EXHIBIT 4.1
LIFE SAVINGS BANK, FEDERAL SAVINGS BANK
(the "Company")
13 1/2% SUBORDINATED DEBENTURES DUE March 15, 2004
DEBENTURE PURCHASE AGREEMENT
Dated as of March 12, 1997
TABLE OF CONTENTS
(Not Part of Agreement)
Page
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1. AUTHORIZATION OF ISSUE OF DEBENTURES............ 1
2. PURCHASE AND SALE OF DEBENTURES................. 1
3. CONDITIONS OF CLOSING........................... 1
4. PREPAYMENTS..................................... 2
5. COVENANTS....................................... 2
6. EVENTS OF DEFAULT............................... 5
7. REPRESENTATIONS, COVENANTS AND WARRANTIES....... 7
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 9
9. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES. 10
10. DEFINITIONS..................................... 11
11. MISCELLANEOUS................................... 14
PURCHASER SCHEDULE
EXHIBIT A -- FORM OF DEBENTURE
TO THE PURCHASERS SET
FORTH IN SCHEDULE HERETO
Gentlemen:
The undersigned, Life Savings Bank, Federal Savings Bank (herein called the
"Bank"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF DEBENTURES. The Bank will authorize the
issue of its Subordinated Debentures (herein called the "Debentures") to be
issued in global form, in the aggregate principal amount of $10,000,000, to be
dated the date of issue thereof, to mature March 15, 2004, to bear interest on
the unpaid balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of 13 1/2% per annum, which
interest shall be payable semi-annually, and to be substantially in the form of
Exhibit A attached hereto (the "Global Debenture"). The term "Debentures" as
used herein shall include the Global Debenture delivered pursuant to any
provision of this Agreement each Debenture delivered in substitution or exchange
for any such Debenture pursuant to any such provision and, to the extent the
context hereof requires, each Beneficial Interest in a Global Debenture held by
a Beneficial Holder thereof.
2. PURCHASE AND SALE OF DEBENTURES. Subject to the terms and conditions
herein set forth, the Bank hereby agrees to sell to you and you agree to
purchase from the Bank the aggregate principal amount of Debentures set forth
opposite your name in the Purchaser Schedule attached hereto at 100% of such
aggregate principal amount. Each purchaser identified in the Purchaser Schedule
is referred to herein as a "Purchaser".
Payment of the purchase price for and delivery of the Debentures to be
purchased by the Purchasers shall be made at the offices of Friedman, Billings,
▇▇▇▇▇▇ & Co., Inc., Arlington, Virginia or at the option of the Bank through the
systems of the Depository Trust Company or any successor entity (the
"Depository"), with delivery of the Debentures to the Depository for the
respective accounts of the Purchasers to be made against payment for the
Debentures in same day funds, or in such other manner as shall be agreed upon by
the Purchasers and the Bank, at 10:00 A.M. on March 14, 1997 (such time and date
being referred to herein, respectively, as the "Closing Time" and the "Closing
Date").
3. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the
Debentures to be purchased by you hereunder is subject to the satisfaction, on
or before the Closing Date, of the following conditions:
3A. Opinion of Company's Counsel. You shall have received from ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the Bank, a favorable opinion reasonably
satisfactory to you and substantially in the form of Exhibit B attached hereto.
3B. Representations and Warranties; No Default. The representations and
warranties contained in Section 7 shall be true on and as of the Closing Date,
except to the extent of changes caused by the transactions herein contemplated;
there shall exist on the Closing Date no Event of Default or Default; and the
Bank shall have delivered to you an Officer's Certificate, dated the Closing
Date, as to both such effects.
3C. Proceedings. All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in substance and
form to you, and you shall have received all such counterpart originals or
certified or other copies of such documents as you may reasonably request.
4. PREPAYMENTS.
4A. Company Prepayments. Except for prepayments made pursuant to Sections
4B, 5J and 6A hereof, for a period of 18 months following the Closing Date the
Bank shall not, and shall not permit any of its Subsidiaries or Affiliates to,
prepay or otherwise retire in whole or in part prior to their stated final
maturity (other than upon acceleration of such final maturity pursuant to
paragraph 6A), any Debentures held by any Holder; provided, that, nothing herein
shall be deemed to limit the ability of the Bank, any Subsidiary or Affiliate to
repurchase Debentures at any time on such terms as the Bank, any Subsidiary or
Affiliate, as the case may be, and the Holder or Holders of Debentures may
agree. Notwithstanding the foregoing sentence, in the event that the Bank is
not then in compliance with any of the covenants contained in Sections 5(A),
(B), (C) or (G), the Bank shall not, and shall not permit any of its
Subsidiaries or Affiliates to, purchase any Debenture other than through a pro-
rata offer to purchase such aggregate principal amount of Debentures which has
been made to all Holders of Debentures. Voluntary prepayments by the Bank after
the initial 18 month period may be made in accordance with the procedure
described in the Debenture.
4B. Purchase Option. This paragraph 4B shall apply only if, pursuant to
paragraph 11D of this Purchase Agreement, the Company is substituted for the
Bank as a party to this Purchase Agreement and as obligor on the Debentures.
Any Holder may require the Company to prepay the Debenture early by giving
notice to the Company not more than 30 days before September 15, 1998 or if the
substitution of the Company for the Bank has not occurred by that date, not more
than 30 days after such substitution. If such notice is given, the Company
shall prepay the principal of the Debenture with respect to which such notice is
given within 90 days of September 15, 1998 or the date of the notice if it is
given after that date along with interest as provided in paragraph 1 of this
Purchase Agreement for the period prior to the prepayment date, provided that no
premium will be payable.
5. COVENANTS.
5A. Limitation on Funded Indebtedness and Indebtedness. The Bank will
not, and will not cause or permit any Subsidiary to create, assume, guarantee,
incur or in any manner become, directly or indirectly liable in respect of any
indebtedness unless, after giving effect thereto, Indebtedness shall not exceed
200% of consolidated net tangible equity capital.
5B. Consolidated Tangible Equity Capital. The Bank will not at any time
permit Consolidated Tangible Equity to be less than $9 million plus the
cumulative amount equal to fifty percent (50%) of the consolidated net income
(but not loss) for each fiscal quarter commencing March 31, 1997 plus the net
proceeds of the Offerings.
5C. Restrictions as to Dividends and Certain Other Payments. So long as
the Debentures are outstanding, the Bank will not, and will not permit any
Subsidiary to, declare or pay any dividend or make any other distribution on its
capital stock (other than on account of capital stock of a Subsidiary owned
legally and beneficially by the Bank or a Subsidiary) or to its respective
stockholders (other than dividends or distributions payable in its capital
stock) or purchase, redeem or otherwise acquire for value (except pursuant to a
bona fide pledge or employee benefit plan) any of its capital stock (other than
on account of capital stock of a Subsidiary owned legally and beneficially by
the Bank or a Subsidiary) (each, a "Restricted Payment") unless: (i)
immediately before, and after giving effect to such Restricted Payment, the
obligation under paragraph 5B would be met; (ii) at the time of and immediately
before, such declaration is made and after giving effect to, such Restricted
Payment, no Default or Event of Default exists or would exist as a result of
such Restricted Payment; and (iii) no Default or Event of Default shall have
occurred within 365 days of the declaration of such Restricted Payment.
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5D. Merger, Consolidation or Sale of Assets; Successor Corporations. The
Bank will not merge or consolidate with, or sell all or substantially all of its
assets to, any person, firm or corporation unless it is the successor
corporation in such transaction and, immediately thereafter, it is not in
default under this Agreement or, if it is not the successor corporation, the
successor corporation expressly assumes the Bank's obligations under this
Agreement and immediately after such transaction, it is not in default under
this Agreement. Any successor corporation shall succeed to and be substituted
for the Bank as if such successor corporation had been named as the Bank in this
Agreement.
5E. Modification of the Debentures or this Agreement. With the consent of
the Beneficial Holders of not less than 51% in principal amount of the
Debentures, any term, covenant, agreement, or condition of the Debentures or
this Agreement may be amended or compliance therewith may be waived, provided
that no amendment or waiver shall, without the consent of the Beneficial Holders
of all the Debentures affected thereby: (i) change the principal amount of any
Debenture or the maturity of the principal of any Debenture or (ii) reduce the
rate or extend the time of payment of interest on any Debenture or (iii) reduce
the percentage of Holders of Debentures required to consent to any such
amendment or waiver.
5F. Line of Business. So long as the Debentures are outstanding, the Bank
will remain principally engaged in the financial services business.
5G. Capital Adequacy. The Bank shall be classified as "well capitalized"
or "adequately capitalized" as defined in 12 C.F.R. Sec. 565.4 (or its
equivalent as such regulation may be amended from time to time).
5H. FDIC Membership. The Bank shall not at any time fail to have its
deposits insured by the FDIC.
5I. Limitation on Incurrence of Indebtedness by Subsidiaries. Any
Indebtedness incurred by any Subsidiary subsequent to the issuance of the
Debentures shall not include any covenant which would restrict the payment of
dividends to the Bank.
5J. Change of Control. This paragraph 5J shall apply only if, pursuant to
paragraph 11D of this Purchase Agreement, the Company is substituted for the
Bank as a party to this Purchase Agreement and as obligor on the Debentures.
(i) The Company shall maintain liquid assets in an amount equal to
interest on the aggregate outstanding Debentures for one year.
(ii) Notwithstanding anything in Section 4 of the contrary, the
Company shall, within 45 days following the date of the consummation
of a transaction resulting in a Change of control, notify the Holders
in writing of such Change of Control. To the extent that the
Debentures are in the form of a Global Debenture held by the
Depository for the benefit of the respective accounts of the
Beneficial Holders, in accordance with the procedures of the
Depository at that time, such notice shall contain all necessary
provisions to provide for the Beneficial Holders to receive
notification of such Change in Control through the Depository. Upon
receipt of such notification, each Beneficial Holder shall have the
option, through and in accordance with the procedures of the
Depository, to notify the Company that such Beneficial Holder requires
that the Company purchase all or a portion of such Beneficial Holder's
Beneficial Interest in the Global Debenture at a price equal to 101%
of the principal amount of such Beneficial Interest plus accrued
interest to the purchase date. The Company will purchase the
Beneficial Interests in the Debentures on a date specified in the
notification of Change of Control, which date will not be later than
60 days after the consummation of the transaction resulting in a
Change of Control.
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A "Change of Control" will be deemed to have occurred in the event that,
after the date of this Agreement, either (a) any person (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor provision thereto) directly or indirectly,
shall beneficially own (as defined in Rule 13d-3 under the Exchange Act, or any
successor provision thereto) at least 50% of the aggregate voting power of all
classes of capital stock of the Company entitled to vote generally in the
election of directors or (b) any Person, directly or indirectly, shall succeed
in having a sufficient number of its nominees elected to the Board of Directors
of the Company such that such nominees, when added to any existing director
remaining on the Board of Directors of the Company after such election who is an
affiliate or related person of such Group, will constitute a majority of the
Board of Directors of the Company; provided however that, for purposes of this
Section 5J, in the case of (a) a Change in Control shall not be deemed to have
occurred, if at the time the Person becomes the beneficial owner of such
aggregate voting power, the Person has outstanding securities which have
received a rating from a nationally recognized statistical rating organization
(as that term is defined in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act)
which rating is in one of such rating organization's generic rating categories
which signifies "investment grade".
5K. Financial and Business Information.
The Bank for periods for which it or a parent holding company makes
periodic filings with the OTS or the Securities and Exchange Commission, in
accordance with procedures of the Depository, shall deliver or cause to be
delivered to each Beneficial Holder of the Debentures:
(i) as soon as practicable after the end of each quarterly fiscal
period in each fiscal year of the Bank (other than the last quarterly
fiscal period of each such fiscal year), and in any event within 45
days thereafter: (a) a consolidated statement of financial condition
of the Bank and its consolidated subsidiaries, as at the end of such
quarter, and (b) consolidated statements of operations, cash flows and
shareholders' equity of the Bank and its consolidated subsidiaries,
for such quarter and (in the case of the second and third quarters)
for the portion of the fiscal year ending with such quarter, setting
forth in each case, in comparative form, the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with generally accepted accounting
principles, but in such detail as is customarily applied to quarterly
financial statements, and certified as complete and correct, subject
to changes resulting from year-end adjustments, by a Senior Financial
Officer, and accompanied by the certificate required by Section 5M;
provided, that delivery of copies of the Bank's Quarterly Report on
Form 10-Q filed with the Securities and Exchange Commission (and any
successor agency) (the "Commission") within the time period specified
above shall be deemed to satisfy the requirements of this Section
5K(i) so long as such quarterly report contains or is accompanied by
the information and certificates specified in this Section 5K(i).
(ii) as soon as practicable after the end of each fiscal year of the
Bank, and in any event within 90 days thereafter (a) consolidated
statements of financial condition of the Bank and its consolidated
subsidiaries, as at the end of such year, and (b) consolidated and
consolidating statements of operations, cash flows and shareholders'
equity of the Bank and its consolidated subsidiaries, for such year,
setting forth in the case of each consolidated financial statement, in
comparative form, the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with generally accepted
accounting principles; and
(iii) promptly upon their becoming available, (a) each financial
statement, report, notice or proxy statement sent by the Bank or any
Subsidiary to stockholders generally, (b) each regular or periodic
report (including, without limitation, each Form 10-K, Form 10-Q and
Form 8-K), any registration statement which shall have become
effective, and each final prospectus and all amendments thereto filed
by the Bank or any Subsidiary with the Commission, and (c) each
regular
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or periodic report (including, without limitation, each call report)
filed by the Bank or any Subsidiary with the FDIC, or the OTS (and any
similar agency or successor agency).
5L. Officer's Certificates. Each set of financial statements delivered to
each Beneficial Holder of the Debentures pursuant to Section 5K(i) or Section
5K(ii) shall be accompanied by a certificate of a Senior Financial Officer,
setting forth:
(i) the information (including detailed calculations) required in
order to establish whether the Bank was in compliance with the
requirements of Section 5A through Section 5C, inclusive, as of the
end of the period covered by the financial statements then being
furnished (including with respect to each such section, where
applicable, the calculations of the maximum or minimum amount, ratio
or percentage, as the case may be, permissible under the terms of such
sections, and the calculation of the amount, ratio or percentage then
in existence); and
(ii) a statement that the signer has reviewed the relevant terms
hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Bank
and its consolidated subsidiaries from the beginning of the accounting
period covered by the income statements being delivered therewith to
the date of the certificate and that such review has not disclosed the
existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such condition
or event existed or exists, specifying the nature and period of
existence thereof and what action the Bank has taken or proposes to
take with respect thereto.
6. EVENTS OF DEFAULT.
6A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) default in the payment of the principal of or premium, if any,
on any Debenture when the same becomes due and payable at maturity,
upon redemption or otherwise;
(ii) default in the payment of interest on the Debentures when the
same becomes due and payable and the continuance of such default for a
period of 30 days;
(iii) failure to comply with any agreement or covenant of the Bank
in, or provisions of, the Debentures or this Agreement and the
continuance of such default for a period of 30 days after the date the
Bank has knowledge thereof;
(iv) an event of default occurs under any mortgage, bond, indenture,
loan agreement or other evidence of indebtedness under which there may
be issued or by which there may be secured or evidenced any
Indebtedness (other than non-recourse Indebtedness) for money borrowed
by the Bank or any Subsidiary thereof (or the payment of which is
guaranteed by the company or any Subsidiary), whether such
Indebtedness or guarantee now exists or shall be created hereafter;
provided, however, that no such event of default shall constitute an
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Event of Default unless the effect of such Event of Default is to
cause the acceleration of such Indebtedness prior to its stated
maturity, which, together with the principal amount of any other such
Indebtedness so caused to be accelerated, aggregates $2 million or
more at any time;
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(v) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the
Bank or any Subsidiary thereof which remains or remain undischarged
for a period of 60 days, provided that the aggregate of all such
judgments is $2 million or more at any time;
(vi) any representation or warranty made by the Bank in this
Agreement, or made by the Bank in any written statement or certificate
furnished by the Bank in connection with the issuance and sale of the
Debentures or furnished by the Bank pursuant to this Agreement proves
false in any material respect as of the date of the issuance or making
thereof and, if susceptible of cure, is not cured within 60 days of
notice thereof;
(vii) the entry of a decree or order by a court having jurisdiction
in the premises adjudging the Bank bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Bank under the
Federal Bankruptcy Code or any other applicable Federal or State law,
or appointing a receiver, liquidator, assignee, trustee, sequestrator
(or other similar officials) of the Bank or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days or the appointment of
the FDIC or the OTS or any successor agency thereto as conservator or
receiver for the Bank and the continuance of such conservatorship or
receivership unstayed and in effect for a period of 30 consecutive
days; or
(viii) the Bank or any material Subsidiary thereof shall institute
proceedings to be adjudicated insolvent, or shall consent to the
filing of an insolvency proceeding against it, or shall file a
petition or answer or consent seeking reorganization, readjustment,
arrangement, composition, appointment of a receiver or similar relief
under the federal insolvency laws, or any other similar applicable law
of any governmental unit, domestic or foreign, or shall consent to the
appointment of a receiver, conservator, liquidator, trustee or
assignee in insolvency of it or of a substantial part of its property,
or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due, or if the Bank shall voluntarily suspend transaction of
its business, or if corporate action shall be taken by the Bank or any
Subsidiary thereof in furtherance of any of the aforesaid purposes;
then in the cases of clauses (i), (ii), (iv), (v), (vi), (vii) and (viii) above,
unless the principal of the Debentures shall have already become due and
payable, Beneficial Holders of no less than 51% in aggregate principal amount of
the Debentures then outstanding may declare the principal of the Debentures to
be immediately due and payable, anything in this Agreement or in the Debentures
to the contrary notwithstanding, except the limitations applicable with respect
to the FDIC as receiver described in the Debentures. In the case of clause
(iii) above, unless the principal of the Debentures shall have already become
due and payable, Beneficial holders of no less than 51% in aggregate principal
amount of the Debentures then outstanding may declare the principal of the
Debentures to be due and payable, along with all accumulated interest, 10 days
after the Bank has been in default under clause (iii) above. Overdue principal
and overdue interest in respect of the Debentures shall bear interest at a rate
of 13 1/2% per annum, subject to applicable law. A Holder, by written notice to
the Bank, may waive all defaults and rescind such acceleration and its
consequences as to the Debentures held by such Debenture Holder; but no such
waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent upon any subsequent
default.
The Bank shall deliver to the Holders, within 15 days after it becomes
aware of the occurrence thereof, written notice of any event which with the
giving of notice or the lapse of time or both would become an Event of Default
under (iv) or (v) above, its status and what action the Bank is taking or
proposes to take with respect thereto.
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In the event Holders shall have proceeded to enforce any right under this
Agreement and such proceeding shall have been discontinued or abandoned or shall
have been determined adversely to the Holders, then in every such case the Bank
and the Holders shall be restored, respectively, to their former positions under
the Debentures and this Agreement, and all other rights, remedies and powers of
the Bank and the Holders, respectively, under the Debentures and this Agreement
shall continue as though no such proceedings had been undertaken.
6B. Other Remedies. If any Event of Default or Default shall occur and be
continuing, a Holder of any Debenture may proceed to protect and enforce its
rights under this Agreement and such Debenture by exercising such remedies as
are available to such Holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance of
any covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the Holder of any Debenture is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
7. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Bank represents,
covenants and warrants:
7A. Organization. The Bank has been duly organized and is validly
existing as a federal savings bank under the laws of the United States, each
material Subsidiary is duly organized and existing in good standing under the
laws of the jurisdiction in which it is incorporated, and the Bank and each
material Subsidiary has the corporate power to own its respective property and
to carry on its respective business as now being conducted.
7B. Financial Statements. The audited consolidated financial statements
of the Bank and its subsidiaries and other financial information included in the
Private Placement Memorandum, dated March 12, 1997 (the "Private Placement
Memorandum") present fairly the consolidated financial position of the Bank and
its Subsidiaries as of and at the dates indicated and the consolidated results
of their operations for the periods specified therein and said consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent in all material respects
during the periods involved and the independent certified public accountants who
certified the audited financial statements included in the Private Placement
Memorandum are independent public accountants as required by the Securities Act
and the rules and regulations thereunder.
7C. Material Adverse Change. At the Closing Time, there shall not have
been, since the latest date as of which financial or statistical information is
presented in the Private Placement Memorandum, any change in the business
operations, profits, financial condition or Properties of the Bank or its
Subsidiaries except changes that in the aggregate, would not be reasonably
likely to have a Material Adverse Effect.
7D. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Bank, threatened against the Bank
or any of its Subsidiaries, or any properties or rights of the Bank or any of
its Subsidiaries, by or before any court, arbitrator or administrative or
governmental body which has not been previously disclosed to the Purchasers and
which would be reasonably likely to have a Material Adverse Effect.
7E. Outstanding Debt. Neither the Bank nor any of its Subsidiaries has
outstanding any debt with a term in excess of one year except as disclosed in
the Private Placement Memorandum. There exists no default under the provisions
of any instrument evidencing such debt or of any agreement relating thereto.
7F. Title to Properties. The Bank has and each of its Subsidiaries has
good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, subject to no Lien of any kind, except for Liens for
taxes not yet due and payable and any other Liens, encumbrances or defects in
title which are not material to the Bank and its Subsidiaries, taken as a whole.
All leases necessary in any material respect for the conduct of the respective
businesses of the Bank and its Subsidiaries are valid and subsisting and are in
full force and effect.
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7G. Taxes. The Bank has and each of its Subsidiaries has filed all
Federal, State and other income tax returns which, to the best knowledge of the
officers of the Bank, are required to be filed, and each has paid all taxes as
shown on such returns and on all assessments received but it to the extent that
such taxes have become due, except such taxes as are being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles.
7H. Environmental Compliance.
(i) After reasonable inquiry, to the best of the Bank's knowledge,
neither the Bank nor any Subsidiary is in violation of any applicable
Environmental Protection Law except for such violations that, in the
aggregate for all such violations, would not be reasonably likely to have a
Material Adverse Effect.
(ii) After reasonable inquiry, to the best of the Bank's knowledge,
neither the Bank nor any Subsidiary is subject to any liability under any
Environmental Protection Law that, in the aggregate for all such
liabilities, would be reasonably likely to have a Material Adverse Effect.
7I. Conflicting Agreements and Other Matters. Neither the Bank nor any of
its Subsidiaries is a party to any contract or agreement which materially and
adversely affects its business, property or assets, or financial condition.
Neither the execution nor delivery of this Agreement or the Debentures, nor the
offering, issuance and sale of the Debentures, nor fulfillment of nor compliance
with the terms and provisions hereof and of the Debentures will conflict with,
or result in a material breach of the terms, conditions or provisions of the
charter or by-laws of the Bank or any of its Subsidiaries, or constitute a
material default under, or result in any material violation of, or result in the
creation of any material Lien upon, any of the material properties or assets of
the Bank or any of its Subsidiaries pursuant to any award of any arbitrator or
any agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the Bank or any of
its Subsidiaries is subject. Neither the Bank nor any of its Subsidiaries is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing indebtedness of the Bank or such Subsidiary, any agreement relating
thereto or any other contract or agreement (including its charter) which limits
the amount of, or otherwise imposes restrictions on the incurring of, debt of
the Bank of the type to be evidenced by the Debentures.
7J. Offering of Debentures. Neither the Bank nor, to the Bank's
knowledge, any agent acting on its behalf, has taken or will take any action
which would subject the issuance or sale of the Debentures to the provisions of
section 5 of the Securities Act, or to the provisions of any securities or blue
sky law of any applicable jurisdiction.
7K. Governmental Consent. Neither the nature of the Bank or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Bank or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Debentures is such as to require any authorization, consent, approval, exemption
or other action by or notice to or filing with any court or administrative or
governmental body which have not already been obtained as of the date of this
Agreement (other than routine filings after the date of closing with the
Securities and Exchange Commission and/or any state securities commissions) in
connection with the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Debentures or fulfillment of or compliance
with the terms and provisions hereof or of the Debentures.
7L. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to you by the Bank or on behalf of the Bank
with the Bank's approval in connection herewith contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
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7M. Debentures Not Listed or Quoted. The Debentures will not be, at the
Closing Time, of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a U.S.
automated interdealer quotation system.
7N. No General Solicitation. None of the Bank, its affiliates (as defined
in Rule 501(b) under the Securities Act) or any person (other than the
Purchasers, as to whom the Bank makes no representation) acting on its behalf
has engaged, in connection with the offering of the Debentures, in any form of
general solicitation or general advertising within the meaning of Rule 502(c)
under the 1933 Act.
7O. No Sales or Offers of Similar Securities. The Bank has not, directly
or indirectly, sold or offered to sell the Debentures or any securities having
terms substantially similar to the Debentures in any one or more public or
private offerings during the last twelve months or otherwise approached or
negotiated with any potential purchaser for the purchase of any such securities
during such twelve-month period.
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
8A. Each Purchaser hereby represents and warrants to, and agrees with, the
Bank that it (i) is a "qualified institutional buyer" within the meaning of Rule
144A under the Securities Act and or an "accredited investor" within the meaning
of Regulation D under the Securities Act; (ii) has not and will not solicit
offers for, or offer or sell, Debentures by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under Regulation D under
the Securities Act; (iii) will otherwise act in accordance with the terms and
conditions set forth in this Agreement, including Section 9 hereof, in
connection with the placement of the Debentures contemplated hereby; (iv) has
received and read the Bank's Private Placement Memorandum dated March 12, 1997
(the "Memorandum"); (v) has had the opportunity to ask questions and receive
answers concerning the Bank, the terms and conditions of the offering
contemplated by the Memorandum, this Agreement, the Debentures, and the terms
and conditions thereof and to obtain any additional information which the Bank
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of the information contained in the Memorandum
or to evaluate the business and financial risk of investing in the Debentures;
(vi) relied only on, in purchasing the Debentures, information delivered or made
available by the Bank, Friedman, Billings, ▇▇▇▇▇▇ and Co., Inc. and its
Affiliates; (vii) is acquiring the Debentures for its own account or an account
with respect to which it exercises sole investment discretion and that it or
such account has assets of at least $20 million and is an "Accredited Investor"
as defined in Regulation D under the Securities Act or "qualified institutional
buyer", as defined in Rule 144A (a "QIB"), acquiring the Debentures for
investment purposes and not with a view to offer for sale in connection with any
distribution of the Debentures; (viii) understands and agrees that such
Debentures are being offered only in a transaction not involving any public
offering and will constitute "restricted securities" within the meaning of the
Securities Act and the rules thereunder, and that: (A) such Debentures may be
resold, pledged or transferred only (1) to the Bank, (2) so long as such
Debentures are eligible for resale pursuant to rule 144A, to a person whom the
seller reasonably believes is a QIB that purchases for its own account or for
the account of a QIB to whom notice is given that the resale, pledge or other
transfer is being made in reliance on Rule 144A, (3) to a person whom the seller
reasonably believes is a QIB that purchases for its own account or for the
account of a QIB pursuant to another available exemption from the registration
requirements under the Securities Act, or (4) to a person whom the seller
reasonably believes is a QIB that purchases for its own account or for the
account of a QIB pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States; (B) the purchaser will, and each subsequent
holder is required to, notify any purchaser of Debentures from such holder of
the resale restrictions referred to in (A) above if then applicable; (C) with
respect to any transfer of Debentures pursuant to clause A above, the Bank will
require written confirmation from the transferee (or a U.S. registered
broker/dealer on the transferee's behalf) that the transfer is being made in
compliance with the applicable restrictions on transfer and the requirements of
the exemption from registration relied upon by the transferor (which exemption
shall be specified in the confirmation), together with, in the case of a
transfer under clause (3) above, such certificates, legal opinions, or other
information as the Bank may reasonably require to confirm that such transfer is
being made pursuant to an
9
exemption from or in a transaction not subject to, the registration requirements
of the Securities Act; and (ix) understands that the notification requirements
referred to in (viii) above will be satisfied (except with respect to sales to
QIBs holding through DTC) by virtue of the fact that the legends on the Form of
Debenture attached hereto as Exhibit A will be placed on the Debentures unless
otherwise agreed by the Bank.
9. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES.
Each of the Purchasers and the Bank hereby establish and agree to observe
the following procedures in connection with the offer and sale by the Purchasers
of the Debentures.
9A. Offers and Sales Only to Qualified Institutional Buyers. Offers and
sales of the Debentures will be made by the Purchasers only (i) to the Bank,
(ii) so long as such Debentures are eligible for resale pursuant to Rule 144A,
to a person whom the seller reasonably believes is a QIB that purchases for its
own account or for the account of a QIB to whom notice is given that the resale,
pledge or other transfer is being made in reliance on Rule 144A, (iii) to a
person whom the seller reasonably believes is a QIB that purchases for its own
account or for the account of a QIB pursuant to another available exemption from
the registration requirements under the Securities Act, or (iv) to a person whom
the seller reasonably believes is a QIB that purchases for its own account or
for the account of a QIB pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
9B. No General Solicitation. If a Purchaser elects to resell any
Debentures, such Debentures will be offered by the Purchaser only by approaching
prospective purchasers on an individual basis. No general solicitation or
general advertising (as such terms are used in Regulation D under the Securities
Act) will be used in connection with offering any of the Debentures for resale.
9C. Purchasers by Non-Bank Fiduciaries. In the case of a non-bank
purchaser of a Debenture acting as a fiduciary for one or more third parties, in
connection with an offer and sale to such purchaser pursuant to Section 9A, each
third party shall, in the judgment of the applicable Purchaser, be a QIB.
9D. Minimum Principal Amount. No sale of the Debentures to any one
purchaser will be for less than U.S. $100,000 principal amount and no Debenture
will be issued in a smaller principal amount. If the purchaser is a non-bank
fiduciary acting on behalf of others, each person for whom it is acting must
purchase at least U.S. $100,000 principal amount of the Debentures.
9E. Restrictions on Transfer. The transfer restrictions and the other
provisions set forth in the Debentures shall apply to the Debentures except as
otherwise agreed by the Bank and the Purchasers. Following the sale of the
Debentures by the Purchasers to subsequent purchasers pursuant to the terms
hereof, no Purchaser shall be liable or responsible to the Bank for any losses,
damages or liabilities suffered or incurred by the Bank, including any losses,
damages or liabilities under the Securities Act, arising from or relating to any
resale or transfer of any Debenture by such subsequent purchaser. So long as
the Debentures qualify for inclusion in the depository system operated by the
Depository, the Debentures will be in global form held by the Depository as
securities custodian. Accordingly, transfers of Beneficial Interests in the
Debentures will be made in accordance with the procedures for such transfers
specified by the Depository. The Global Debenture may not be transferred except
(i) by the Depository to a nominee of the Depository;
(ii) by a nominee of the Depository to the Depository or another nominee
of the Depository; or
(iii) by the Depository or any such nominee to a successor Depository or
nominee of a successor Depository.
9F. Company to Provide Certain Information. The Bank will make
available, upon request, to any seller of the Debentures the information
specified in Rule 144A(d)(1) under the Securities Act.
10
10. DEFINITIONS. For the purpose of this Agreement the following terms
shall have the meanings specified with respect thereto below:
"Affiliate" means any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, the Bank, (ii) which beneficially owns or holds 5% or more of any
class of the voting stock of the Bank or (iii) which beneficially owns or holds
5% or more of the voting stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of the Bank or a Subsidiary
thereof. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Beneficial Holder" shall mean, from time to time, any Person which
holds at such time a Beneficial Interest, provided that if such Person is a
participant or member of the Depository who is acting as agent for another
Person, then that other Person shall be the "Beneficial Holder" for purposes
hereof.
"Beneficial Interest" shall mean, from time to time, a beneficial
ownership interest in the Global Debenture, as reflected by the Securities
Position List of the Depository for the Global Debenture for such time.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which commercial banks in California are required by law (other than a general
banking moratorium or holiday for a period exceeding four consecutive days) to
be closed.
"Capitalized Lease" shall mean any rental obligation which, under
generally accepted accounting principles, is or will be required to be
capitalized on the books of the Bank or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"Company" shall mean Life Financial Corp., a company organized to be
the Bank's parent holding company.
"Consolidated Net Worth" shall mean Stockholders' Equity plus General
Valuation Allowance for Loan Losses.
"Consolidated Tangible Equity Capital" shall mean Consolidated Net
Worth minus Goodwill.
"Environmental Protection Law" shall mean any law, statute or
regulation enacted by any jurisdiction in connection with or relating to the
protection or regulation of the environment, including, without limitation,
those laws, statutes and regulations regulating the disposal, removal,
production, storing, refining, handling, transferring, processing or
transporting of hazardous or toxic substances, and any orders, decrees or
judgments issued by any court of competent jurisdiction in connection with any
of the foregoing.
"Event of Default" shall mean any of the events specified in Section
6A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"FDIC" shall mean the Federal Deposit Insurance Corporation and any
Person succeeding to the functions thereof.
"Funded Indebtedness" shall mean all indebtedness that matures more
than one year from the date of creation thereof, or that is extendible or
renewable at the option of any party thereto to a date more than one year from
the date of creation thereof (whether or not renewed or extended).
"Goodwill" shall mean unidentified intangibles which have been created
in connection with an acquisition transaction.
11
"Holder" shall mean, at any time, the registered holder of a
Debenture.
"Indebtedness" shall mean all indebtedness, liabilities and other
obligations, direct or contingent (other than deferred income taxes and other
credits, outside minority interests and items of Stockholders' Equity) which
would, in accordance with generally accepted accounting principles, be
classified upon the consolidated balance sheet of the Bank as liabilities, but
in any event including without limitation:
(1) all guarantees, other than guarantees on secured indebtedness;
(2) all indebtedness, liabilities and other obligations arising under
any conditional sale or other title retention agreement, whether or
not the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale
of such property; provided, however, that the terms "Funded
-------- -------
Indebtedness" and "Indebtedness" shall not include any obligation of
the Bank or of any Subsidiary incurred in the ordinary course of its
business, with respect to:
(a) any deposits with it or funds collected by it;
(b) any banker's acceptance or letter of credit issued by it;
(c) any check, note, certificate of deposit, money order,
traveler's check, draft or ▇▇▇▇ of exchange issued, accepted or
endorsed by it;
(d) any discount with, borrowing from, or other obligation to any
Federal Reserve Bank, the FDIC or any Federal Home Loan Bank (or
successor organization) which discount or borrowing is in the
ordinary course of its banking business and not incurred in
connection with any unusual or extraordinary "rescue loan" by
such Federal Reserve Bank, the FDIC or the Federal Home Loan Bank
(or successor organization) to the Bank in connection with a
business to be acquired by the Bank or any Subsidiary;
(e) any agreement, made by it in the ordinary course of its
banking business, to purchase or repurchase securities, loans or
federal funds, or to participate in any such purchase or
repurchase;
(f) any transaction made by it in the ordinary course of its
banking business in the nature of any extension of credit,
whether in the form of a commitment, guarantee or otherwise,
undertaken by it for the account of a third party with the
application by it of the same banking considerations and legal
lending limits that would be applicable if the transaction were a
loan to such party;
(g) any transaction in which it acts solely in a fiduciary or
agency capacity;
(h) other obligations incurred by it in the ordinary course of
its banking, mortgage banking or trust business to its customers
solely in their capacities as such;
(i) any other liability or obligation of any Subsidiary incurred
in the ordinary course of its banking business not involving any
obligation for borrowed money;
(j) Capitalized Leases;
(k) any borrowing under mortgage warehousing lines of credit,
including, without limitation, commercial paper and medium term
note programs for the purpose of funding or carrying mortgage
loans;
12
(l) any borrowings under any revolving line of credit with a
maturity date of less than one year up to an aggregate amount at
any time outstanding equal to 30% of Consolidated Net Worth;
(m) drafts outstanding or official bank checks outstanding used
to fund mortgage loan volume;
(n) indebtedness ranking junior to the Debentures in right of
payment or on liquidation;
provided, however, that notwithstanding the foregoing,
-------- -------
Indebtedness shall not be deemed to include the guaranty by the
Bank of any secured Indebtedness of any Subsidiary which is
permitted to be incurred pursuant to subsection 2(d) of this
definition of Indebtedness.
"IRC" shall mean the Internal Revenue Code of 1986, together with all
rules and regulations promulgated pursuant thereto, as amended from time to
time.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property (for purposes
of this definition, the "Owner"), whether such interest is based on the common
law, statute or contract, and includes but is not limited to
(a) the security interest arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing
statement under the Uniform Commercial Code of any jurisdiction, or an
agreement to give any of the foregoing,
(b) reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting real property,
(c) stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements affecting the Owner's rights
in stock owned by the Owner, and
(d) any interest in any Property held by the Owner evidenced by a
conditional sale agreement, Capitalized Lease or other arrangement
pursuant to which title to such Property has been retained by or
vested in some other Person for security purposes.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business operations, profits, financial condition or Properties of the Bank
and the Subsidiaries, taken as a whole, (ii) the ability of the Bank to perform
its obligations set forth herein and in the Debentures, or (iii) the validity or
enforceability of this Agreement or the Debentures.
"Offerings" shall mean the exchange of each share of common stock of
the Bank for three shares of the Company's common stock and the offering and
selling to the public of 2,500,000 additional shares of common stock at a
proposed offering price of $7.00 to $9.00 per share.
"OTS" shall mean the federal Office of Thrift Supervision and any
Person succeeding to the functions thereof.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Private Placement Memorandum" shall mean the offering document
pursuant to which the Debentures are being offered.
13
"Properties" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Securities Position List" shall mean the securities position list of
the Depository listing the Persons that have a Beneficial Interest in the Global
Debenture and the amount of such Beneficial Interest.
"Senior Financial Officer" shall mean any one of the chief financial
officer and the principal accounting officer of the Bank.
"Stockholders' Equity", "General Valuation Allowance for Loan Losses",
"Consolidated Assets", "Net Income" and "Consolidated Net Loss" shall be defined
according to generally accepted accounting principles applicable to the Bank and
in effect on the date the Debentures are issued.
"Subsidiary" shall mean: any entity (i) that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia and (ii) of which at least 50% (by number of votes) of the voting stock
of such entity and all outstanding shares of preferred stock, all outstanding
securities convertible into or exchangeable for shares of capital stock and all
outstanding warrants, rights or options to purchase shares of capital stock of
such entity are owned directly by the Bank or by another Subsidiary.
11. MISCELLANEOUS
11A. Paying Agent. The Bank shall appoint a Person with an office or
agency located in the continental United States (the "Paying Agent") where
Debentures may be presented for payment. The Bank appoints, as of the Closing
Date, Chemical Trust Company of California, as Paying Agent, with an office at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and may thereafter
appoint successor Paying Agents or co-Paying Agents, from time to time, all of
which will for purposes hereof be deemed to be Paying Agents. The Bank shall
enter into appropriate written agreements with each Paying Agent (other than the
Bank) reflecting the relevant terms of the relationship with each Paying Agent.
All fees and expenses of the Paying Agent shall be paid by the Bank.
On or before 9:00 a.m. (local time of the Paying Agent) on each due date of
principal or interest on any Debenture and each due date, if any, of any other
amount payable in respect of the Debentures, the Bank shall deposit by federal
funds wire transfer in immediately available funds (or its equivalent) with the
Paying Agent, a sum sufficient to pay the amounts then due. The Bank shall
require each Paying Agent (other than the Bank) to agree in writing that the
Paying Agent will hold in trust for the ratable benefit of the Holders all
moneys held by the Paying Agent for the payment of principal or interest (and
any other amount that may be due) on the Debentures. So long as the Bank acts
as Paying Agent, it shall segregate and hold as a separate trust fund all
amounts held by it as Paying Agent. The Paying Agent shall promptly notify each
of the Holders of any failure by the Bank to deposit any moneys at the times and
dates, and in the amounts, required hereby.
11B. Debenture Payments.
(i) Manner of Payment. The Bank shall pay, or cause the Paying Agent to
pay, all amounts payable to the Purchasers in accordance with their instructions
or with respect to the Global Debenture in accordance with the instructions of
the Depository. In the absence of written directions, all amounts payable with
respect to any Debenture shall be paid by check mailed and addressed to the
Holder of the Debenture at the address shown in the records of Holders
maintained by the Bank or the Paying Agent, as the case may be.
(ii) Payments Due on Holidays. If any payment due on, or with respect to,
any Debenture shall fall due on a day other than a Business Day, then such
payment shall be made, in the same amount without adjustment, on the first
Business Day following the day on which such payment shall have so fallen due,
with the same force and effect as if made on the day the payment became due,
and, if so paid, no interest shall accrue for the period after such payment
date.
14
11C. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Bank in connection herewith shall survive the execution and
delivery of this Agreement and the Debentures, the transfer by you of any
Debenture or portion thereof or interest therein and the payment of any
Debenture, and may be relied upon by any subsequent purchaser, regardless of any
investigation made at any time by or on behalf of you or any subsequent
purchaser. Subject to the preceding sentence, this Agreement and the Debentures
embody the entire agreement and understanding between you and the Bank and
supersede all prior agreements and understandings relating to the subject matter
hereof.
11D. Exchange of Debentures for Debentures of Holding Company. At any time
prior to maturity of the Debentures as defined therein the Bank may substitute
in its place as obligor on the Debentures and as a party to this Purchase
Agreement a holding company ("Holding Company") that owns substantially all of
the issued and outstanding common stock of the Bank, as follows:
(i) No less than ten days prior to such substitution, the Bank shall
provide notice to you in accordance with Section 11F hereof that it
intends to substitute the Holding Company for the Bank and the date of
such substitution ("Substitution Date"). The notice shall (i) include
the name and address of the Holding Company, (ii) be executed by the
Chief Executive Officers of the Bank and the Holding Company, (iii)
affirm on behalf of the Holding Company the provisions of paragraph 7
of this Purchase Agreement and (iv) enclose an opinion of the Holding
Company's counsel with respect to the Holding Company substantially in
the Form of Exhibit B attached hereto.
(ii) On the Substitution Date without further action the Holding
Company shall become the issuer of the Debentures and a party to the
Purchase Agreement in place of the Bank. All obligations of and
references to the Bank in and with respect to the Debentures and this
Purchase Agreement shall become obligations of and references to the
Holding Company, provided that the last reference to Bank in paragraph
6A(vii) shall continue to be a reference to the Bank.
11E. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Beneficial Holder) whether so
expressed or not.
11F. Notices. All written communications provided for hereunder shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at such other
address as you shall have specified to the Bank in writing, (ii) if to any other
Holder of any Debenture, addressed to such other Holders at such address as such
other Holders shall have specified to the Bank in writing or, if any such other
Holders shall not have so specified an address to the Bank, then addressed to
such other Holder in care of the last Holder of such Debenture which shall have
so specified an address to the Bank, and (iii) if to the Bank, addressed to it
at Life Savings Bank, Federal Savings Bank, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. Perl, Chief Executive Officer or at such
other address as the Bank shall have specified to the Holder of each Debenture
in writing.
11G. Descriptive Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11H. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of Delaware.
11I. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
15
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Bank, whereupon this letter shall become a binding agreement between you and the
Bank.
Very truly yours,
By: /s/ ▇▇▇▇▇▇ ▇. Perl
------------------------------------------
Title: President and Chief Executive Officer
Accepted:
-----------------------------------
16
DEBENTURE
THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE DEBENTURE
PURCHASE AGREEMENT HEREIN AFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), OR A NOMINEE THEREOF.
THIS GLOBAL DEBENTURE MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A DEBENTURE
REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, AND
MAY NOT BE TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE DEBENTURE PURCHASE AGREEMENT. UNLESS THIS
DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO LIFE SAVINGS
BANK, FEDERAL SAVINGS BANK (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
DEBENTURE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OR
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
THIS DEBENTURE IS NOT A SAVINGS ACCOUNT OR A DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER AGENCY OR FUND OF THE UNITED STATES.
ABSENT PRIOR WRITTEN APPROVAL BY THE OFFICE OF THRIFT SUPERVISION ("OTS"),
THIS SECURITY IS NOT ELIGIBLE FOR PURCHASE BY ANY SAVINGS ASSOCIATION OR A
CORPORATE AFFILIATE THEREOF, EXCEPT THAT THIS SECURITY MAY BE PURCHASED BY
A CORPORATE AFFILIATE OF THE ISSUER OR BY ANY DIVERSIFIED SAVINGS AND LOAN
HOLDING COMPANY AND ANY NON-SAVINGS ASSOCIATION SUBSIDIARY THEREOF.
THIS DEBENTURE AS A SECURITY OF THE BANK HAS NOT BEEN OFFERED BY AN
OFFERING CIRCULAR FILED WITH AND DECLARED EFFECTIVE BY, THE OTS AND DUE
CARE SHOULD BE TAKEN TO ENSURE THAT THE SELLER OF THE SECURITY IS NOT AN
UNDERWRITER WITHIN THE MEANING OF 12 C.F.R. (S)563G.1(A)(14). THIS
DEBENTURE IF IT BECOMES A SECURITY OF A HOLDING COMPANY FOR THE BANK THE
FOLLOWING SHALL APPLY. THE SECURITIES WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). (A) THE HOLDER
HEREOF, BY PURCHASING THIS DEBENTURE ACKNOWLEDGES THAT THE DEBENTURES
CONSTITUTE "RESTRICTED SECURITIES" AND AGREES FOR THE BENEFIT OF THE ISSUER
THAT THIS DEBENTURE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1) TO THE ISSUER, (2) SO LONG AS SUCH DEBENTURES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER",
AS DEFINED IN RULE 144A (A "QIB"), THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (4)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES; (B)
THE PURCHASER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF DEBENTURES FROM SUCH HOLDER OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE IF THEN
APPLICABLE; (C) WITH RESPECT TO ANY TRANSFER OF DEBENTURES PURSUANT TO
CLAUSE (A) ABOVE, THE ISSUER WILL REQUIRE WRITTEN CONFIRMATION FROM THE
TRANSFEREE (OR A U.S. REGISTERED BROKER/DEALER ON THE TRANSFEREE'S BEHALF)
THAT THE TRANSFER IS BEING MADE IN COMPLIANCE WITH THE APPLICABLE
RESTRICTIONS ON TRANSFER AND THE REQUIREMENTS OF THE EXEMPTION FROM
REGISTRATION RELIED UPON BY THE TRANSFEROR (WHICH EXEMPTION SHALL BE
SPECIFIED IN THE CONFIRMATION), TOGETHER WITH, IN THE CASE OF A TRANSFER
UNDER CLAUSE (3) ABOVE, SUCH CERTIFICATES, LEGAL OPINIONS, OR OTHER
INFORMATION AS THE BANK MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. BY
PURCHASING THIS DEBENTURE THE HOLDER HEREOF AGREES AND REPRESENTS FOR THE
BENEFIT OF THE BANK THAT THE HOLDER WILL NOTIFY ANY PURCHASER OF THIS
DEBENTURE FROM THE HOLDER OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
LIFE SAVINGS BANK, FEDERAL SAVINGS BANK
13 1/2% SUBORDINATED DEBENTURE DUE March 15, 2004
$10,000,000
CUSIP NUMBER: ▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned, LIFE SAVINGS BANK, FEDERAL SAVINGS
BANK (herein called the "Bank"), a federally chartered savings bank hereby
promises to pay to Cede & Co., as nominee for the Depository Trust Company, or
registered assigns the principal sum of $10,000,000 on March 15, 2004
("Maturity") (unless earlier paid upon acceleration), with interest (computed on
the basis of a 360-day year comprised of 12 30-day months) on the unpaid balance
thereof at the rate of 13 1/2% per annum from the date hereof, payable
semiannually on the 15th day of March and September in each year (each, an
"Interest Payment Date"), commencing with the September 15 next succeeding the
date hereof, until the principal hereof shall have become due and payable.
In any case where the applicable Interest Payment Date or Maturity with
respect hereto, as the case may be, does not fall on a Business Day, payment of
principal or interest otherwise payable on such day need not be made on such
day, but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date or at Maturity and no interest
shall accrue with respect to such payment for the period from and after the
Interest Payment Date or such Maturity, as the case may be, to the date of
payment.
This Global Debenture is issued pursuant to a Debenture Purchase Agreement,
dated as of March 12, 1997 (the "Debenture Purchase Agreement") between the Bank
and the respective original purchasers of the Debentures named in the Purchasers
Schedule attached thereto and is entitled to the benefits thereof. All
provisions, including without limitation paragraphs 4, 5, 6, 9, 11(a) and 11(d),
of the Debenture Purchase Agreement and obligations of the Bank thereunder are
incorporated herein by this reference. To the extent not defined in this
Debenture, all capitalized terms shall have the meaning set forth in the
Debenture Purchase Agreement.
The Debentures (including all of the obligations of the Bank hereunder) are
direct, unconditional obligations of the Bank and rank without preference or
priority among themselves and at least pari passu with all other existing and
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future unsecured and subordinated indebtedness of the Bank. The Debentures are
subordinated on liquidation, as to principal, interest, and premium, if any, to
all claims (including post-default interest) against the Bank having the same
priority as savings account holders or any higher priority, are unsecured by the
assets of the Bank, or any of its affiliates, and are not eligible as collateral
for any loan by the Bank.
The Debentures will not be subject to any sinking fund and will not be
redeemable or repayable prior to September 15, 1998. Thereafter, upon
notification of redemption by the Bank, the Debenture to be redeemed shall
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be surrendered for payment within 30 days of such notification and such
Debenture shall continue to earn interest through the date of such surrender but
not after the expiration of such 30 day period.
Payments of principal, premium, if any, and interest are to be made in
lawful money of the United States of America in the manner provided for in the
Debenture Purchase Agreement.
No voluntary prepayment of principal shall be made and no payment of
principal shall be accelerated without the approval of the OTS if the Bank is
failing to meet its regulatory capital requirements under Part 567 of the OTS
regulations or if after giving effect to such payment the Bank would fail to
meet such regulatory requirements.
In case an Event of Default, as defined in the Debenture Purchase
Agreement, shall occur and be continuing, the principal of this Debenture may be
declared or otherwise become due and payable in the manner and with the effect
provided in the Debenture Purchase Agreement.
The Debenture Purchase Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Bank and the rights of Holders of the Debentures to be
affected thereby by the Bank with the consent of the Bank and the Beneficial
Holders of 51% of the aggregate principal amount of Debentures at the time
outstanding. The Debenture Purchase Agreement also contains provisions
permitting the Beneficial Holders of 51% in principal amount of the outstanding
Debentures to waive compliance by the Bank with certain provisions of the
Debenture Purchase Agreement. Any such consent or waiver by or on behalf of the
Holder of this Debenture shall be conclusive and binding upon Debenture issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Debenture.
Neither the Bank nor any Paying Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Debenture or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
No provision of this Debenture or of the Debenture Purchase Agreement shall
alter or impair the obligations of the Bank, which are absolute and
unconditional, to pay the principal of and interest on this Debenture at the
time, place, and rate herein prescribed, provided, that at any time prior to
maturity of the Debentures the Bank may in accordance with Section 11D of the
Purchase Agreement substitute in its place as obligor on the Debentures and as a
party to the Purchase Agreement a holding company that owns substantially all of
the issued and outstanding common stock of the Bank.
No recourse shall be had for the payment of the principal of or interest on
this Note, or for any claim based hereon, or otherwise in respect hereof,
against any incorporator, stockholder, officer or director, as such, past,
present, or future, of the Bank or of any successor at law or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
Under 12 U.S.C. 1828(b) the Bank shall not pay interest on its capital
notes or debentures (if such interest is required to be paid only out of
profits) or distribute any of its capital assets while it remains in default in
the payment of any assessment due the Federal Deposit Insurance Corporation.
Notwithstanding anything to the contrary in this certificate (or in any
related document); (A) if the FDIC shall be appointed receiver for the issuer of
this certificate (the "issuer"), and in its capacity as such shall cause the
issuer to merge with or into another financial institution, or in such capacity
shall sell or otherwise convey part or all of the assets of the issuer to
another financial institution or shall arrange for the assumption of less than
all of the liabilities of the issuer by one or more other financial
institutions, the FDIC shall not have any obligation, either in its capacity as
receiver or in its corporate capacity, to contract for or to otherwise arrange
for the assumption of
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the obligation represented by this certificate in whole or in part by any
financial institution or institutions which results from any such merger or
which has purchased or otherwise acquired from the FDIC as receiver for the
issuer, any of the assets of the issuer, or which, pursuant to any arrangement
with the FDIC, has assumed less than all of the liabilities of the issuer. To
the extent that obligations represented by this certificate have not been
assumed in full by a financial institution with or into which the issuer may
have been merged, as described in this subparagraph (A), and/or by one or more
financial institutions which have succeeded to all or a portion of the assets of
the issuer, or which have assumed a portion but not all of the liabilities of
the issuer as a result of one or more transactions entered into by the FDIC as
receiver for the issuer, then the holder of this certificate shall be entitled
to payments on this obligation in accordance with the procedures and priorities
set forth in any applicable receivership regulations or in orders of the FDIC
relating to such receivership. (B) In the event that the obligation represented
by this certificate is assumed in full by another financial institution, which
shall succeed by merger or otherwise to substantially all of the assets and the
business of the issuer, or which shall be arrangement with the FDIC assume all
or portion of the liabilities of the issuer, and payment or provision for
payment shall have been made in respect of all matured installments of interest
upon the certificates together with all matured installments of principal on
such certificates which shall have become due otherwise than by acceleration,
then any default caused by the appointment of a receiver for the issuer shall be
deemed to have been cured, and any declaration consequent upon such default
declaring the principal and interest on the certificate to be immediately due
and payable shall be deemed to have been rescinded. (C) This security is not
eligible to be purchased or held by any savings association or corporate
affiliate thereof except that this security may be purchased or held by a
corporate affiliate of the issuer or by a diversified savings and loan holding
company and its non-savings association subsidiaries. The issuer of this
security may not recognize on its transfer books any transfer made to a savings
association or any corporate affiliate thereof (except as provided in the
preceding sentence) and will not be obligated to make any payments of principal
or interest on this security if the owner of this security is a savings
association or any corporate affiliate thereof (except as provided in the
preceding sentence).
This Debenture shall be construed and enforced in accordance with the law
of the State of Delaware.
By:
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President and Chief Executive Officer
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