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EXHIBIT 10.1
AMENDED AND RESTATED
SECURED CONVERTIBLE SENIOR NOTE
PURCHASE AGREEMENT
BETWEEN
ALTIVA FINANCIAL CORPORATION
AND
VALUE PARTNERS, LTD
DATED FOR REFERENCES PURPOSES ONLY
AS OF FEBRUARY 29, 2000
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TABLE OF CONTENTS
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Article I. Definitions.....................................................................................1
Section 1.1 Definitions............................................................................1
Article II. Purchase and Sale of Notes......................................................................7
Section 2.1 Purchase and Sale of Notes.............................................................7
Section 2.2 Closing................................................................................7
Article III. Representations and Warranties..................................................................7
Section 3.1 Representations and Warranties of the Company..........................................7
Section 3.2 Representations and Warranties of the Purchaser.......................................18
Article IV. Conditions Precedent to Closing................................................................20
Section 4.1 Conditions to Obligations of the Parties..............................................20
Section 4.2 Conditions to Obligations of the Purchaser............................................20
Section 4.3 Conditions to Obligations of the Company..............................................22
Article V. Covenants......................................................................................23
Section 5.1 Shareholder Meeting...................................................................23
Section 5.2 Applications..........................................................................24
Section 5.3 Investigation and Confidentiality.....................................................25
Section 5.4 Press Releases........................................................................26
Section 5.5 No Solicitation.......................................................................26
Section 5.6 Rule 144 and Rule 144A Reporting......................................................26
Section 5.7 Stay, Extension and Usury Laws........................................................27
Article VI. Miscellaneous..................................................................................27
Section 6.1 Survival of Provisions................................................................27
Section 6.2 Termination...........................................................................27
Section 6.3 Waiver; Amendments....................................................................28
Section 6.4 Communications........................................................................28
Section 6.5 Costs, Expenses and Taxes.............................................................28
Section 6.6 Execution in Counterparts; FAX Execution..............................................29
Section 6.7 Binding Effect; Assignment............................................................29
Section 6.8 Governing Law.........................................................................30
Section 6.9 Usury.................................................................................30
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Section 6.10 Severability of Provisions............................................................30
Section 6.11 Construction..........................................................................30
Section 6.12 Integration...........................................................................31
Section 6.13 Participation Interests...............................................................31
Section 6.14 No Third Party Beneficiaries..........................................................32
Section 6.15 Representation by Counsel.............................................................32
Section 6.16 Waiver of Claims......................................................................32
Section 6.17 Texas Language........................................................................32
Section 6.18 Power of Attorney.....................................................................32
Article VII Indemnification................................................................................33
Section 7.1 Indemnification.......................................................................33
Section 7.2 Set Off...............................................................................33
Exhibit A Name and Address of the Purchaser
Exhibit B Form of Amended and Restated Note
Exhibit C Form of Amended and Restated Pledge and Security Agreement
Exhibit D Form of Amended and Restated Registration Rights Agreement
Exhibit E Form of Intercreditor and Collateral Sharing Agreement
Exhibit F Form of Indenture relating to the Exchange Notes
Exhibit G Matters to be covered by Opinion of Counsel to the Company
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AMENDED AND RESTATED
SECURED CONVERTIBLE SENIOR NOTE
PURCHASE AGREEMENT
Amended and Restated Secured Convertible Senior Note Purchase
Agreement, dated for reference purposes only as of February 29, 2000 (the
"Agreement"), between Altiva Financial Corporation (the "Company"), a Delaware
corporation, and Value Partners, Ltd. (the "Purchaser"), a Texas Limited
partnership.
WITNESSETH:
WHEREAS, the Company and the Purchaser have entered into a Secured
Convertible Note Purchase Agreement, dated as of August 31, 1999, as amended by
Amendment No. 1 to the Secured Convertible Note Purchase Agreement, dated as of
December 13, 1999, Amendment No. 2 to the Secured Convertible Note Purchase
Agreement, dated as of December 30, 1999, Amendment No. 3 to the Secured
Convertible Note Purchase Agreement, dated as of February 2, 2000, and Amendment
No. 4 to the Secured Convertible Note Purchase Agreement, dated as of February
11, 2000 (collectively, the "Existing Agreement"), pursuant to which the
Purchaser acquired an aggregate of $7,000,000, $250,000, $1,750,000, $700,000
and $300,000 principal amount of 12% Secured Convertible Notes due 2006
(collectively the "Existing Notes"), respectively; and
WHEREAS, the Company and the Purchaser desire to amend and restate the
Existing Agreement to increase the aggregate principal amount of 12% Secured
Convertible Notes due 2006 to be issued and sold by the Company to the Purchaser
from $10,000,000 to $14,000,000, to amend and restate such Notes and to
otherwise amend the agreements of the parties; and
WHEREAS, the parties deem it in their best interest to set forth their
mutual agreements herein;
NOW, THEREFORE, in consideration of any extension of credit and/or
other financial accommodation at any time made by the Purchaser to or for the
benefit of the Company, and of the promises set forth herein, the parties hereto
amend and restate the Existing Agreement in its entirety and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:
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"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Secured Convertible Senior
Note Purchase Agreement, as amended, supplemented or modified from time to time.
"Business Day" means any day except a Saturday, Sunday or other day on
which banking institutions in the city of Atlanta, Georgia are authorized by law
to close.
"Capital Stock" of any Person means any and all shares or other equity
interest of such Person.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute in effect from time to time), and the rules and regulations
promulgated thereunder.
"Commission" means the Securities and Exchange Commission and any
successor thereto.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Company" means Altiva Financial Corporation, a Delaware corporation,
together with its successors.
"Company Financial Statements" has the meaning set forth in Section
3.1(i)(i) hereof.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including without
limitation potential liability for investigating costs, cleanup costs,
governmental response costs, natural resource damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment of any Materials of Environmental
Concern.
"Environmental Laws" means any law, statute, rule or regulation of any
governmental, judicial, legislative, executive, administrative or regulatory
authority of the United States, or of any state, local or foreign government or
any subdivision thereof or of any governmental body or other regulatory or
administrative agency or commission, domestic or foreign (a "Law"), relating to
pollution or protection of the environment (including ambient air, surface
water, groundwater,
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land surface or subsurface strata), including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, and
other Laws relating to (i) emissions, discharges or releases of pollutants,
contaminants, chemicals, or industrial toxic or hazardous substances or wastes
(collectively known as "Polluting Substances") or (ii) the handling, storage,
disposal, reclamation, recycling or transportation of Polluting Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or any successor statute in effect from time to time).
"Exchange" shall mean the exchange by the holders of the Subordinated
Notes of such Subordinated Notes for senior notes of the Company in the maximum
aggregate principal amount of $19,228,000, of which $6,428,000 shall be
mandatorily convertible into 6,428,000 shares of Common Stock which have
substantially the same terms as the Notes (except regarding convertibility into
shares of Common Stock) and which generally are secured on a pari passu basis by
the same collateral as the Notes pursuant to the Exchange Note Security
Agreements (as amended, supplemented or otherwise modified from time to time,
the "Exchange Notes"), as provided in the Exchange Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
and in effect from time to time (or any successor statute in effect from time to
time), and the rules and regulations of the Commission promulgated thereunder.
"Exchange Agreement" means the Exchange Agreement between the Company
and the holders of not less than 92% of the aggregate principal amount of the
outstanding Subordinated Notes providing for the Exchange and related matters.
"Exchange Note Indenture" means the Indenture entered into by the
Company and U.S. Trust Company of Texas, N.A., as trustee for the holders of the
Exchange Notes, as amended, supplemented or otherwise modified from time to
time.
"Exchange Note Letter of Transmittal" means the Letter of Transmittal
between the Company and the holders of not less than 92% of the aggregate
principal amount of the outstanding Subordinated Notes providing for the
Exchange and related matters.
"Exchange Note Registration Rights Agreement" means the Registration
Rights Agreement entered into by the Company and the holders of the Exchange
Notes, as amended, supplemented or otherwise modified from time to time.
"Exchange Note Related Agreements" means the Exchange Notes, the
Exchange Note Indenture, the Exchange Note Security Agreements, the Escrow
Agreement, the Exchange Note Letter of Transmittal, the Exchange Note
Registration Rights Agreement and the Intercreditor Agreement.
"Exchange Note Securities" means (i) the Exchange Notes and (ii) the
Common Stock issuable upon mandatory conversion of the Exchange Notes.
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"Exchange Note Security Agreements" means (i) the Pledge and Security
Agreement pursuant to which holders of Exchange Notes which constitute
"qualified institutional buyers" for purposes of Rule 144A under the Securities
Act ("QIBs") obtain a security interest in the collateral pledged by the Company
pursuant to the Security Agreement to secure the Notes and (ii) the Pledge and
Security Agreement pursuant to which Persons who or which do not constitute QIBs
obtain a first lien security interest in the capital stock of MCI.
"Exchange Notes" has the meaning set forth in the definition of the
term "Exchange."
"Existing Agreement " has the meaning set forth in the first WHEREAS
recital to this Agreement.
"Existing Notes" has the meaning set forth in the first WHEREAS recital
to this Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Agreement, consistently
applied.
"Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (or any successor statute in effect from time to time), and the
rules and regulations of the Federal Trade Commission promulgated thereunder.
"Indebtedness Instrument" mean any note, mortgage, indenture, chattel
mortgage, deed of trust, loan agreement, hypothecation agreement, pledge
agreement, security agreement, financing statement or other document, instrument
or agreement evidencing or securing the payment of or otherwise relating to the
borrowing of monies. Indebtedness Instruments shall include, but not be limited
to, the Existing Notes, the Notes, the Exchange Notes and the Subordinated
Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in respect of such asset.
"Intercreditor Agreement" has the meaning set forth in Section 4.2(i).
"Material Adverse Effect" means any effect that (i) is material and
adverse to the financial condition, results of operations, business or prospects
of the Company and its Subsidiaries taken as a whole or (ii) materially impairs
the ability of the Company to perform its
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obligations under this Agreement, any Related Agreement, the Exchange Agreement
or any Exchange Note Related Agreement.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"MCI" means The Money Centre, Inc., a North Carolina corporation,
together with its successors.
"NASD" means National Association of Securities Dealers, Inc.
"Notes" means $14,000,000 aggregate principal amount of Amended and
Restated 12% Secured Convertible Senior Notes due 2006 to be issued and sold by
the Company and purchased by the Purchaser pursuant to this Agreement,
substantially in the form of Exhibit B hereto, as amended, supplemented or
otherwise modified from time to time, which shall supersede in their entirety
the Existing Notes.
"Participation Agreement" means the Amended and Restated Participation
Agreement between the Purchaser and ▇. ▇▇▇▇ Price, as amended, supplemented or
otherwise modified from time to time.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or a political subdivision or an agency or instrumentality thereof.
"Preferred Stock" means the Preferred Stock, par value $.01 per share,
of the Company.
"Previously Disclosed" means disclosed in a letter dated the date
hereof delivered from the Company to the Purchaser or from the Purchaser to the
Company, as applicable, specifically referring to the appropriate section of
this Agreement and describing in reasonable detail the matters contained
therein.
"Purchase Price" has the meaning set forth in Section 2.1 hereof.
"Purchaser" means Value Partners, Ltd and its successors and assigns.
"Real Estate Owned" means the consolidated properties of the Company
acquired by foreclosure on a loan or deed-in-lieu thereof or otherwise included
in the Company's real estate owned for purposes of reporting asset quality of
the Company in its reports filed with the Commission under the Exchange Act.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement by and among the Company and the Purchaser,
substantially in the form of Exhibit D hereto, as amended, supplemented or
otherwise modified from time to time.
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"Related Agreements" means the Notes, the Security Agreement, the
Registration Rights Agreement and the Intercreditor Agreement.
"Securities" means (i) the Notes and (ii) the Common Stock issuable
upon conversion of the Notes.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor statute thereto as in effect from time to time), and the rules and
regulations of the Commission promulgated thereunder.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
"Security Agreement" means the Amended and Restated Pledge and Security
Agreement by and among the Company and the Purchaser, in its own right and as
agent for the holders of the Notes, substantially in the form of Exhibit C
hereto, as amended, supplemented or otherwise modified from time to time.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"Stock Equivalents" means, with respect to any Person, options,
warrants, calls, contracts or other rights entered into or issued by such Person
which confer upon the holder thereof the right (whether or not contingent) to
acquire any Capital Stock, voting securities or securities convertible into or
exchangeable for Capital Stock or voting securities of such Person.
"Stock Option Plan" means the 1999 Stock Incentive Plan of the Company.
"Subordinated Notes" means the 12 1/2% Subordinated Notes due 2001
issued by the Company.
"Subsidiary" means with respect to any Person, (i) any corporation,
association, limited liability company or other business entity of which more
than 50% of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more Subsidiaries of such
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or managing general partner of which is such Person
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or a Subsidiary of such Person or (b) the only general partners of which are
such Person or one or more Subsidiaries of such Person (or any combination
thereof).
"Taxes" means all taxes, charges, fees, levies or other governmental
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, property or other taxes, customs, dues, fees, assessments or charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority (domestic or
foreign).
"Tax Returns" means all foreign, federal, State and local returns
relating to Taxes.
"▇. ▇▇▇▇ Price" means ▇. ▇▇▇▇ Price Recovery Fund, II, L.P. and its
successors and assigns.
ARTICLE II
PURCHASE AND SALE OF NOTES
SECTION 2.1 PURCHASE AND SALE OF NOTES. Subject to the terms and
conditions herein set forth, the Company agrees that it will issue and sell to
the Purchaser and the Purchaser agrees that it will purchase from the Company
the principal amount of Notes set forth opposite such Purchaser's name on
Exhibit A hereto at a price equal to $4,000,000 (the "Purchase Price", which is
equal to the difference between the $10,000,000 aggregate principal amount of
Existing Notes purchased by the Purchaser from the Company pursuant to the
Existing Agreement and the $14,000,000 principal amount of the Notes).
SECTION 2.2 CLOSING. Subject to the satisfaction or waiver of all of
the conditions to the parties' obligations hereunder specified in Article IV of
this Agreement, the purchase and sale of the Notes will take place at a closing
(the "Closing") to be held at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP,
in Baltimore, Maryland, at such time and on such day as the parties hereto
mutually agree upon. The date on which the Closing is to occur is referred to
herein as the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
Previously Disclosed, the Company represents and warrants to each of the
Purchasers as follows:
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(a) Capital Structure. The authorized capital stock of the Company
consists of 400,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock. As of February 24, 2000, there were (i) 4,026,122 shares of Common Stock
issued and outstanding and no shares of Common Stock were held as treasury
shares and (ii) 56,905 shares of Series A Convertible Preferred Stock were
issued and outstanding and no shares of Preferred Stock were held as treasury
shares. All outstanding shares of Capital Stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and none of
the outstanding shares of Capital Stock of the Company has been issued in
violation of the preemptive rights of any Person. Except as contemplated by this
Agreement or as Previously Disclosed, there are no Stock Equivalents authorized,
issued or outstanding with respect to the Capital Stock of the Company as of the
date hereof. The Company has Previously Disclosed each option to purchase Common
Stock which is outstanding as of the date hereof, including the exercise price
and term thereof, as well as the relevant terms of any other Stock Equivalents
which are outstanding as of the date hereof.
(b) Organization, Standing and Authority of the Company. The
Company is a corporation duly organized and validly existing under the laws of
Delaware with full corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such licensing or qualification and where the failure to be so
licensed, qualified or in good standing would have a Material Adverse Effect.
The Company has heretofore delivered true and complete copies of the Certificate
of Incorporation and Bylaws of the Company as in effect as of the date hereof to
each Purchaser which has requested the same.
(c) Ownership of Subsidiaries. The Company does not own or have
the right to acquire, directly or indirectly, any outstanding Capital Stock or
other voting securities or ownership interests of any corporation, bank, savings
association, partnership, joint venture or other organization. The outstanding
shares of Capital Stock of each Subsidiary of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, and are
directly owned by the Company free and clear of all Liens. No Stock Equivalents
are authorized, issued or outstanding with respect to the Capital Stock of any
Subsidiary of the Company and there are no agreements, understandings or
commitments relating to the right of the Company to vote or to dispose of such
Capital Stock.
(d) Organization, Standing and Authority of Subsidiaries. Each
Subsidiary of the Company (i) is duly organized and validly existing under the
laws of the jurisdiction in which it is organized, (ii) has full corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such qualification,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect. The Company has heretofore delivered true
and complete copies of the articles of incorporation and bylaws or equivalent
documents of each Subsidiary of the Company as in effect as of the date hereof
to each Purchaser which has requested the same.
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(e) Authority; Due Execution. The Company has full corporate power
and authority to perform its respective obligations under this Agreement and
each of the Related Agreements, and the execution, delivery and performance by
the Company of this Agreement and each Related Agreement have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes,
and each of the Related Agreements, when duly executed and delivered by the
Company, will constitute, a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) rights
to indemnity and contribution under the Registration Rights Agreement may be
limited by applicable law, (ii) enforceability may be limited by bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally
and (iii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.
(f) No Conflict. Neither the execution and delivery of this
Agreement and each of the Related Agreements, nor consummation of the
transactions contemplated hereby and thereby, nor compliance by the Company with
any of the provisions hereof or thereof, (i) does or will conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of the Company or the equivalent documents of any Subsidiary of the
Company, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any Lien upon any property or asset of the Company
or a Subsidiary of the Company pursuant to, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or a Subsidiary of the Company is a party, or by
which any of their respective properties or assets may be bound or affected, or
(iii) subject to the compliance referred to in clauses (i) and (ii) of the
succeeding sentence, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or a Subsidiary of the Company. Except
for (i) compliance with applicable federal and State securities laws in
connection with this Agreement and the performance by the Company of its
obligations under the Registration Rights Agreement and (ii) any required
compliance by the Company with applicable federal and State securities laws
and/or the HSR Act in connection with the issuance of shares of Common Stock
upon conversion of the Notes in accordance with their terms, no consent,
approval, order or other authorization of any Governmental Entity or of any
third party is required by or on behalf of the Company or a Subsidiary of the
Company in connection with the execution, delivery and performance of this
Agreement and each of the Related Agreements. The representations and warranties
contained in this Section 3.1(f), insofar as they relate to federal and State
securities laws requirements, are made in reliance on the representations and
warranties of the Purchaser contained in Section 3.2 of this Agreement.
(g) Status of Securities. The Securities have been authorized by
all necessary corporate action on the part of the Company. When delivered to the
Purchaser at the Closing against payment therefor as provided herein, the Notes
will be duly authorized and validly issued and will not be issued in violation
of the preemptive rights of any Person. Subject to the approvals and compliance
referred to in the second sentence of Section 3.1(f) hereof, shares of Common
Stock issued by the Company upon conversion of the Notes in accordance with
their terms will be duly authorized,
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validly issued and non-assessable at the time of issuance and will not be
issued in violation of the preemptive rights of any Person. The representations
and warranties contained in this Section 3.1(g), insofar as they relate to
federal and State securities laws requirements, are made in reliance on the
representations and warranties of the Purchaser contained in Section 3.2 of this
Agreement.
(h) Securities Reports. The Company has filed all Securities
Documents required to be filed by it under the Securities Laws on a timely basis
or has received a valid extension of such time of filing, and all such
Securities Documents complied in all material respects with the requirements of
the Securities Laws and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, at the time and in light of the
circumstances under which they were made, not misleading.
(i) Financial Statements.
(i) The Company has previously delivered to the Purchaser
(i) statements of financial condition of the Company as of August 31, 1999 and
1998 and statements of operations, changes in stockholders' equity and cash
flows of the Company for each of the years ended August 31, 1999, 1998 and 1997,
accompanied by the related audit report of Deloitte & Touche LLP, (ii) an
unaudited statement of financial condition as of November 30, 1999 and unaudited
statements of operations, changes in stockholders' equity and cash flows of the
Company for the three months ended November 30, 1999 and 1998 and (iii) an
unaudited statement of financial condition as of December 31, 1999 and an
unaudited statement of operations for the three months ended December 31, 1999.
The foregoing financial statements, as well as the financial statements of the
Company to be delivered to the holders of Notes after the Closing pursuant to
the terms of the Notes (collectively the "Company Financial Statements"), fairly
present or will fairly present, as the case may be, in all material respects the
consolidated financial condition of the Company as of the respective dates set
forth therein, and the consolidated results of operations, changes in
shareholders' equity and cash flows of the Company for the respective periods or
as of the respective dates set forth therein in accordance with GAAP.
(ii) Each of the Company Financial Statements has been or
will be, as the case may be, prepared in accordance with GAAP consistently
applied during the periods involved, except as stated therein. The books and
records of the Company and its Subsidiaries are being maintained in material
compliance with applicable legal and accounting requirements, and such books and
records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of the
Company and its Subsidiaries.
(iii) Except to the extent (x) reflected, disclosed or
provided for in the Securities Documents filed by the Company prior to the date
hereof and (y) of liabilities incurred since August 31, 1999 in the ordinary
course of business, neither the Company nor any Subsidiary of the Company has
any liabilities, whether absolute, accrued, contingent or otherwise, which has
had or could reasonably be expected to have a Material Adverse Effect.
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(j) Material Adverse Change. Since August 31, 1999, (i) the
Company and the Subsidiaries of the Company have conducted their respective
businesses in the ordinary and usual course (excluding the incurrence of
expenses in connection with this Agreement and the Exchange Agreement and the
transactions contemplated hereby and thereby) and (ii) no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
(k) Environmental Matters.
(i) The Company is in compliance with all Environmental
Laws, except for any violations of any Environmental Law which, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company has not received any communication alleging
that the Company or any Company Subsidiary is not in such compliance and, to the
knowledge of the Company, there are no present circumstances that would prevent
or interfere with the continuation of such compliance.
(ii) None of the properties owned, leased or operated by
the Company or the any Company Subsidiary has been or is in violation of or
liable under any Environmental Law, except for any such violations or
liabilities which, individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect.
(iii) To the knowledge of the Company, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against the Company or any of its
Subsidiaries or against any Person whose liability for any Environmental Claim
the Company or any Subsidiary of the Company has or may have retained or assumed
either contractually or by operation of law, except such as, individually or in
the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect.
(l) Tax Matters.
(i) The Company and its Subsidiaries have timely filed
all Tax Returns required by applicable law to be filed by them (including,
without limitation, estimated tax returns, income tax returns, information
returns and withholding and employment tax returns) and have paid, or where
payment is not required to have been made, have set up an adequate reserve or
accrual for the payment of, all Taxes required to be paid in respect of the
periods covered by such Tax Returns, except in all cases where the failure to do
so, individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect. As of the date hereof, there is no
audit examination, assessed deficiency, deficiency litigation or refund
litigation with respect to any Taxes of the Company or any Subsidiary of the
Company. All Taxes due with respect to completed and settled examinations or
concluded litigation relating to the Company have been paid in full or
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adequate provision has been made for any such Taxes on the Company's
consolidated statement of financial condition in accordance with GAAP. The
Company has not executed an extension or waiver of any statute of limitations on
the assessment or collection of any Tax that is currently in effect.
(ii) Neither the Company nor any Subsidiary of the Company
(i) is a party to any agreement providing for the allocation or sharing of
taxes, (ii) is required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting method
initiated by the Company or a Subsidiary of the Company (nor does the Company
have any knowledge that the Internal Revenue Service has proposed any such
adjustment or change of accounting method) or (iii) has filed a consent pursuant
to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply.
(iii) There has been no "ownership change," as defined
under Section 382 of the Code and regulations thereunder, of the Company since
August 31, 1998, and issuance of the Notes pursuant to this Agreement (assuming
no conversion of such Notes) and consummation of the Exchange (including
conversion of the Exchange Notes) pursuant to the Exchange Agreement and the
Exchange Notes will not result in such an ownership change of the Company.
(m) ERISA. The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; to the knowledge of the
Company, no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for which the Company would have any
material liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 (whether or not waived)
or 4971 of the Code; and each "pension plan" for which the Company would have
any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and to the knowledge of the Company
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(n) Litigation. There are no actions, suits, investigations or
legal proceedings instituted, pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary of the Company or against any
asset, interest or right of the Company or any Subsidiary of the Company, or
against any director, officer or employee of any of them that in any such case,
if decided adversely, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Neither the Company nor any Subsidiary
of the Company is a party to any order, judgment or decree which has had or
could reasonably be expected to have a Material Adverse Effect.
(o) Compliance with Laws. The Company and each Subsidiary of the
Company has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with,
federal, State, local and foreign governmental or regulatory bodies that are
necessary in order to permit it to carry on its business as it is presently
being
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conducted and the absence of which could reasonably be expected to have a
Material Adverse Effect; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect; and to the best knowledge of
the Company, no suspension or cancellation of any of the same is threatened.
(p) No Default or Violation. Neither the Company nor any
Subsidiary of the Company currently is in violation of its Certificate of
Incorporation or Bylaws or equivalent documents, or of any applicable federal,
State or local law or ordinance or any order, rule or regulation of any
Governmental Entity (including, without limitation, all securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and hour
laws, ordinances, orders, rules and regulations), or in default with respect to
any order, writ, injunction or decree of any court, or in default under any
order, license, regulation or demand of any Governmental Entity, any of which
violations or defaults could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and neither the Company nor any
Subsidiary of the Company has received any notice or communication from any
Governmental Entity asserting that the Company or any Company Subsidiary is in
violation of any of the foregoing which could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary of the Company
is subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment, and none
of them has received any written communication requesting that they enter into
any of the foregoing.
(q) Certain Fees. No fees or commissions will be payable by the
Company to brokers, finders, investment bankers or banks pursuant to any
agreement entered into by the Company with respect to the offer and sale of the
Notes or the Exchange Notes or any of the other transactions contemplated
hereby, by any Related Agreement or by the Stock Purchase Agreement.
(r) Patents, Trademarks, Etc. The Company and each of its
Subsidiaries owns or possesses all legal rights to use all proprietary rights,
including without limitation all trademarks, trade names, service marks and
copyrights, that are material to the conduct of their existing businesses.
Neither the Company nor any of its Subsidiaries is bound by or a party to any
options, licenses or agreements of any kind with respect to any trademarks,
service marks or trade names which it claims to own. Neither the Company nor any
of its Subsidiaries has received any communications alleging that any of them
has violated or would violate any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other Person.
(s) Loan Matters
(i) Each loan agreement, note or borrowing arrangement,
including without limitation portions of outstanding lines of credit and loan
commitments on the books and records of the Company and its Subsidiaries
(collectively, "Loans") that was made by the Company and to the knowledge of the
Company that was made by any third party was made, and has been serviced in all
material respects in accordance with, the Company's underwriting standards and
the relevant
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Loan documentation in the ordinary course of business, is evidenced in all
material respects by appropriate and sufficient documentation and, to the best
knowledge of the Company, constitutes the legal, valid and binding obligation of
the obligor named therein, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(ii) None of the agreements pursuant to which the Company
or any Subsidiary has sold Loans or pools of Loans or participations in Loans or
pools of Loans contain any obligation to repurchase such Loans or interests
therein on account of a payment default by the obligor on any such Loans.
Neither the Company nor any of its Subsidiaries is in default under any such
agreement or has received any notice alleging default.
(iii) To the knowledge of the Company, all brokers and
other third parties who originate or have originated Loans have all required
licenses and approvals from all jurisdictions requiring licenses and approvals
and have complied with and are not in violation of any applicable law,
regulation, order, rule, policy or guidelines of any Governmental Entity.
(iv) The practices of the Company and its Subsidiaries
with respect to compensation paid to mortgage brokers comply with the policy
statement issued by the Department of Housing and Urban Development in March
1999.
(t) Certain Assets. The Company has Previously Disclosed a true
and correct listing of the following assets of the Company and its Subsidiaries
as of November 30, 1999: (i) all non-performing Loans, securities or other
assets (i.e., all assets on which the Company has ceased recognizing interest
under GAAP or as to which any payments of principal or interest are past due 90
or more days as of such date), (ii) all Loans, securities or other assets as to
which any payments of principal or interest are past due 60 or more days, (iii)
all Loans, securities or other assets not included in the foregoing which have
been classified special mention, substandard, doubtful or loss, or otherwise
classified adversely, by management of the Company or regulatory examiners, and
(iv) each parcel of Real Estate Owned (excepting such parcels as may have been
disposed of in the ordinary course of business subsequent to such date),
including an identification of the amount of reserves which have been
established with respect to each such parcel and its net carrying value.
(u) Year 2000 Compliance. All computer hardware and software
owned, used or licensed by the Company or any of its Subsidiaries, including but
not limited to system and application programs, files, databases and computer
services, the failure or disfunctionality of which would individually or in the
aggregate have a Material Adverse Effect is Year 2000 Complaint. "Year 2000
Complaint" means that such hardware and software will (i) correctly process date
data from at least January 1, 1900 through December 31, 2000 without error or
interruption due to date, (ii) maintain functionality with respect to the input,
storing, processing or output of records or data containing dates falling on or
after January 1, 2000, and (iii) be interoperable with other Year 2000 compliant
hardware or software owned, used or licensed by the Company or any of its
Subsidiaries which may
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deliver records to, receive records from or otherwise interact with such
hardware or software in the course of processing records or data.
(v) Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of a proceeding naming the
Company or any Subsidiary of the Company as a defendant asserting that the
Company or any such Subsidiary has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel the
Company or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other material
labor dispute or disputes involving it or any of its Subsidiaries pending, or to
the Company's knowledge, threatened, nor the Company aware of any activity
involving its or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.
(w) Insurance. The Company believes that it and each Subsidiary of
the Company is insured, and during each of the past three calendar years has
been insured, for reasonable amounts with financially sound and reputable
insurance companies against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured and has maintained all insurance required by applicable laws and
regulations. All of the policies and bonds maintained by the Company and its
Subsidiaries are in full force and effect and all claims thereunder have been
filed in a due and timely manner and, to the Company's knowledge, no such claim
has been denied.
(x) Properties. All real and personal property owned by the
Company or a Subsidiary of the Company or presently used by any of them in its
respective business is in an adequate condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with its past practices. The Company has good and marketable
title free and clear of all Liens (other than equities of redemption under
applicable foreclosure laws) to all of the material properties and assets, real
and personal, reflected on the consolidated statement of financial condition of
the Company as of August 31, 1999 included in the Company Financial Statements
or acquired after such date, other than properties sold by the Company in the
ordinary course of business, except (i) Liens for current taxes not yet due or
payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of its banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent and (iv) as reflected on the consolidated statement of financial
condition of the Company as of May 31, 1999 included in the Company Financial
Statements. All real and personal property which is material to the Company's
business and leased or licensed by the Company or a Subsidiary of the Company is
held pursuant to leases or licenses which are valid and enforceable in
accordance with their respective terms.
(y) Investment Company Act of 1940. The Company is not, and will
not become upon consummation of the transactions contemplated hereby and by the
Related Agreements, an
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"investment company" or an entity "controlled" by an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
(z) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action which might subject the offering,
issuance or sale of the Notes to the registration requirements of the Securities
Act or comparable provisions of any applicable State securities laws.
(aa) Exercise of Warrants; Stockholder Approval. After taking into
account the 600,000 shares of Common Stock issued by the Company in connection
with the acquisition of MCI but without regard to the shares of Common Stock
issuable upon conversion of the Notes, an aggregate of 11,027 shares of Common
Stock may be issued by the Company upon conversion of the Notes without
compliance with the stockholder approval requirements of the NASD. The
affirmative vote of the holders of a majority of the shares of Company Common
Stock present in person or by proxy at a duly called meeting of the stockholders
of the Company at which a quorum, consisting of the holders of a majority of the
outstanding shares of Company Common Stock present in person or by proxy, is
present is the only vote of the stockholders of the Company necessary to approve
(i) the conversion features of the Notes in their entirety and (ii) the
consummation of the Exchange pursuant to the Exchange Agreement.
(bb) Indebtedness Defaults. As of the date hereof and the Closing
Date, the Company is not in default under any Indebtedness Instrument (which has
not been waived).
(cc) Solvency. The Company (i) is now generally paying its debts as
they mature, (ii) owns property which, at a fair valuation, is greater than the
sum of its indebtedness and (iii) has capital sufficient to carry on its
business in the ordinary course consistent with past practice.
(dd) Exchange Agreement and Related Agreements.
(i) The Company has heretofore delivered to the Purchaser a true
and correct copy of the Exchange Agreement and the Exchange Note Related
Agreements.
(ii) The Company has full corporate power and authority to perform
its obligations under the Exchange Agreement and the Exchange Note Related
Agreements, and the execution, delivery and performance by the Company of the
Exchange Agreement and the Exchange Note Related Agreements have been duly
authorized by all necessary corporate action on the part of the Company, except
for the approval of the shareholders of the Company of the issuance of Common
Stock upon conversion of the Exchange Notes pursuant to the requirements of the
NASD. The Subordinated Note Agreement and the Exchange Note Related Agreements
have been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, except (i) rights to indemnity and contribution under
the Exchange Note Registration Rights Agreement may be limited by applicable
law, (ii) enforceability may be limited by bankruptcy, insolvency, moratorium
and similar laws affecting creditors' rights
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generally and (iii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(iii) Neither the execution and delivery of any of the Exchange
Agreement and the Exchange Note Related Agreements, nor consummation of the
transactions contemplated thereby, nor compliance by the Company with any of the
provisions thereof, (i) does or will conflict with or result in a breach of any
provisions of the Certificate of Incorporation or Bylaws of the Company or the
equivalent documents of any Subsidiary of the Company, (ii) violate, conflict
with or result in a breach of any term, condition or provision of, or constitute
a default (or any event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
Lien upon any property or asset of the Company or a Subsidiary of the Company
pursuant to, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or a Company Subsidiary is a party, or by which any of their respective
properties or assets may be bound or affected, or (iii) subject to the
compliance referred to in the succeeding sentence, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or a
Subsidiary of the Company. Except for the approval of the shareholders of the
Company of the issuance of Common Stock upon conversion of the Exchange Notes
pursuant to the requirements of the NASD and actions by the Commission in
connection with the performance by the Company of its obligations under the
Exchange Note Registration Rights Agreement relating to such shares of Common
Stock, no consent, approval, order or other authorization of any Governmental
Entity or of any third party is required by or on behalf of the Company or a
Subsidiary of the Company in connection with the execution, delivery and
performance of the Exchange Agreement and the Exchange Related Agreements.
(iv) Except for the approval of the shareholders of the Company of
the issuance of Common Stock upon conversion of the Exchange Notes pursuant to
the requirements of the NASD, the Exchange Securities have been authorized by
all necessary corporate action on the part of the Company. When issued pursuant
to the terms of the Exchange Agreement, the Exchange Securities will be duly
authorized and validly issued and will not be issued in violation of the
preemptive rights of any Person. The Exchange Notes and, assuming receipt of the
shareholder approval referred to in the first sentence of this paragraph (iv),
the shares of Common Stock issued by the Company upon conversion of the Exchange
Notes, will be duly authorized, validly issued and non-assessable at the time of
issuance and will not be issued in violation of the preemptive rights of any
Person.
(ee) Disclosure. None of the representations and warranties of the
Company or any of the information or documents which have been Previously
Disclosed to the Purchaser pursuant hereto are false or misleading in any
material respect or contain any untrue statement of a material fact, or omit to
state any material fact required to be stated or necessary to make any such
information or document, at the time and in light of the circumstances, not
misleading. Copies of all documents referred to in this Section 3.1 are true,
correct and complete copies thereof and include all amendments, supplements and
modifications thereto and all waivers thereunder.
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SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
(a) Investment Intent. The Purchaser represents and warrants to
the Company that the Securities to be acquired by it hereunder are being
acquired for its own account for investment and with no intention of
distributing or reselling such Securities or any part thereof or interest
therein in any transaction which would be in violation of federal or State
securities laws, without prejudice, however, to the Purchaser's right, subject
to the provisions of this Agreement and the Registration Rights Agreement, at
all times to sell participation interests in the Notes in accordance with
Section 6.13 hereof and/or to sell or otherwise dispose of all or any part of
such Securities under an effective registration statement under the Securities
Act and other applicable State securities laws or under an exemption from such
registration, and subject, nevertheless, to the disposition of the Purchaser's
property being at all times within its control.
(b) Transfer Restrictions. If the Purchaser should decide to
dispose of any of the Securities, such Purchaser understands and agrees that it
may do so only as set forth below: (i) to the Company, (ii) to any Person
reasonably believed by such Purchaser to be a "qualified institutional buyer"
("QIB") (as defined in Rule 144A under the Securities Act) in compliance with
Rule 144A under the Securities Act, (iii) pursuant to an exemption from
registration set forth in Rule 144 under the Securities Act, (iv) to any Person
who is reasonably believed by such Purchaser to be an "accredited investor" (as
defined in Rule 501(a) under the Securities Act) and that, prior to such
transfer, furnishes to the Purchaser and the Company a signed letter confirming
its status as an accredited investor and agreeing to the restrictions on
transfer of the Securities set forth in this Agreement, (v) to any Affiliate of
such Purchaser pursuant to an applicable exemption under the Securities Act or
(vi) pursuant to an effective registration statement under the Securities Act,
provided that, notwithstanding the foregoing, so long as certain of the
collateral for the Notes may be held only by a QIB, as reasonably determined by
the Company, the Notes may be offered, sold or otherwise disposed of only
pursuant to clauses (i) or (ii) above. In connection with any transfer of any
Securities other than (i) any transfer pursuant to an effective registration
statement under the Securities Act or (ii) any transfer by a QIB pursuant to
clause (ii) above, the Company may require that the transferor of any such
Securities provide to the Company an opinion of counsel experienced in the area
of United States securities laws selected by the transferor (which may include
in-house counsel of a transferor), which counsel shall be, and the form and
substance of which opinion shall be, reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such Securities
under the Securities Act or any State securities laws. In connection with any
transfer pursuant to clause (ii) above, the Company may request reasonable
certification as to the status of the transferor's transferee as a QIB. The
Purchaser agrees to the imprinting, so long as appropriate, (i) on the Notes of
the legends set forth on the form of Note included as Exhibit B hereto and (ii)
on certificates representing the Common Stock issuable upon conversion of the
Notes of legends which are substantially similar to such legends. The Notes and
certificates evidencing the Common Stock issuable upon conversion of the Notes
also shall bear any other legends required by applicable federal or State
securities laws, which legends may be removed when, in the opinion of counsel to
the Company experienced in the applicable securities laws, the same are no
longer required under the applicable requirements of such securities laws. The
Company agrees
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that it will provide the Purchaser, upon request, with a substitute document
evidencing the Securities not bearing such legend at such time as such legend is
no longer applicable.
(c) Stop Transfer Instructions. The Purchaser agrees that the
Company shall be entitled to make a notation on its records and give
instructions to any transfer agent of the Securities in order to implement the
restrictions on transfer set forth in Section 3.2(b) of this Agreement.
(d) Accredited Investor, etc. The Purchaser represents and
warrants to, and covenants and agrees with, the Company that at the time it was
offered the Notes, it was, and at the date hereof, it is, a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act, and has
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective
investment in the Notes, and has so evaluated the merits and risks of such
investment, is able to bear the economic risk of such investment and, at the
present time, is able to afford a complete loss of such investment.
(e) Due Execution. The Purchaser represents and warrants to the
Company that this Agreement has been, and each Related Agreement to which it
will become a party will be, duly executed and delivered by it or on its behalf
and constitutes, or will constitute, as applicable, a valid and binding
obligation of such Purchaser, enforceable against the Purchaser in accordance
with its terms, except that (i) rights to indemnity and contribution under the
Registration Rights Agreement may be limited by applicable law, (ii)
enforceability may be limited by bankruptcy, insolvency, moratorium and similar
laws affecting creditors' rights generally and (iii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability.
(f) No Conflict. The Purchaser represents and warrants to the
Company that neither the execution and delivery of this Agreement and each of
the Related Agreements to which the Purchaser is or will become a party, nor
consummation of the transactions contemplated hereby and thereby, nor compliance
by the Purchaser with any of the provisions hereof or thereof, (i) does or will
conflict with or result in a breach of any provisions of the articles of
incorporation or bylaws or equivalent documents of the Purchaser, (ii) violate,
conflict with or result in a breach of any term, condition or provision of, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
Lien upon my property or asset of the Purchaser pursuant to any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Purchaser is a party, or by which any of
its properties or assets may be bound or affected, or (iii), subject to the
compliance referred to in clause (i) and (ii) of the succeeding sentence,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Purchaser. Except for (i) compliance with applicable federal
and State securities laws in connection with the performance by the Purchaser of
its obligations under the Registration Rights Agreement and (ii) any required
compliance by the Purchaser with applicable federal and State securities laws
and the HSR Act in connection with the issuance of shares of Common Stock upon
conversion of the Notes in
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accordance with their terms, the Purchaser represents and warrants to the
Company that no consent, approval, order or other authorization of
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any Governmental Entity or of any third party is legally required by or on
behalf of the Purchaser in connection with the execution, delivery and
performance of this Agreement and each Related Agreement to which it will become
a party.
(g) Access to Information. The Purchaser acknowledges that prior
to the date hereof it has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Notes and the merits and risks of investing in the Notes and
(ii) access to information about the Company and the Company's financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment in the Notes.
(h) Reliance. The Purchaser understands and acknowledges that (i)
the Notes are being offered and sold without registration under the Securities
Act in a transaction that is exempt from the registration provisions of the
Securities Act and (ii) such exemption depends in part on, and that the Company
will rely upon, the accuracy and truthfulness of the foregoing representations
and warranties of such Purchaser, and such Purchaser hereby consents to such
reliance.
ARTICLE IV
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 4.1 CONDITIONS TO OBLIGATIONS OF THE PARTIES. The respective
obligations of each of the parties hereto to fulfill their obligations under
Section 2.1 hereof at the Closing shall be subject to the satisfaction or waiver
prior to the Closing of the following conditions:
(a) All requirements prescribed by law which are necessary to the
consummation of the transactions contemplated by this Agreement shall have been
satisfied.
(b) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(c) No statute, rule or regulation shall have been enacted,
entered, promulgated, interpreted, applied or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of any of the
transactions contemplated by this Agreement.
(d) The Company shall have entered into binding and enforceable
Exchange Agreements with the holders of not less than 92% principal amount of
Subordinated Notes.
SECTION 4.2 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to fulfill its obligations under Section 2.1 hereof
shall be subject to the satisfaction or waiver prior to the Closing of the
following conditions:
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(a) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as if made on the
Closing Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); the Company shall have
performed, in all material respects, each of its covenants and agreements
contained in this Agreement to be performed prior to the Closing; and the
Purchaser shall have received a certificate signed by the Chief Executive
Officer and the Chief Financial Officer of the Company, dated the Closing Date,
to the foregoing effect.
(b) The Company shall have delivered to the Purchaser a duly
executed Note, registered in the name of the Purchaser, sufficient to evidence
the Note to be issued and sold by the Company and purchased by the Purchaser, as
set forth on Exhibit A hereto, against payment therefor to the Company in an
amount equal to the Purchase Price (net of the amount of costs as of the Closing
Date which are reimbursable by the Company pursuant to Section 6.5 hereof, which
shall be deemed a partial payment for the Note purchased by the Purchaser in
that sum) and surrender of the Existing Notes.
(c) The Purchaser shall have received (i) a counterpart to this
Agreement, duly executed and delivered by the Company, and (ii) a counterpart of
each Related Agreement (other than the Notes), substantially in the form
attached hereto as an exhibit, which shall have been duly executed and delivered
by the Company and the other party or parties thereto (other than the
Purchaser).
(d) The Purchaser shall have received, in form and substance
reasonably satisfactory to it, opinions, addressed to the Purchaser and dated
the Closing Date, of King & Spalding and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP
special counsel to the Company, with respect to the indicated matters set forth
in Exhibit G hereto.
(e) No party to this Agreement (other than the Purchaser) shall be
in material breach of this Agreement unless such breach shall have been waived
in writing by each of the other parties to this Agreement.
(f) The Company shall have obtained in writing all consents of
third parties necessary to permit the consummation of the transactions
contemplated by this Agreement and the Related Agreements, as Previously
Disclosed pursuant to Section 3.1(f) hereof, and no such consent shall contain
any term or condition that the Purchaser reasonably deems to be materially
disadvantageous to the Company or the Purchaser.
(g) Each of City National Bank of West Virginia and Sovereign
Bancorp, Inc. shall have waived any adjustments to the terms of the stock
options issued to them pursuant to the Stock Option Agreement, dated May 29,
1998, between the Company and each such entity, that may be required pursuant to
Section 7 of such Stock Option Agreements as a result of (i) the issuance of the
Notes or the conversion thereof to shares of Common Stock in accordance with
their terms and (ii) consummation of the Exchange pursuant to the Exchange
Agreement, in each case in form and
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substance reasonably satisfactory to the Purchaser, and Sovereign Bank shall
have waived the same pursuant to the Participation Agreement, dated June 29,
1998, between it and the Company.
(h) The Purchaser and ▇. ▇▇▇▇ Price shall have entered into the
Participation Agreement, pursuant to which ▇. ▇▇▇▇ Price shall have agreed to
purchase on the Closing Date a $5.5 million participation interest in the Notes
issued to the Purchaser pursuant to this Agreement and ▇. ▇▇▇▇ Price shall have
delivered to the Purchaser on the Closing Date a dollar amount equal to $2.0
million such participation interest (which amount is net of $3.5 million
previously delivered to the Purchaser by ▇. ▇▇▇▇ Price for participation
interests in the Existing Notes).
(i) The Company, the Purchaser, and United States Trust Company of
New York, as collateral agent for the holders of the Notes and the Exchange
Notes, shall have entered into an Intercreditor and Collateral Sharing Agreement
substantially in the form of Exhibit E hereto (the "Intercreditor Agreement"),
and the Company and United States Trust Company of New York, N.A., as trustee,
shall have entered into the Indenture relating to the Exchange Notes in the form
of Exhibit F hereto.
(j) The Purchaser shall have received such other certificates,
opinions, documents and instruments related to the transactions contemplated
hereby and the Exchange as may have been reasonably required by it and are
customary for transactions of this type, and all corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement, shall be
reasonably satisfactory in form and substance to it and its counsel.
SECTION 4.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to fulfill its obligations under Section 2.1 hereof
shall be subject to the satisfaction or waiver prior to the Closing of the
following conditions:
(a) Each of the representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as if made on the
Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), and the Company shall
have received a certificate signed by a duly authorized representative of each
Purchaser to the foregoing effect.
(b) The Purchaser shall have delivered to the Company the Existing
Notes and a dollar amount equal to the Purchase Price (net of the amount of
costs as of the Closing Date which are reimbursable by the Company pursuant to
Section 6.5 hereof), such amount to be payable (i) by wire transfer of
immediately available funds to an account with a bank designated by the Company,
by notice to the Purchaser to be provided no later than two Business Days prior
to the Closing Date, or (ii) a federal (same day) funds check payable to the
order of the Company.
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(c) The Company shall have received (i) a counterpart to this
Agreement, duly executed and delivered by the Purchaser, and (ii) a counterpart
of each Related Agreement (other than the Notes), substantially in the form
attached hereto as an exhibit, which shall have been duly executed and delivered
by the Purchaser.
(d) No party to this Agreement (other than the Company) shall be
in material breach of this Agreement unless such breach shall have been waived
in writing by each of the other parties to this Agreement.
(e) The Company shall have obtained in writing all consents of
third parties necessary to permit the consummation of the transactions
contemplated by this Agreement and the Related Agreements (other than the
consents referred to in Section 4.2(g) hereof) and no such consent shall contain
any term or condition that the Company reasonably deems to be materially
disadvantageous to the Company.
(f) The Company shall have received such other certificates,
opinions, documents and instruments related to the transactions contemplated
hereby as may have been reasonably required by the Company and are customary for
transactions of this type, and all corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, shall be reasonably satisfactory in
form and substance to the Company and its counsel.
ARTICLE V
COVENANTS
SECTION 5.1 SHAREHOLDER MEETING. The Company shall (i) take all action
necessary (including without limitation the preparation, filing and
dissemination of requisite proxy materials) to have its shareholders approve in
accordance with and to the extent required by the applicable requirements of the
NASD, separate proposals for the issuance of the number of shares of Common
Stock issuable (i) upon full conversion of the Notes and (ii) upon mandatory
conversion of the applicable portion of the Exchange Notes (the "Stockholder
Approvals") at the first annual meeting of the shareholders of the Company held
after the date hereof or at a special meeting of shareholders which is called
for the purpose prior to the holding of such annual meeting of shareholders,
which annual meeting or special meeting shall in no event be held later than
▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) recommend that its shareholders approve each of such
proposals and use its reasonable best efforts to obtain, as promptly as
practicable, such approvals and (iii) reasonably cooperate and consult with the
Purchaser with respect to the foregoing matters, including without limitation
giving the Purchaser the right to review in advance the proxy statement (in
preliminary and definitive form) to be sent to the shareholders of the Company
to solicit the Stockholder Approvals.
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SECTION 5.2. APPLICATIONS.
(a) Notwithstanding any other provision hereof to the contrary,
the right of a holder, whether on its own behalf or on behalf of a holder of a
participation interest in the Notes, to convert the principal amount of any
Note, or any portion thereof, and the obligation of the Company to issue any
shares of Common Stock upon the exercise of such conversion right, are subject
to the condition that, if upon receipt by the Company of written notice of
conversion from any holder, whether on its behalf or on behalf of a holder of
participation interest in the Notes, outside counsel advises the Company in
writing (a copy of which shall be provided to the converting holder) that in its
opinion the Company, such holder and/or any participant on behalf of whom such
holder is attempting to exercise conversion rights are required under applicable
law to make a filing under the HSR Act in connection with such conversion and
issuance of shares of Common Stock, no shares of Common Stock shall be issued to
such holder until all applicable filings under the HSR Act are made by the
Company and, if required under the HSR Act, by such holder and any other person
or persons and all applicable waiting periods under the HSR Act have expired or
been terminated. As soon as practicable after the receipt from any holder of the
Notes, whether on its behalf or on behalf of a holder of a participation
interest in the Notes (collectively the "Notice Giver"), of notice of an intent
to convert an amount of Notes sufficient to require a filing under the HSR Act,
but in any event no later than the tenth Business Day after receipt of such
notice, the Company will (i) prepare and file with the Antitrust Division of the
U.S. Department of Justice (the "DOJ") and the Federal Trade Commission (the
"FTC") the Notification and Report Form (accompanied by all documentary
attachments contemplated thereby) required by the HSR Act, (ii) upon the request
of any Notice Giver, request early termination of the waiting period imposed by
the HSR Act, (iii) coordinate and cooperate with the Notice Giver in responding
to formal and informal requests for additional information and documentary
material from the DOJ and the FTC in connection with such filing, (iv) use its
reasonable best efforts to take, or cause to be taken, all reasonable action and
to do, or cause to be done, all things reasonably necessary and appropriate to
permit the issuance to the Notice Giver of the shares of Common Stock issuable
upon the conversion of the Notes with respect to which any filing is required
under the HSR Act and (v) reimburse the holders of the Notes for the entire
amount of any filing fee or any other costs and expenses incurred by holders of
the Notes in connection therewith (including legal fees) or as required to be
paid under the HSR Act. The Notice Giver agrees to provide to the Company all
reasonable cooperation in connection with the making of such filings under the
HSR Act; provided, however, that neither the Company nor any such Notice Giver
shall be required in connection with any such filing to enter into any
agreement, or take or refrain from taking any action, as a condition to
obtaining any approval required under the HSR Act if, in the judgment of such
party, such condition could have a material adverse effect on such party or its
business. In the event that despite their reasonable efforts, the Company and
such Notice Giver do not receive all approvals required under the HSR Act in
connection with such conversion, such holder's notice of conversion shall be
deemed to be rescinded and the Company shall not be obligated to take any
further action with respect to the conversion of such Note pursuant to such
notice of exercise.
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(b) In the event that any other approval, consent or non-objection
need be obtained by the Company from, or a notice or other filing need be filed
by the Company with, any Governmental Entity in connection with (i) the
execution, delivery and performance of this Agreement or any Related Agreement
by the Company or (ii) the Company's issuance of Common Stock upon conversion of
the Notes, the Company shall take all actions reasonably necessary to obtain any
such approval, consent or non-objection or file such notice or other filing as
promptly as practicable, and the Purchaser agrees to cooperate with the Company
in obtaining or filing the same. The Company shall provide copies of any notice,
application or other document required to be filed pursuant to this Section 5.2
(excluding any confidential information) to the holder(s) seeking to convert a
Note or Notes into Common Stock for review not less than three Business Days
prior to the making of such filing and shall keep such holder apprised of the
status of such filing and the consideration thereof by the relevant Governmental
Entity.
SECTION 5.3 INVESTIGATION AND CONFIDENTIALITY.
(a) The Company shall permit the Purchaser and its representatives
reasonable access during normal business hours to its properties and personnel,
and shall disclose and make available to the Purchaser all books, papers and
records relating to the assets, stock ownership, properties, operations,
obligations and liabilities of the Company and its Subsidiaries, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of meetings of boards of directors (and any committees
thereof) and shareholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files, loan files, plans affecting employees, and any other business
activities or prospects in which the Purchaser may have a reasonable interest in
connection with an investment in the Securities, provided that such access shall
be reasonably related to the transactions contemplated hereby and not unduly
interfere with normal operations, and provided further that in the event that
any of the foregoing are in the control of any third party, the Company shall
use its reasonable best efforts to cause such third party to provide access to
such materials to the Purchaser who shall request the same. In the event that
the Company is prohibited by law from providing any of the access referred to in
the preceding sentence to the Purchaser, it shall use its reasonable best
efforts to obtain promptly waivers thereof so as to permit such access. The
Company shall make the directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) of the
Company and its Subsidiaries available to confer with the Purchaser and its
representatives, provided that such access shall be reasonably related to the
transactions contemplated hereby and not unduly interfere with normal
operations.
(b) All information furnished to the Purchaser by the Company
previously in connection with the transactions contemplated by this Agreement or
pursuant hereto shall be treated as the sole property of the Company and the
Purchaser covenants, severally and not jointly and as to itself only, that it
shall use its best efforts to keep confidential all such information and shall
not directly or indirectly use such information for any purpose other than in
connection with the transactions contemplated hereby. The obligation to keep
such
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information confidential shall continue for five years from the date hereof
but shall not apply to (i) any information which the Purchaser can
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establish by convincing evidence (x) was already in its possession prior to the
disclosure thereof by the Company; (y) was then generally known to the public;
or (z) became known to the public through no fault of the Purchaser; or (ii)
disclosures pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction, provided that the Purchaser shall use its
reasonable best efforts to give the Company prior notice thereof as promptly as
practicable but in any event not less than five Business Days prior to such
disclosure and shall limit such disclosure to the minimum amount required by
such legal requirement or court order.
(c) No investigation by or on behalf of the Purchaser shall in any
way affect the representations, warranties, covenants or agreements of the
Company set forth herein.
SECTION 5.4 PRESS RELEASES. The Company and the Purchaser shall agree
with each other as to the form and substance of any press release related to
this Agreement or the transactions contemplated hereby, and consult with each
other as to the form and substance of other public disclosures which may relate
to the transactions contemplated by this Agreement, provided, however, that
nothing contained herein shall prohibit any party, following prior notification
to such other parties, from making any disclosure which it determines in good
faith is required by law or regulation. For purposes of the foregoing, the
Company may treat a law firm designated from time to time by the Purchaser as
the authorized representative of the Purchaser.
SECTION 5.5 NO SOLICITATION. Prior to consummation of the transactions
contemplated by this Agreement and the Exchange pursuant to the Exchange
Agreement, neither the Company nor any of the directors, officers, employees,
representatives or agents of the Company shall solicit or encourage inquiries or
proposals with respect to, furnish any information relating to, or participate
in any negotiations or discussions concerning, any acquisition, lease or
purchase of all or a substantial portion of the assets of, or any equity
interest in, the Company, or any business combination with the Company, other
than as contemplated by this Agreement and the Exchange Agreement. The Company
will immediately notify the Purchaser orally and in writing if any such
inquiries or proposals are received by, or such information is requested from,
or any such negotiations or discussions are sought to be initiated with, the
Company.
SECTION 5.6 RULE 144 AND RULE 144A REPORTING. With a view to making
available to holders of Securities the benefits of certain rules and regulations
of the Commission which may permit the sale of the Securities to the public
without registration, the Company agrees at all times to:
(a) make and keep public information available, as those terms are
understood and defined in Rules 144 and 144A under the Securities Act (or any
successors thereto); and
(b) use its reasonable best efforts to file with the Commission in
a timely manner all Securities Documents required to be filed by the Company
under the Securities Laws.
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SECTION 5.7 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest on the Notes, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of its obligations under the Notes, and the Company
(to the extent it may lawfully do so) hereby expressly waives all benefits or
advantages of any such law.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 SURVIVAL OF PROVISIONS. The representations, warranties,
covenants and agreements of the Company and the Purchaser made herein shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Purchaser or the Company, as the case
may be, (ii) acceptance of any of the Securities and payment by the Purchaser
therefor and retirement thereof, (iii) the transfer of any Securities or
interest therein by the Purchaser or (iv) any termination of this Agreement.
SECTION 6.2 TERMINATION. This Agreement may be terminated:
(a) by mutual agreement of the Company and the Purchaser;
(b) by the Company by written notice to the Purchaser if any of
the conditions specified in Sections 4.1 and 4.3 of this Agreement has not been
met or waived by it pursuant to the terms of this Agreement by 5:00 p.m.,
Eastern Time, on February 29, 2000, provided, however, that the right to
terminate this Agreement pursuant to this Section 6.2(b) shall not be available
to the Company to the extent that any action by the Company or failure by the
Company to fulfill any obligation under this Agreement has been a cause of, or
resulted in, the failure of any one or more of the conditions specified in
Sections 4.1 and 4.3 of this Agreement not being fulfilled by such date; or
(c) by the Purchaser by written notice to the Company if any of
the conditions specified in Sections 4.1 and 4.2 of this Agreement has not been
met or waived by such Purchaser pursuant to the terms of this Agreement by 5:00
p.m., Eastern Time, on February 29, 2000, provided, however, that the right to
terminate this Agreement pursuant to this Section 6.2(c) shall not be available
to the Purchaser to the extent that any action by such Purchaser or failure by
such Purchaser to fulfill any obligation under this Agreement has been a cause
of, or resulted in, the failure of any one or more of the conditions specified
in Sections 4.1 and 4.2 of this Agreement not being fulfilled by such date.
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SECTION 6.3 WAIVER; AMENDMENTS.
No failure or delay on the part of the Company or the Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Purchaser at law or in equity. No waiver of or consent to any departure by
the Company or the Purchaser from any provision of this Agreement shall be
effective unless signed in writing by the party entitled to the benefit thereof.
Except as otherwise provided herein, no amendment, modification or termination
of any provision of this Agreement shall be effective unless signed in writing
by or on behalf of the Company and the Purchaser. Any amendment, supplement or
modification of or to any of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on any party hereto in any
case shall entitle another party hereto to any other or further notice or
demand in similar or other circumstances.
SECTION 6.4 COMMUNICATIONS. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to the Purchaser, initially at the address set forth
below its name on Exhibit A hereto, and thereafter at such other
address, notice of which is given in accordance with this Section 6.4,
with a copy to ▇. ▇▇▇▇ Price at ▇. ▇▇▇▇ Price Recovery Fund, II, L.P.,
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
(ii) if to the Company, initially at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer;
and thereafter at such other address notice of which is given in
accordance with this Section 6.4.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being sent by certified mail, return receipt requested, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
SECTION 6.5 COSTS, EXPENSES AND TAXES. The Company agrees to (i) pay
all costs and expenses incurred by it in connection with the negotiation,
preparation, typing, reproduction, execution, delivery and performance of this
Agreement, the Related Agreements, the Exchange Agreement and the Exchange Note
Related Agreements and any amendment or supplement or modification hereof or
thereof (except to the extent otherwise provided in the Registration Rights
Agreement or the Exchange Note Registration Rights Agreement), including without
limitation,
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attorneys fees and expenses and all reasonable costs and expenses incurred by it
in connection with the Company's administration of the foregoing agreements, and
(ii) reimburse the expenses of the Purchaser and ▇. ▇▇▇▇ Price incurred in
connection with the transactions provided for herein (through a deduction of the
Purchase Price), including reasonable fees and expenses payable to counsel to
the Purchaser and ▇. ▇▇▇▇ Price in connection with the negotiation, preparation,
typing, reproduction, execution and delivery of this Agreement, the Related
Agreements, the Exchange Agreement and the Exchange Note Related Agreements,
provided that such fees and expenses of counsel in this clause (ii) shall not
exceed $288,000 (such amount being exclusive of amounts paid by the Company in
connection with the negotiation, preparation and execution of the Existing
Agreement, exclusive of all amendments thereto). The Company shall pay all
reasonable costs and expenses (including, without limitation, attorneys' fees
and expenses), if any, incurred by the Purchaser in connection with any waiver,
amendment or modification of any provision of this Agreement or any Related
Agreement with respect to an obligation of, or requested by, the Company. In
addition, the Company shall pay any and all stamp, transfer and other similar
taxes payable in connection with the execution and delivery of this Agreement or
the original issuance of any of the Securities, and shall save and hold the
Purchaser harmless from and against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes.
SECTION 6.6 EXECUTION IN COUNTERPARTS; FAX EXECUTION.
(a) This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
(b) For purposes of negotiating and finalizing this Agreement or
any Related Agreement (including any subsequent amendments thereto), any signed
document transmitted by facsimile machine ("FAX") shall be treated in all manner
and respects as an original document. The signature of any party by FAX shall be
considered for these purposes as an original signature. Any such FAX document
shall be considered to have the same binding legal effect as an original
document. Each of the undersigned parties hereby agrees that it will not raise
the use of the FAX or the fact that any signature or document was transmitted or
communicated through the use of a FAX as a defense to the formation of this
Agreement or any Related Agreement.
SECTION 6.7 BINDING EFFECT; ASSIGNMENT. Prior to the Closing, the
rights and obligations of any Purchaser under this Agreement may not be assigned
to any other Person except with the prior written consent of the Company, and
after the Closing the rights and obligations of the Purchaser may be assigned by
such Purchaser to any Person purchasing Securities from the Purchaser
contemporaneously with such assignment (provided the rights so assigned shall
apply to the Securities so purchased), subject to the provisions of Section
3.2(b). The rights and obligations of the Company under this Agreement may not
be assigned by the Company without the consent of the Purchaser. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other
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than the parties to this Agreement, and their respective successors and
permitted assigns. This Agreement shall be binding upon the Company and the
Purchaser and their respective permitted successors and assigns.
SECTION 6.8 GOVERNING LAW. THE PARTIES HERETO ACKNOWLEDGE THAT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE NOTES BEAR A REASONABLE
RELATION TO THE STATE OF MARYLAND IN THAT, INTERALIA, ▇. ▇▇▇▇ PRICE HAS ITS
PRINCIPAL PLACE OF BUSINESS IN THE STATE OF MARYLAND, PART OF THE NEGOTIATIONS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY HAS OCCURRED IN THE STATE OF
MARYLAND AND THE CLOSING WILL OCCUR IN SUCH STATE. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
MARYLAND, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
SECTION 6.9. USURY.
All agreements between the Company and the holders of the Notes,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of acceleration of
the maturity of the Notes or otherwise, shall the interest contracted for,
charged, received, paid or agreed to be paid to the Noteholders exceed the
maximum amount permissible under the laws of the State of Maryland (hereinafter
the "Applicable Law"). If, from any circumstance whatsoever, interest would
otherwise be payable to the holders of the Notes in excess of the maximum amount
permissible under the Applicable Law, the interest payable to the holders of the
Notes shall be reduced to the maximum amount permissible under the Applicable
Law, and if from any circumstance the holders of the Notes shall ever receive
anything of value deemed interest by the Applicable Law in excess of the maximum
amount permissible under the Applicable Law, an amount equal to the excessive
interest shall be applied to the reduction of the principal of the Notes and not
to the payment of interest, or if such excessive amount of interest exceeds the
unpaid principal amount of the Notes, such excess shall be refunded to the
Company. All interest paid or agreed to be paid to the holders of the Notes
shall, to the extent permitted by the Applicable Law, be amortized, prorated,
allocated and spread throughout the full term of the Notes (including any
renewal or extension) until payment in full of the principal so that the
interest on the Notes for such full term shall not exceed the maximum amount
permissible under the Applicable Law. The Purchaser expressly disavows any
intent to contract for, charge or receive interest in an amount which exceeds
the maximum amount permissible under the Applicable Law. This paragraph as well
as similar paragraphs set forth in the Notes and the Collateral Documents shall
control all agreements between the Company and the holders of the Notes.
SECTION 6.10 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability only without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
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SECTION 6.11 CONSTRUCTION. The Article and Section headings and Table
of Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement. Section and other
references in this Agreement are to this Agreement unless otherwise specified.
In this Agreement, (i) the phrase "to the knowledge of the
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Company" or words of such import shall mean all knowledge, including actual
knowledge and knowledge of matters which a reasonable person in such position
knew or should have known, of the respective directors and officers of the
Company; (ii) use of a particular gender shall be considered to represent the
masculine, feminine or neuter gender as appropriate; and (iii) the terms
"hereof," "herein," "hereunder" and similar terms refer to this Agreement as a
whole and not to any particular provision. The Company represents and warrants
to the Purchaser that the WHEREAS recitals to this Agreement are true and
accurate and agrees that such recitals constitute an integral part of this
Agreement.
SECTION 6.12 INTEGRATION. This Agreement (including documents delivered
pursuant hereto) and the Related Agreements constitute the entire agreement
among the parties with respect to the subject matter thereof and supersede all
prior agreements between the parties with respect to such subject matter
(including without limitation the Existing Agreement and the Existing Notes) and
there are no promises or undertakings with respect thereto not expressly set
forth or referred to herein or therein.
SECTION 6.13 PARTICIPATION INTERESTS. The Company acknowledges and
agrees that immediately following the consummation of the transactions
contemplated hereby the Purchaser will sell an undivided participation interest
in the Note or Notes acquired by it in the principal amount of $5.5 million to
▇. ▇▇▇▇ Price pursuant to the Participation Agreement, and that the Purchaser or
any other registered holder of a Note shall have the right to sell additional
participation interests to ▇. ▇▇▇▇ Price and/or any other third party
(individually a "Participant" and collectively the "Participants") on such terms
as it may determine in its sole discretion. The Company acknowledges that the
original intent of the parties hereto and ▇. ▇▇▇▇ Price was for ▇. ▇▇▇▇ Price to
be a party to this Agreement and an acquirer of a Note or Notes, that the
Purchaser entered into this Agreement on the condition that ▇. ▇▇▇▇ Price be
permitted to purchase a participation interest in such amount and that the
transaction was restructured to provide for ▇. ▇▇▇▇ Price's acquisition of a
participation interest in the Notes in such amount solely because the Company is
not eligible under the terms of certain of the mortgage-related securities
included in the collateral subject to the Security Agreement to pledge an
interest in such collateral directly to ▇. ▇▇▇▇ Price. Accordingly, the Company
covenants and agrees that (i) the Purchaser or any other registered holder of a
Note shall be entitled to obtain on behalf of an applicable Participant the
benefits of this Agreement and each Related Agreement and (ii) the Company shall
take such action as may be necessary or advisable in order to enable the
Purchaser or any other registered holder of a Note to do the same and shall not
at any time insist upon, plead or in any manner whatsoever claim that a
Participant is not indirectly entitled to a right or benefit available to a
registered holder of a Note under this Agreement or any Related Agreement
because it is a Participant and not such a registered holder. Without in any way
limiting the foregoing, the Company acknowledges and agrees that its obligations
under the Registration Rights Agreement are for the benefit of both the holders
of the Notes and Participants and that any shares of Common Stock acquired by a
Participant upon conversion of a Note or Notes in which such Participant holds a
participation interest shall be subject to the terms of the Registration Rights
Agreement until such shares are no longer "Transfer Restricted Securities," as
such term is defined therein.
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SECTION 6.14. NO THIRD PARTY BENEFICIARIES. Except as otherwise
provided in Section 6.13 hereof, this Agreement is solely for the benefit of the
Purchaser and its successors and assigns and any subsequent registered holder of
a Note and nothing contained herein shall be deemed to confer upon any other
Person any right to insist on or to enforce the performance or observance of any
of the obligations contained herein. All conditions to the obligations of the
Purchaser to purchase Notes hereunder are imposed solely and exclusively for the
benefit of the Purchaser and its successors and assigns and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms and no other Person shall under any circumstances be deemed to
be a beneficiary of such conditions.
SECTION 6.15. REPRESENTATION BY COUNSEL. The Company hereby represents
that it has been represented by competent counsel of its choice in the
negotiation and execution of this Agreement and the Related Agreements; that it
has read and fully understands the terms hereof and thereof; that the Company
and its counsel have been afforded an opportunity to review, negotiate and
modify the terms of this Agreement and the Related Agreements and that it
intends to be bound by the terms hereof and thereof.
SECTION 6.16. WAIVER OF CLAIMS. The Company hereby acknowledges, agrees
and affirms that it possesses no claims, defenses, offsets, recoupment or
counterclaims of any kind or nature against or with respect to the enforcement
of this Agreement or any Related Agreement (collectively, the "Claims"), nor
does the Company now have knowledge of any facts that would or might give rise
to any Claims. If facts now exist which would or could give rise to any Claim
against or with respect to the enforcement of this Agreement or any Related
Agreement, the Company hereby unconditionally, irrevocably and unequivocally
waives and fully releases any and all such Claims as if such Claims were the
subject of a lawsuit, adjudicated to final judgment from which no appeal could
be taken and therein dismissed with prejudice.
SECTION 6.17. TEXAS LANGUAGE.
(a) THIS AGREEMENT, TOGETHER WITH THE RELATED AGREEMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES THERETO WITH RESPECT TO THE
MATTERS COVERED THEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(b) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
HERETO.
SECTION 6.18 POWER OF ATTORNEY. The Purchaser, as well as each
subsequent holder of a Note, hereby appoints United States Trust Company of New
York, collateral agent for the holders of the Notes and the Exchange Notes, as
its attorney-in-fact for the purpose of executing on its behalf any of the
Related Agreements, and any amendments, supplements or other modifications
thereto,
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as well as financing statements related to the Security Agreement, which
appointment is irrevocable and coupled with an interest.
ARTICLE VII
INDEMNIFICATION; SET OFF
SECTION 7.1. INDEMNIFICATION. The Company hereby agrees to reimburse
and indemnify each holder of a Note and its respective agents, employees and
assigns (collectively, the "Indemnified Parties") from and against any and all
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for such
Indemnified Party in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnified
Party shall be designated a party thereto) that may at any time be imposed on,
asserted against or incurred by such Indemnified Party as a result of, or
arising out of, or in any way related to or by reason of, this Agreement or any
Related Agreement, any transaction from time to time contemplated hereby or
thereby, or any transaction financed in whole or in part or directly or
indirectly with the proceeds of any Note (and without in any way limiting the
generality of the foregoing, including any exercise by a holder of a Note of any
of its rights or remedies under this Agreement or any Related Agreement), but
excluding any such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements resulting solely
from the gross negligence or willful misconduct of such Indemnified Party, as
finally determined by a court of competent jurisdiction. If and to the extent
that the foregoing obligations of the Company under this Section 7.1, or any
other indemnification obligation of the Company hereunder or under any Related
Agreement, are unenforceable for any reason, the Company hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
SECTION 7.2. SET-OFF. The Company hereby agrees that if any obligation
or liability of the Company under this Agreement or any Related Agreement shall
be due and payable (by acceleration or otherwise) after the occurrence of an
Event of Default and during the continuation thereof, a holder of a Note shall
have the right, without notice to the Company, to set-off against and to
appropriate and apply to such obligation or liability of the Company any
obligation of any nature owing to the Company, including but not limited to all
deposits (whether time or demand, general or special, provisionally credited or
finally credited, whether or not evidenced by a certificate of deposit) now or
hereafter maintained by the Company with a Purchaser. Such right shall be
absolute and unconditional in all circumstances and, without limitation, shall
exist whether or not a holder of Note or any other Person shall have given
notice or made any demand to the Company or any other Person, whether such
obligation owed to the Company is contingent, absolute, matured or unmatured (it
being agreed that a holder of a Note may deem such obligation to be then due and
payable at the time of such setoff), and regardless of the existence or adequacy
of any collateral, guaranty or any other security, right or remedy available to
a Purchaser or any other Person. The rights provided by this Section 7.2 are in
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addition to any other rights of set-off and all other rights and remedies which
a holder of a Note may otherwise have under this Agreement, any Related
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Agreement, at law or in equity or otherwise, and nothing in this Agreement or
any Related Agreement shall be deemed a waiver or prohibition of or restriction
on the rights of set-off or any other rights of any such Person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ALTIVA FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
VALUE PARTNERS, LTD
By: ▇▇▇▇▇ & PARTNERS,
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Partner
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EXHIBIT A
----------------------------------------- ------------------------------------
Name and Address of Purchaser Principal Amount of Notes
Value Partners, LTD $14,000,000
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
W (▇▇▇) ▇▇▇-▇▇▇▇
FAX (▇▇▇) ▇▇▇-▇▇▇▇
2