Exhibit 4.3
AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT (this “A greement”) , dated as of
December 28, 2004, among PEOPLE’S CHOICE FINANCIAL
CORPORATION, a Maryland corporation (the “ Company
”), PEOPLE’S CHOICE HOME LOAN, INC., a Wyoming
corporation (“PCHLI”), LEHMAN COMMERCIAL PAPER INC.
(“ Buyer ” together with its respective
successors and assigns, being a “ Tag-Along Investors
” and, collectively, the “ Tag-Along Investors
”), Neil Kornswiet (together with his respective Related
Parties, collectively, the “Principals”). In this
Agreement, a “ Related Party ” shall include,
with respect to any Principal, (A) any spouse or immediate family
member (in the case of an individual) of such Principal, or (B) a
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners or persons beneficially holding an 80% or
more controlling interest of which consist of such Principal and/or
such other persons referred to in the immediately preceding clause
(A); provided, however, for purposes of the Tag-Along Rights and
the Right, a Related Party shall not include 1-2-3 Mortgage, LLC
(“123”), to the extent that the circumstances or event
that would otherwise give rise to the exercise by Buyer of such
right is a transfer, sale or disposition, directly or indirectly,
of Shares issuable upon the exercise of options, or to the options
themselves, contributed to 123 by Reyes Topete or Dwayne
Barfell.
RECITALS
WHEREAS, PCHLI and the Buyer have
entered into a Master Repurchase Agreement Governing Purchases and
Sales of Mortgage Loans and Working Capital dated as of May 5, 2000
(the “ Master Repurchase Agreement ”;
capitalized terms used herein and not defined herein shall have the
meanings specified in the Master Repurchase Agreement) pursuant to
which Buyer agreed with PCHLI from time to time to enter into
transactions in which PCHLI would (A) on the designated purchase
date sell to Buyer certain residential first and second lien
mortgage loans which conform to PCHLI’s underwriting
guidelines against transfer of the purchase price therefor by Buyer
and (B) simultaneously agree to purchase such mortgage loans from
Buyer at a date subsequent to the purchase date against payment of
the repurchase price.
WHEREAS in connection with the
Master Repurchase Agreement, on May 5, 2000, PCHLI entered into a
Stockholders Agreement, dated May 5, 2000, with the Buyer and Neil
Kornswiet (the “Stockholders Agreement”);
WHEREAS, the Company has entered
into an agreement and plan of merger (the “Merger
Agreement”), dated as of December 28, 2004, pursuant to which
the Company will acquire all of the issued and outstanding shares
of capital stock of PCHLI;
WHEREAS, in connection with the
consummation of the transactions contemplated by the Merger
Agreement, the Buyer shall, among other matters amend existing
warrants to provide for the purchase shares of common stock of the
Company rather than the purchase of shares of common stock of PCHLI
and shall be entitled to certain registration rights with respect
thereto;
WHEREAS, further in connection with
the consummation of the transactions contemplated by the Merger
Agreement, the parties to the Stockholders Agreement desire to add
PCFC as a party and amend and restate such agreement in accordance
with the terms hereof;
WHEREAS, immediately following the
consummation of the transactions contemplated by the Merger
Agreement, the Company expects to consummate a private offering of
securities (the “Private Placement”) as generally
described in that certain preliminary offering memorandum dated
December 6, 2004;
WHEREAS, the parties hereto desire
to set forth the terms and conditions of this new stockholders
agreement;
NOW, THEREFORE, in consideration of
the premises and the mutual agreements herein set forth, the
parties hereto agree as follows.
AGREEMENT
SECTION 1. Defined Terms.
(a) Capitalized terms used and not
otherwise defined herein are used with the meanings attributed
thereto in the Master Repurchase Agreement.
(b) As used in this
Agreement:
“ Common Stock ”
means the shares of common stock, par value $.01 per share, of the
Company now owned and hereafter acquired by the Investors, together
with any securities exercisable for or convertible into or
exchangeable for shares of Common Stock, sometimes referred to
herein as the “ Shares ” (it being understood
that all securities exercisable for or convertible into or
exchangeable for shares of Common Stock shall be treated on any
date as if they had been exercised, converted or exchanged into
Common Stock on that date and shall be deemed to represent the
number of shares of Common Stock that would be issued upon such
exercise, conversion or exchange).
“ Investors ”
means the Tag-Along Investors and the Principals.
SECTION 2. Tag-Along Right.
With respect to any proposed
transfer, sale or other disposition (each, a “ proposed
transfer ”) of Shares by the Principals to a person (such
other person being hereinafter referred to as the “
proposed purchaser ” each Tag-Along Investor shall
each, have the right (the “ Tag-Along, Right ”)
to require the proposed purchaser to purchase all or any portion of
such Tag-Along Investor’s Pro Rata Allocation (hereinafter
defined) of the Shares proposed to be transferred simultaneously
with consummating the proposed transfer. A Tag-Along
Investor’s “ Pro Rata Allocation ” of the
Shares proposed to be transferred shall equal the total number of
Shares proposed to be transferred, multiplied by a fraction, the
numerator of which is the total number of Shares held by such
Tag-Along Investor, and the denominator of which is the total
number of
2
Shares held by all Tag-Along Investors and the
Principal(s) proposing to transfer Shares in the proposed transfer.
Any Shares purchased from Tag-Along Investors pursuant to this
Section 2 shall be purchased at the same price per share and upon
terms and conditions no less favorable as such proposed transfer by
the Principal(s), it being agreed, however, that (i) any Tag-Along
Investor shall be entitled to elect to be paid in cash in lieu of
receiving any non-cash consideration (the amount of such cash to be
determined based on the fair market value by an investment banking
firm (or, if an investment banking firm is generally not qualified
to render such a determination, by an appraisal firm) of recognized
national standing), and (ii) such terms and conditions shall not
include the making of any representations and warranties,
indemnities or other similar agreements other than representations
and warranties with respect to title of the Shares being sold and
authority to sell such Shares and indemnities related thereto
(“ Title Representations ”). The Principals
shall, not less than 20 nor more than 60 days prior to each
proposed transfer, notify, or cause to be notified, each Tag-Along
Investor in writing of each such proposed transfer. Such notice
(the “ Transfer Notice ”) shall set forth: (i)
the name of the transferor and the number and description of Shares
proposed to be transferred, (ii) the name and address of the
proposed purchaser(s), (iii) the proposed amount and form of
consideration and terms and conditions of payment offered by such
proposed purchaser(s), (iv) each Tag-Along Investor’s Pro
Rata Allocation of the Shares proposed to be transferred, and (v)
that the proposed purchaser has been informed of the Tag-Along
Right provided for in this Section 2 and has agreed to purchase
Shares in accordance with the terms hereof. Each of the Principals
hereby agrees not to transfer any Shares indirectly in a manner
that would be inconsistent with the essential intent of this
Section 2. For purposes of this Section 2, any transfer of an
equity interest of an entity that was formed for the purpose of
acquiring Shares shall be deemed to be a transfer of such portion
of the Shares, as applicable, owned by such entity as corresponds
to the portion of the equity of such entity that has been so
transferred, including, but not limited to, Neil Kornswiet’s
membership interest in 123; provided, however, that this Section 2
shall not apply to any transfer, sale or other disposition,
directly or indirectly, of Shares issuable upon the exercise of
options, or to the options themselves, contributed to 123 by Reyes
Topete or Dwayne Barfell.
The Tag-Along Right may be exercised
by any Tag-Along Investor by delivery of a written notice to the
Principal(s) proposing to sell Shares (the “ Tag-Along
Notice ”) within 10 business days following its receipt
of the Tran
