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STOCK PURCHASE AGREEMENT
by and among
CITYFED FINANCIAL CORP.,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇ ▇▇▇▇
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Dated as of December 19, 2003
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EXHIBITS
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Exhibit A Form of Promissory Note
Exhibit B Form of Mutual Release Agreement
Exhibit C Note Amount and Number of Shares
STOCK PURCHASE AGREEMENT
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DECEMBER 19, 2003
The parties to this STOCK PURCHASE AGREEMENT (this "Agreement") are
CITYFED FINANCIAL CORP., a Delaware corporation (the "Company" or "CityFed"),
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., an individual residing at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an
individual residing at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ 07078("▇▇▇▇▇▇▇")
(▇▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇ are referred to individually as a "Claimant" and
collectively as the "Claimants").
WHEREAS, various legal actions have been settled between the Claimants,
all former directors or employees of CityFed or its formerly wholly owned
subsidiaries, on the one hand, and the Federal Deposit Insurance Corporation
and/or the Office of Thrift Supervision, in their various legal capacities, on
the other; and
WHEREAS, the Claimants have settled such actions and/or have incurred
legal defense fees and costs in connection with the defense of the actions, and
the Claimants have claimed indemnification for said amounts from CityFed
pursuant to Article XI of the By-laws of CityFed and Section 145 of the General
Corporation Law of the State of Delaware; and
WHEREAS, CityFed believes it is in its best interest to settle the
indemnification claims by issuing an aggregate of $4,750,000 in notes,
10,000,000 shares of CityFed's common stock, $0.01 par value per share ("Common
Stock"), and 1,200,000 shares of CityFed's Series C, Junior Preferred Stock,
$0.01 par value per share ("Series C Stock"), as the legal and/or
indemnification cost to CityFed might be considerably higher if the aforesaid
claims were to be litigated and thereafter, found to be valid in whole or in
part.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties, intending to
be legally bound, agree as follows:
1. THE TRANSACTION.
1.1. ISSUANCE OF NOTES AND SHARES. Subject to the other provisions
of this Agreement, the Company shall issue to each Claimant, (a) a promissory
note in the form attached hereto as Exhibit A and in principal amount set forth
opposite his name under the column labeled "Note" on Exhibit C, (b) the number
of shares of Common Stock set forth opposite his name under the column labeled
"Common Shares" on Exhibit C, and (c) the number of shares of Series C Stock set
forth opposite his name under the column labeled "Preferred C" on Exhibit C, in
exchange for such Claimant's execution of the form of mutual release agreement
attached hereto as Exhibit B.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Claimant as follows:
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2.1. ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has the requisite power and authority to own and operate its properties and
to carry on its business as now conducted.
2.2. POWER AND AUTHORITY. The Company has the requisite power and
authority to enter into this Agreement and the documents contemplated hereby,
and to issue the shares of Common Stock and Series C Stock set forth on Exhibit
C hereto and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the documents contemplated hereby and the
performance by the Company of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary action on the part of the Company. Each
of this Agreement and such other documents contemplated hereby is a valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and transfer,
reorganization, receivership, moratorium, and other similar laws affecting the
rights and remedies of creditors generally and to the general principles of
equity. As of the date hereof, the execution, delivery and performance of this
Agreement and each of the other documents contemplated hereby by the Company,
and the consummation of the transactions contemplated hereby and thereby, will
not result in a material breach or material default under any organizational
document, agreement, instrument or other document by which the Company is bound
or otherwise violate any instrument, judgment, decree, order, statute, rule or
regulation by which the Company is bound.
3. REPRESENTATIONS AND WARRANTIES OF THE CLAIMANTS. Each Claimant
hereunder, severally and not jointly, represents and warrants to the Company as
follows:
3.1. INVESTMENT REPRESENTATIONS. (a) The Claimant understands that
the shares of Common Stock and Series C Stock set forth opposite his name on
Exhibit C (collectively, such Claimant's "Stock") have not been registered under
the Securities Act of 1933, as amended ("1933 Act"), or any state or foreign
securities laws, and are being issued to the Claimant by reason of specific
exemptions under the provisions thereof that depend in part upon the other
representations and warranties made by the Claimant in this Agreement.
(b) The Claimant understands that the shares of Stock are
"restricted securities" under applicable federal and state securities laws and
that the Securities Act, the rules of the Securities and Exchange Commission
promulgated thereunder and such state securities laws provide in substance that
the Claimant may sell, transfer or otherwise dispose of such shares of Stock
only pursuant to an effective registration statement under the Securities Act
and such state securities laws or an exemption from registration, if available.
(c) The Claimant is acquiring the shares of Stock for investment
only and not with a view to or in connection with any resale or distribution of
any of the shares of Stock. The Claimant has no present intention of making any
sale, assignment, pledge, gift, transfer or other disposition of his shares of
Stock or any interest therein.
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(d) The Claimant has not received, paid or given, directly or
indirectly, any commission or remuneration for or on account of any sale, or the
solicitation of any sale, of the shares of Stock to him.
(e) The Claimant is an "accredited investor" as such term is
defined in Rule 501 under Regulation D promulgated under the Securities Act.
(f) The Claimant has sufficient knowledge and experience in
investing in companies similar to the Company so as to be able to evaluate the
risks and merits of investment in the shares of Stock and he is able financially
to bear the risks thereof.
3.2. AUTHORITY; ENFORCEABILITY. The Claimant has full power and
authority to enter into this Agreement and the documents contemplated hereby and
to perform fully his obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each of this Agreement and the
other documents contemplated hereby is a valid and binding obligation of the
Claimant, enforceable against him in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and transfer, reorganization,
receivership, moratorium, and other similar laws affecting the rights and
remedies of creditors generally and to the general principles of equity. As of
the date hereof, the execution, delivery and performance of this Agreement and
each of the other documents contemplated hereby by the Claimant, and the
consummation of the transactions contemplated hereby and thereby, will not
result in a material breach or material default under any organizational
document, agreement, instrument or other document by which the Claimant is bound
or otherwise violate any instrument, judgment, decree, order, statute, rule or
regulation by which Claimant is bound.
4. MISCELLANEOUS.
4.1. SURVIVAL. The representations, warranties, agreements,
rights, and covenants of the Company and each Claimant made in or pursuant to
this Agreement shall survive the execution of this Agreement.
4.2. DEFINITIONS. In addition to the other terms defined elsewhere
in this Agreement, the following terms used in this Agreement have the meanings
set forth below:
"business day" is a day on which the Company is open for business.
"party" or "parties" mean a party or the parties to this
Agreement.
"person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any court, government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority or instrumentality (federal, state,
local or foreign), or any other legal entity.
4.3. CONSTRUCTION. As used in this Agreement, unless the context
otherwise requires: (a) references to "Section" are to a section of this
Agreement; (b) all "Exhibits" referred to in this Agreement are to Exhibits
attached to this Agreement and are incorporated into this Agreement by reference
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and made a part of this Agreement; (c) "include," "includes" and "including" are
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import; and (d) the headings of the
various sections and other subdivisions of this Agreement are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions of this Agreement.
4.4. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, the other documents contemplated hereby, and the documents referred
to herein and therein, constitute the entire agreement among the parties with
respect to the subject matter hereof, and no other agreements, warranties,
representations or covenants regarding the subject matter hereof shall be of any
force of effect unless in writing, executed by the party to be bound thereby and
dated on or after the date hereof. This Agreement is not intended to confer upon
any person other than the parties hereto any rights or remedies.
4.5. NOTICES. Any and all notices or other communications or
deliveries provided for or permitted hereunder shall be made in writing and
shall be deemed to have been duly given or made for all purposes if sent by
hand-delivery, registered first-class mail, telex, telecopier, or courier
guaranteeing overnight delivery, as follows (or at such other address as shall
have been furnished in writing given in accordance with this provision):
(a) if to the Company, to:
CityFed Financial Corp.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to a Claimant, to such Claimant at his address or facsimile
number set forth in the first paragraph of this Agreement or below his signature
to this Agreement or at such other address or facsimile number as any party
specifies by notice given to the other party in accordance with this Section.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and on the next
business day if timely delivered to a courier guaranteeing overnight delivery.
4.6. AMENDMENT. This Agreement may be amended, superseded,
canceled, renewed or extended and any terms hereof may be waived only by a
written instrument signed by the Company and all of the Claimants.
4.7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
4.8. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed
by, construed, and enforced in accordance with the internal laws of the
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Commonwealth of Massachusetts. Should any clause, section or part of this
Agreement be held or declared to be void or illegal for any reason, all other
clauses, sections or parts of this Agreement shall nevertheless continue in full
force and effect.
4.9. ASSIGNMENT. This Agreement shall be binding upon, and inure
to the benefit of, the parties and their respective successors and permitted
assigns. No party may assign its or his rights or obligations under this
Agreement without the written consent of the other parties hereto.
4.10. SUBMISSION TO JURISDICTION. Each party to this Agreement (a)
hereby irrevocably submits itself and consents to the jurisdiction of the United
States District Court for the Commonwealth of Massachusetts located in Boston,
Massachusetts, or the state courts of the Commonwealth of Massachusetts located
in Boston, Massachusetts, for the purpose of any suit, action or other
proceeding in connection with this Agreement or the other documents contemplated
hereby or to enforce a resolution, settlement, order or award made regarding
this Agreement or such other documents, (b) hereby irrevocably waives the right
to commence any suit, action or other proceeding in connection with this
Agreement or such other documents in any other jurisdiction (including any
foreign jurisdiction) that might otherwise be available by reason of their
presence or other circumstances in connection with this Agreement or such other
documents, and (c) to the extent permitted by applicable law, hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court or that the suit, action or proceeding is improper.
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4.11. CERTAIN UNDERSTANDINGS. This Agreement does not constitute a
partnership or joint venture among the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed on the date and year first above written.
CITYFED FINANCIAL CORP.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax. No. ▇▇▇.▇▇▇.▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
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Fax. No. ▇▇▇.▇▇▇.▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax. No. ▇▇▇.▇▇▇.▇▇▇▇
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EXHIBIT A
FORM OF PROMISSORY NOTE
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PROMISSORY NOTE
$____________ Date: December __, 2003
For value received, the undersigned CityFed Financial Corp. (the
"Borrower"), at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, promises to pay
to the order of ___________, ______________ (the "Lender"), at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (or at such other place as the Lender may designate in
writing) the sum of $4,329,000.00 with interest from November 15, 2003, on the
unpaid principal at the prime rate as posted in the Eastern Edition of THE WALL
STREET JOURNAL (or equivalent source) per annum.
Unpaid principal after May 31, 2007 (the "Due Date") shall accrue
interest at a rate of 10.00% annually until paid.
The unpaid principal and accrued interest shall be payable in full on
the Due Date; provided, however, that all or part of the principal amount of
this Note, and accrued interest thereon, may be prepaid at any time or from time
to time by the Borrower, without penalty.
All payments on this Note shall be applied first in payment of accrued
interest and any remainder in payment of principal.
If any payment obligation under this Note is not paid when due, the
remaining unpaid principal balance and any accrued interest shall become due
immediately at the option of the Lender.
If any payment obligation under this Note is not paid when due, the
Borrower promises to pay all costs of collection, including reasonable attorney
fees, whether or not a lawsuit is commenced as part of the collection process.
If any of the following events of default occur, this Note and any
other obligations of the Borrower to the Lender, shall become due immediately,
without demand or notice:
1) the failure of the Borrower to pay the principal and any
accrued interest in full on or before the Due Date;
2) the filing of bankruptcy proceedings involving the Borrower as
a debtor;
3) the application for the appointment of a receiver for the
Borrower;
4) the making of a general assignment for the benefit of the
Borrower's creditors; or
5) the insolvency of the Borrower.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principal and interest on this Note shall be paid in
the legal currency of the United States. The Borrower waives presentment for
payment, protest, and notice of protest and nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of
the Lender under this Note, or assignment by Lender of this Note shall affect
the liability or the obligations of the Borrower. All rights of the Lender under
this Note are cumulative and may be exercised concurrently or consecutively at
the Lender's option.
This Note shall be construed in accordance with the laws of the State
of Massachusetts.
Signed this __th day of December, 2003,
Borrower:
CityFed Financial Corp.
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
By:
----------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President
EXHIBIT B
FORM OF MUTUAL RELEASE AGREEMENT
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MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement is entered into as of this __th day of
December 2003 by and between CityFed Financial Corp. ("CFF") and ___________
("Claimant").
CFF and Claimant state as follows:
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, CFF and Claimant, each of them, for themselves,
and for their heirs, executors, administrator, successors in interest, and
assigns, hereby fully, generally, and unconditionally and forever settle,
compromise, release, acquit, and discharge each other from any and all claims,
suits, controversies, accounts, covenants, promises, judgments, damages,
obligations, contracts, agreements, costs and actions of any kind or character,
at law or in equity, whether or not well founded in law or fact, suspected or
unsuspected, direct or indirect, which relate to, arise out of, or are in any
way connected to the operation or business of CFF, City Federal Savings Bank, or
any of their subsidiaries or affiliates, to the extent such exist or have
accrued, up to and including the date of this Mutual Release Agreement as
recited above.
This Agreement may be executed in two counterparts, which may be
transmitted by facsimile and shall have the same force and effect as the
originally signed document and which together shall constitute one and the same
instrument, and either party hereto may execute this Agreement by signing such
counterpart.
CityFed Financial Corp. Claimant
By:__________________________ _____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its: President
Date: _______________________ Date:________________________
EXHIBIT C
Note Amount and Number of Shares
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Note amount and Common and Series C Preferred shares to be issued to
each Claimant:
Note Common Preferred
Shares C
Total
Settlement
Amount $4,750,000.00 10,000,000 1,200,000
Claim
Amounts
$5,164,366.81 ▇▇▇▇▇▇▇ $4,329,000.00 9,110,000 400,000
$485,789.03 ▇▇▇▇ $407,000.00 860,000 400,000
$17,023.00 ▇▇▇▇▇▇▇▇ $14,000.00 30,000 400,000
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$5,667,178.84 Total $4,750,000.00 10,000,000 1,200,000