart, collectively, the "Founders")
and Cargill Financial Services Corporation, a Delaware corporation ("Cargill").
WHEREAS, in connection herewith, the Board of Directors of the Company,
pursuant to power granted to it in the Company's Certificate of Incorporation,
established and designated 8,313 shares of Series C Preferred Stock as
authorized preferred stock of the Company; and
WHEREAS, in connection herewith, Strome Offshore, Strome Partners and
Cargill, in aggregate, are purchasing 7,913 shares of the Company's Series C
Preferred Stock in a private stock transaction for approximately $1,000,000 (the
"$1,000,000 Series C Issuance");
WHEREAS, the parties hereto desire to enter into this Amendment in order to
clarify the relationship between them.
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. The parties hereby acknowledge and agree that in connection with the
$1,000,000 Series C Issuance, (i) the Company has complied with the Investors
Rights Agreement dated July 15, 1993, among the Company, the Founders, Heidi
Berk, Strome Offshore, Strome Partners and Cargill ("Investors Rights
Agreement"). To the extent the Investors Rights Agreement requires that the
Company offer to the Founders, Strome Offshore, Strome Partners and Cargill a
right of first refusal to participate in any new issuance of securities by the
Company; and (ii) each of the Founders has declined to participate in the
$1,000,000 Series C Issuance.
2. The shares of Series C Preferred Stock issued in connection with the
$1,000,000 Series C Issuance shall be subject to the Shareholders Agreement
entered into as of July 15, 1993, by and among the Company, Strome Offshore,
Strome Partners and the Founders (the "Shareholder Agreement"); and the
certificates representing such shares shall bear the legend set forth in Section
6 of the Shareholders Agreement; and the sale (but not subsequent transfers) of
Series C Preferred Stock in connection with the $1,000,000 Series C Issuance
shall be exempt from the provisions of Sections 2 and 3 of the Shareholders
Agreement.
3. The Investors Rights Agreement is hereby amended as follows:
The definitions of "Preferred" and "Registrable Securities" set forth
in Section 1.1 and Section 1.2, respectively, of the Investors Rights Agreement
shall include for all purposes (so as to make rights equal with respect to the
Series A, Series B and Series C
-1-
<PAGE>
Preferred Stock) the shares of Series C Preferred Stock issued in connection
with the $1,000,000 Series C Issuance.
4. This Amendment (i) shall be governed by and construed in accordance
with the internal laws of the State of California, (ii) may be amended only by a
writing signed by each of the parties hereto, and (iii) may be executed in one
or more counterparts, all of which taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
ACC CONSUMER FINANCE CORPORATION,
a Delaware corporation
By /s/ Rocco J. Fabiano
--------------------------------
Rocco J. Fabiano, COB & CEO
--------------------------------
[Printed Name and Title]
STROME PARTNERS, a Delaware
limited partnership
By: STROME SUSSKIND INVESTMENT
MANAGEMENT, L.P., General Partner
By: SSCO, Inc., General Partner
By: /s/ Jeffrey S. Lambert
------------------------------
Jeffrey S. Lambert
------------------------------
Chief Financial Officer
STROME OFFSHORE LIMITED,
a Cayman Island corporation
By /s/ Jeffrey S. Lambert
------------------------------------
Jeffrey S. Lambert
------------------------------------
Director
/s/ Rocco J. Fabiano
---------------------------------------
Rocco J. Fabiano
/s/ Gary S. Burdick
---------------------------------------
Gary S. Burdick
-2-
<PAGE>
/s/ Rellen M. Stewart
------------------------------------
Rellen M. Stewart
CARGILL FINANCIAL SERVICES CORPORATION, a
Delaware corporation
By /s/ Jeffery A. Hilligoss
---------------------------------
Assistant Vice President
---------------------------------
(Printed Name and Title)
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<PAGE>
THIRD AMENDMENT
TO
INVESTOR RIGHTS AGREEMENT
This THIRD AMENDMENT TO THE INVESTOR RIGHTS AGREEMENT (this
"Amendment"), dated as of March 31, 1996, by and among ACC CONSUMER FINANCE
CORPORATION, a Delaware corporation (as successor to American Credit
Corporation) (the "Company"), ROCCO J. FABIANO, GARY S. BURDICK AND RELLEN M.
STEWART (collectively, the "Founders"), CARGILL FINANCIAL SERVICES CORPORATION,
a Delaware corporation ("Cargill"), STROME PARTNERS, a Delaware limited
partnership, and STROME OFFSHORE LIMITED, a Cayman Island corporation
(collectively, the "Stockholders"), amends that certain Investor Rights
Agreement dated July 15, 1993, among the Company, the Founders, Heidi L. Berk,
Cargill and the Stockholders, as amended by the Agreement to Purchase Preferred
Stock and Amendment to Existing Agreements dated June 24, 1994, among the
Company, the Founders, Cargill and the Stockholders, and the Amendment and
Agreement Concerning Existing Agreements dated January 23, 1996, among the
Company, the Founders, Cargill and the Stockholders (the "Investor Rights
Agreement").
Whereas, the parties hereto desire to amend the Investor Rights
Agreement in certain respects.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. If, on or before May 31, 1996, the Company and its stockholders
receive aggregate net proceeds of not less than $7,500,000 from a firm
commitment underwritten public offering of shares of common stock of ACC (the
"Eligible ACC IPO"), then effective as of the date of such closing, the
Investor Rights Agreement shall be hereby amended as follows:
a. Amendment to Section 2
----------------------
(i) Section 2.5 shall be amended in its entirety to read as
follows:
Information Rights. The Company shall provide to Cargill
written notice of each regular and/or special meeting of the
Board of Directors of the Company on or before the time that
it gives notice of each meeting to the Board members and
shall give Cargill notice of its intention to seek approval
of matters by written consent on or before its circulation
of the written consent to the members of
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the Board of Directors. Upon written request, the Company
shall promptly provide to Cargill true and correct copies of
the materials provided to the Board of Directors in
connection with a regular or special meeting of the Board of
Directors or in connection with a written consent. In
addition, upon written request, the Company shall provide to
Cargill true and correct copies of all materials and
information to which Board members are entitled under
Section 220(d) of the General Corporation Law of the State
of Delaware. Furthermore, Cargill shall have the right to
discuss any such materials and information with the senior
executives of the Company and said senior executives shall
cooperate in good faith with Cargill. Cargill and each of
its individual representatives receiving information shall
hold all such materials, and the information contained
therein, in confidence and trust pursuant to Section 3.1
hereof and Cargill and its representatives shall abide by
all reasonable written insider trading rules, regulations
and policies of the Company provided to Cargill and all
applicable laws. The Company reserves the right to withhold
any such materials or information if access thereto would
materially and adversely affect the attorney-client
privilege between the Company and its counsel. Further, upon
invitation by the Company, representatives of Cargill may
attend meetings of the Board of Directors of the Company.
The information rights set forth in this Section 2.5 shall
terminate and be of no further force or effect (i) upon the
later of the termination of (a) the Subordinated Certificate
and Net Interest Margin Certificate Financing Facility
Agreement dated as of September 1, 1995, as amended as of
March 31, 1996, by and among the Company's subsidiary, OFL-A
Receivables Corp., a Delaware corporation ("Receivables"),
Cargill, and Norwest Bank Minnesota, National Association, a
national banking association ("Norwest"), and (b) the Master
Contract Repurchase Agreement dated as of July 15, 1993, as
amended as of June 24, 1994, September 15, 1995, September
29, 1995, and March 31, 1996, by and among Norwest, as
custodian, Cargill and Receivables or (ii) upon the closing
date for the sale (whether by merger, consolidation or sale
of assets) of all or substantially all of the Company's
business, assets or capital stock to a non-affiliated
corporation, entity or person. The information rights set
forth herein shall not be transferrable without the consent
of the Company's Board of Directors.
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2. Amendment Void. If the Eligible ACC IPO does not occur on or before
May 31, 1996, none of the amendments to the Investor Rights Agreement set forth
in Section 1 shall be effective and this Amendment shall be null and void.
3. Miscellaneous. All provisions of the Investor Rights Agreement other
than those expressly amended by this Amendment shall remain in full force and
effect. This Amendment may be executed in any number of counterparts, each of
which when so delivered shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument. This Amendment constitutes the
written consent to the Amendment by the holders of the Registrable Securities
(as defined in the Investor Rights Agreement) excuting this Amendment, which
holders own more than a majority of the outstanding shares of Registrable
Securities.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and delivered by its duly authorized officer on the date first set
forth above.
"ACC":
ACC CONSUMER FINANCE
CORPORATION,
a Delaware corporation
By /s/ Rocco J. Fabiano
-----------------------
Rocco J. Fabiano, COO & CEO
--------------------------------
[Printed Name and Title]
The "Founders":
/s/ Rocco J. Fabiano
-------------------------------
Rocco J. Fabiano
/s/ Gary S. Burdick
-------------------------------
Gary S. Burdick
/s/ Rellen M. Stewart
--------------------------------
Rellen M. Stewart
[SIGNATURES CONTINUED NEXT PAGE]
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"Cargill":
CARGILL FINANCIAL SERVICES
CORPORATION,
a Delaware corporation
By /s/ David A. Netjes
-----------------------------
Assistant Vice President
-----------------------------
[Printed Name and Title]
The "Stockholders":
STROME PARTNERS,
a Delaware limited partnership
By /s/ Jeffrey Susskind
-----------------------------
Vice President
-----------------------------
[Printed Name and Title]
STROME OFFSHORE LIMITED,
a Cayman Islands corporation
By /s/ Jeffrey Susskind
-----------------------------
Vice President
-----------------------------
[Printed Name and Title]
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