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EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 19, 1998
By and Between
AAMES FINANCIAL CORPORATION
and
THIRTY-FIVE EAST INVESTMENTS LLC
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TABLE OF CONTENTS
Page
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SECTION 1
Definitions
1.1 Certain Definitions......................................................1
1.2 Other Definitions........................................................3
SECTION 2
Purchase and Sale of the Shares and Warrants
2.1 Purchase and Sale........................................................4
2.2 The Closing..............................................................4
2.3 Delivery.................................................................4
SECTION 3
Representations and Warranties of the Company
3.1 Organization, etc.......................................................5
3.2 Qualification to do Business............................................5
3.3 Capitalization..........................................................5
3.4 Authorization; No Breach................................................6
3.5 Material Contracts; Defaults............................................7
3.6 Regulatory Matters......................................................7
3.7 Compliance with Laws....................................................8
3.8 Authorization of Shares and Warrants....................................9
3.9 Ownership of Shares and Warrants........................................9
3.10 Financial Reports and Regulatory Documents..............................9
3.11 Litigation.............................................................11
3.12 Tax Matters............................................................11
3.13 Anti-takeover Provisions...............................................11
3.14 Brokers or Finders.....................................................11
3.15 Disclosure.............................................................11
3.16 Risk Management Instruments............................................12
3.17 Books and Records......................................................12
3.18 Insurance..............................................................12
3.19 Environmental Matters..................................................12
3.20 Employee Benefit Plans.................................................14
3.21 Labor Matters..........................................................15
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SECTION 4
Representations, Warranties and
Acknowledgments of the Purchaser
4.1 Execution, Delivery and Performance.....................................16
4.2 Investment..............................................................16
4.3 Organization............................................................16
4.4 No Breach...............................................................16
4.5 Financing...............................................................17
SECTION 5
Conditions to the Purchaser's Obligations for the Closing
5.1 Representations and Warranties..........................................17
5.2 Registration Rights Agreement...........................................17
5.3 Warrant Agreement.......................................................18
5.4 Opinion of the Company's Counsel........................................18
5.5 HSR Act.................................................................20
5.6 Amendment of the Rights Agreement.......................................20
5.7 Proceedings.............................................................20
5.8 Closing Documents.......................................................21
5.9 Waiver..................................................................21
SECTION 6
Conditions to the Company's Obligations for the Closing
6.1 Representations and Warranties..........................................21
6.2 Legal Matters...........................................................21
6.3 Closing Documents.......................................................22
6.4 HSR Act.................................................................22
6.5 Waiver..................................................................22
6.6 Concurrent Purchase Agreement...........................................22
SECTION 7
Covenants
7.1 Financial Statements and Other Information..............................22
7.2 Directors...............................................................23
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7.3 HSR Act Filing..........................................................23
7.4 Conditions to Closing...................................................23
7.5 Use of Proceeds.........................................................23
7.6 Pledge of Shares........................................................23
7.7 No-Action Letter........................................................24
SECTION 8
Miscellaneous
8.1 Expenses...............................................................24
8.2 Additional Purchases of Common Stock...................................25
8.3 Amendments and Waivers.................................................25
8.4 Termination............................................................25
8.5 Survival of Representations and Warranties.............................25
8.6 Successors and Assigns.................................................25
8.7 Severability...........................................................26
8.8 Entire Agreement.......................................................26
8.9 Descriptive Headings; Language Interpretation..........................26
8.10 Governing Law..........................................................26
8.11 Waiver of Jury Trial...................................................27
8.12 Notices................................................................27
8.13 Remedies...............................................................28
8.14 Counterparts...........................................................28
8.15 Publicity..............................................................28
8.16 Legend.................................................................28
8.17 Transfer Opinion.......................................................29
INDEX TO EXHIBITS
Exhibit Number
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Registration Rights Agreement A
Warrant Agreement B
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March
19, 1998, by and between Aames Financial Corporation, a Delaware corporation
(the "Company") and Thirty-Five East Investments LLC, a Delaware limited
liability company (the "Purchaser").
WHEREAS, the Company desires to sell 2,225,865 shares (the
"Shares") of Common Stock and warrants to purchase an additional 2,225,865
shares of Common Stock, on the terms and conditions set forth herein; and
WHEREAS, the Purchaser desires to purchase the Shares and the
Warrants on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
SECTION 1
Definitions
1.1 Certain Definitions. The terms specified in this Section 1.1
shall, for all purposes of this Agreement, have the meanings herein specified,
unless the context expressly otherwise requires.
"Affiliate" means a person that directly, or indirectly through
one of more intermediaries, controls or is controlled by, or is under common
control with, the person specified.
"Closing" shall have the meaning assigned to such term in Section
2.2.
"Common Stock" shall mean the Company's common stock, par value
$.001 per share.
"Concurrent Purchase Agreement" shall mean the Stock Purchase
Agreement, dated the date hereof, by and between the Company and the Concurrent
Purchaser.
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"Concurrent Purchaser" shall mean Turtle Creek Revocable Trust.
"Documents" shall mean, collectively, this Agreement, the Warrant
Agreement and the Registration Rights Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934 or
any federal statute from time to time in effect which has replaced such statute.
"Governmental Authority" means any court, administrative agency
or commission or other federal, state or local governmental authority or
instrumentality.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976.
"Material Adverse Effect" means any effect that (i) is material
and adverse to the financial position, results of operations, business or
prospects of the Company and its Subsidiaries taken as a whole, or (ii) would
materially impair the ability of either the Purchaser or the Company to perform
its obligations under any of the Documents or otherwise, provided, however, that
in determining whether a Material Adverse Effect has occurred there shall be
excluded any effect on the referenced party the cause of which is (i) any change
in consumer finance or similar laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental authorities
and (ii) any change in generally accepted accounting principles or regulatory
accounting principles applicable to finance companies generally.
"Officer's Certificate" shall mean a certificate signed by the
chief executive officer and the chief financial officer of the Company, stating
that (i) the person signing such certificate has made or has caused to be made
such investigations as are necessary in order to permit him to verify the
accuracy of the information set forth in such certificate, and (ii) to the best
of such person's knowledge, such certificate does not misstate any material fact
or omit to state any material fact necessary to make the certificate not
misleading.
"Registration Rights Agreement" shall have the meaning set forth
in Section 5.2 hereof.
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"Regulatory Documents" shall have the meaning set forth in
Section 3.10.
"Rights" shall mean securities or obligations convertible into or
exercisable or exchangeable for, or giving any person any right to subscribe for
or acquire, or any options, calls or commitments relating to, or any stock
appreciation right or other instrument the value of which is determined in whole
or in part by reference to the market price or value of, shares of Common Stock.
"Rights Agreement" shall mean the Rights Agreement dated as of
June 21, 1996, between the Company and ▇▇▇▇▇ Fargo Bank.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, or any
federal statute from time to time in effect which has replaced such statute.
"Subsidiary" shall mean any corporation of which shares of stock
having a majority of the general voting power in electing the Board of Directors
are, at the time as of which any determination is being made, owned by the
Company either directly or through its Subsidiaries, any partnership in which
the Company or any Subsidiary is a general partner and any joint venture in
which the Company or any Subsidiary is a joint venturer.
"Warrant Agreement" shall have the meaning set forth in Section
5.3 hereof.
"Warrant Shares" shall mean the shares of Common Stock issuable
upon exercise of the Warrants.
"Warrants" shall mean the warrants to purchase an aggregate of up
to 2,225,865 shares of Common Stock at a price of $17.2031 per share upon the
occurrence of a Purchase Event (as defined in the Warrant Agreement), subject to
adjustment as provided herein and in the Warrant Agreement.
1.2 Other Definitions. In addition to the terms defined in
Section 1.1 hereof, certain other terms are defined elsewhere in this Agreement,
and, whenever such
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terms are used in this Agreement, they shall have their respective defined
meanings, unless the context expressly otherwise requires.
SECTION 2
Purchase and Sale of the Shares and Warrants
2.1 Purchase and Sale. On the terms and subject to the conditions
set forth herein, the Company will issue to the Purchaser and the Purchaser will
purchase from the Company the Shares at a purchase price of $13.7625 per share,
for an aggregate purchase price of $30,633,467.06 (the "Purchase Price"). In
addition, on the terms and subject to the conditions set forth herein, in
consideration for the purchase of the Shares, the Company will issue to the
Purchaser the Warrants. If the Company shall adjust, split, combine or
reclassify its shares of Common Stock between the date hereof and the date of
Closing, the purchase price per share, the number of shares of Common Stock
purchased hereby, the number of Warrants issued and the exercise price of such
Warrants shall be adjusted so that the Purchaser's interest shall not be
diluted.
2.2 The Closing. The delivery of and payment for the Shares and
Warrants will take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, no later than five business days after
all waiting periods applicable to the transactions contemplated by this
Agreement and the Concurrent Purchase Agreement under the HSR Act have expired
or been terminated, and on the same day as the closing of the Concurrent
Purchase Agreement or such other time and date or such other place, as the
parties shall mutually agree in writing (the "Closing").
2.3 Delivery. At the Closing, the Company will deliver to the
Purchaser the Shares and the Warrants, registered in the Purchaser's or its
nominee's name, against payment therefor by the Purchaser of the Purchase Price
in immediately available funds by wire transfer to such account as the Company
may designate in writing.
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SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser that:
3.1 Organization, etc. Each of the Company and its Subsidiaries
is a corporation duly incorporated, validly existing and in good standing under
the laws of the state of its incorporation. Each of the Company and its
Subsidiaries has all requisite corporate power and authority to own and operate
its properties, to carry on its businesses as now conducted and to carry out and
perform its obligations under the terms of this Agreement, the Warrant Agreement
and the Registration Rights Agreement.
3.2 Qualification to do Business. The Company is duly licensed or
qualified and is in good standing as a foreign corporation in the State of
California and each other jurisdiction wherein the nature of the business
transacted by the Company or the nature of the property owned or leased by it
requires such licensing or qualification. Each of the Subsidiaries is duly
licensed or otherwise qualified in each state where in the nature of the
business transacted by such Subsidiary or the nature of the property owned or
leased by it requires such licensing or qualification and where failure to be so
licensed or qualified would reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect on the Company.
3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock and 1,000,000 shares of preferred stock. At
March 17, 1998, there was outstanding 27,823,317 shares of Common Stock and 0
shares of preferred stock. At February 28, 1998, the Company had outstanding
5,037,121 options to purchase shares of Common Stock, which options were duly
granted pursuant to the 1991 Stock Incentive Plan, 1995 Stock Incentive Plan,
1996 Stock Incentive Plan, 1997 Non-Qualified Stock Option Plan, 1997 Stock
Option Plan and outside of any such plans. Each such plan has been duly approved
by the Board of Directors and, except for the 1997 Non-Qualified Stock Option
Plan, stockholders of the Company. 5,315,505 shares of Common
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Stock are reserved for issuance upon exercise of such options, 6,106,617 shares
of Common Stock are reserved for issuance upon conversion of the Company's 5.5%
Subordinated Convertible Debentures due 2006. 500,000 Shares of preferred stock
are reserved for issuance upon exercise of the Rights distributed to holders of
Common Stock pursuant to the Rights Agreement, 1,124,184 shares of Common Stock
are reserved for issuance under the Company's Dividend Reinvestment and Stock
Purchase Plan and 562,500 shares of Common Stock are reserved for issuance under
the Company's Stock Purchase Plan.
(b) Except as described in Section 3.3(a), the Company has no
outstanding Rights, except for Warrants which will be issued pursuant to this
Agreement and the Concurrent Purchase Agreement.
(c) All of the outstanding shares of the capital stock of the
Company are validly issued, fully paid and nonassessable and, upon the issuance
and sale of the Shares, the Shares will be validly issued, fully paid and
nonassessable, and upon the valid exercise (including payment of the exercise
price) of the Warrants, the Warrant Shares will be validly issued, fully paid
and nonassessable.
3.4 Authorization; No Breach. The execution, delivery and
performance of each of the Documents and all other agreements and instruments
contemplated thereby and the consummation of all transactions contemplated
thereby have been duly authorized by all requisite corporate action of the
Company. Assuming due execution by the Purchaser, each of the Documents and all
other agreements and instruments contemplated thereby constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, equitable subordination,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing. The execution and delivery by the Company of each of the Documents and
all other agreements and other instruments contemplated and the consummation of
the transactions contemplated thereby do not and will not (with or without the
giving of notice, the lapse of time or both) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or any Subsidiary's
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capital stock or assets or (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) give any
third party the right to accelerate any obligation under or (iv) result in a
violation of, the Certificate of Incorporation or Bylaws of the Company, or, any
law, statute, rule, regulation, instrument, order, judgment or decree to which
the Company or any of its properties is subject, or any contract to which the
Company is a party or by which it is bound or to which any of its properties is
subject, assuming that all applicable waiting periods under the HSR Act have
expired or been terminated and all applicable filings pursuant to state
securities laws, the HSR Act, the Securities Act, the Exchange Act and the rules
and regulations of the New York Stock Exchange have been made.
3.5 Material Contracts; Defaults. Except for those agreements and
other documents filed as exhibits to its Regulatory Documents or as set forth in
Schedule 3.5, neither the Company nor any of its subsidiaries is a party to,
bound by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract" within
the meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
materially restricts the conduct of business by it or any of its Subsidiaries.
Except as disclosed in the Regulatory Documents, neither the Company nor any of
its Subsidiaries is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its respective assets, business, or
operations may be bound or affected, or under which it or its respective assets,
business, or operations receives benefits, or under any other contract if such
default could reasonably be expected to have a Material Adverse Effect on the
Company, and in either case there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
3.6 Regulatory Matters. (a) No consent, approval, authorization,
registration or qualification of any Governmental Authority or any third party
is required to be obtained by the Company or any of its Subsidiaries in
connection with the execution, delivery or performance by the Company of each of
the Documents, except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities laws, the ▇▇▇ ▇▇▇,
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the Securities Act, the Exchange Act and the rules and regulations of the New
York Stock Exchange.
(b) Neither the Company nor any of its Subsidiaries or any of
their properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of companies which originate, process, underwrite, sell, securitize
or service loans (collectively, the "Regulatory Authorities").
(c) Neither the Company nor any of its Subsidiaries has been
advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
3.7 Compliance with Laws. The Company and each of its
Subsidiaries:
(a) Is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Federal
Truth-in-Lending Act and Regulation Z, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices except where such noncompliance would not, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse Effect
on the Company.
(b) Has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted,
except where the failure to obtain such permits, licenses, authorizations,
orders and approvals or to make such filings, applications and registrations
could not reasonably be expected to, singularly or in the aggregate, to have a
Material Adverse Effect; all such
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permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to Company's knowledge, no suspension or cancellation of
any of them is threatened.
(c) Except as disclosed in Schedule 3.7, has received, since June
30, 1997, no notification or communication from any Governmental Authority (i)
asserting that the Company or any of its Subsidiaries is not in compliance with
any of the statutes, regulations or ordinances which such Governmental Authority
enforces, except where such notification or communication would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on the Company or (ii) threatening to revoke any
material license, franchise, permit or governmental authorization (nor, to the
Company's knowledge, do any grounds for any of the foregoing exist).
3.8 Authorization of Shares and Warrants. The Company has
authorized the issuance and sale to the Purchaser of the Shares and Warrants.
Each share of Common Stock issued and sold to the Purchaser hereunder has the
rights set forth in the Company's Certificate of Incorporation and each Warrant
has the terms and rights set forth in the Warrant Agreement.
3.9 Ownership of Shares and Warrants. Upon delivery of the Shares
and Warrants to the Purchaser and payment therefor pursuant hereto, good and
valid title to such Shares and Warrants, free and clear of all liens,
encumbrances, equities or claims, will pass to the Purchaser. The issuance and
sale of the Shares and Warrants pursuant hereto will not give rise to any
preemptive rights and will not violate any law, statute, rule, regulation,
instrument, order, judgment or decree to which the Company or any of its assets
are subject.
3.10 Financial Reports and Regulatory Documents.
(a) The Company's Annual Reports on Form 10-K for the fiscal
years ended June 30, 1995, 1996 and 1997, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1995 under the
Securities Act, under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in
the form filed or to be filed (collectively, "Regulatory Documents") with the
SEC,
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as applicable, as of the date filed, (i) complied or will comply in all material
respects as to form with the applicable requirements under the Securities Act
and the Exchange Act, as the case may be, and (ii) did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
each of the consolidated balance sheets contained in or incorporated by
reference into any such Regulatory Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date, and each
of the consolidated statements of income and changes in stockholders' equity and
cash flows or equivalent statements in such Regulatory Documents (including any
related notes and schedules thereto) fairly presents, or will fairly present,
the consolidated results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of the Company and its Subsidiaries
for the periods to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end audit
adjustments and the lack of complete footnote disclosure in the case of
unaudited statements.
(b) Except as disclosed in Schedule 3.10, since June 30, 1997,
the Company and its Subsidiaries have not incurred any material liability other
than in the ordinary course of business consistent with past practice (other
than liabilities with respect to expenses related to this Agreement and the
transactions contemplated hereby).
(c) Except as disclosed in Schedule 3.10 or disclosed in the
Regulatory Documents filed on or before the date hereof, since June 30, 1997,
(i) the Company and its Subsidiaries have conducted their respective businesses
in the ordinary and usual course consistent with past practice (excluding the
incurrence of expenses related to this Agreement and the transactions
contemplated hereby) and (ii) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and events
(described in any paragraph of Section 3 or otherwise), is reasonably likely to
have a Material Adverse Effect.
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3.11 Litigation. Except as disclosed in Schedule 3.11, no
material litigation, claim or other proceeding before any court or governmental
agency is pending against the Company or any of its Subsidiaries and, to the
Company's knowledge, no such litigation, claim or other proceeding has been
threatened.
3.12 Tax Matters. The Company has duly filed or caused to be
filed all material tax returns (Federal, state, local and foreign) required to
be filed and paid all amounts of taxes shown or required to be shown thereon to
be due, including interest and penalties, except to the extent of any taxes
being contested by or on behalf of the Company in good faith and by proper
proceedings, for which adequate reserves have been provided. The Company does
not possess any knowledge of any actual or proposed additional tax assessments
against it which, singly or in the aggregate, could have a Material Adverse
Effect on the Company. No issues raised in connection with the examination of
any of the tax returns referred to above are currently pending which is likely
to result in a Material Adverse Effect on the Company, and no waivers of
statutes of limitation have been given or requested by or with respect to any
taxes of the Company.
3.13 Anti-takeover Provisions. Subject to amendment of the Rights
Agreement prior to Closing, the acquisition of the Shares and the Warrants and
the exercise of the Warrants by the Purchaser will not cause the Purchaser or
any of its Affiliates to become (i) an "Acquiring Person" for purposes of the
Rights Agreement or (ii) subject to the restrictions against business
combinations contained in Section 203 of the Delaware General Corporation Law.
3.14 Brokers or Finders. The Company has not incurred, nor will
it incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement and the transactions
contemplated hereby, other than to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation.
3.15 Disclosure. Neither this Agreement nor any of the schedules
or other attachments hereto nor any document delivered by the Company to the
Purchaser pursuant hereto or in connection herewith contains any untrue
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statement of a material fact or omits a material fact necessary to make the
statements contained therein not misleading.
3.16 Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for the Company's own account, or
for the account of one or more of the Company's Subsidiaries or their customers,
if any, were entered into in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of the Company or one
of its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect. Neither the Company nor its
Subsidiaries, nor to the Company's knowledge, any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
3.17 Books and Records. The books and records of the Company and
its Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies of
any kind contained or reflected therein, and they fairly present the financial
position of the Company and its Subsidiaries.
3.18 Insurance. The Company and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management of
the Company reasonably has determined to be prudent in accordance with industry
practices. All the insurance policies, binders, or bonds maintained by the
Company or its Subsidiaries are in full force and effect; the Company and its
Subsidiaries are not in material default thereunder; and all claims thereunder
have been filed in due and timely fashion.
3.19 Environmental Matters. To the best knowledge of the Company,
neither the conduct nor operation of the Company or its Subsidiaries nor any
condition of any property presently or previously owned, leased or operated
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by any of them (including, without limitation, in a fiduciary or agency
capacity), violates or violated Environmental Laws and no condition has existed
or event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws which violation or liability would have or
would reasonably be expected to have a Material Adverse Effect on the Company.
To the knowledge of the Company's executive officers, no property on which the
Company or any of its Subsidiaries holds a Lien, violates or violated
Environmental Laws and no condition has existed or event has occurred with
respect to any such property that, with notice or the passage of time, or both,
is reasonably likely to result in liability under Environmental Laws, which
violation or liability would have or would reasonably be expected to have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has received any notice from any person or entity that the Company
or its Subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from, any such property, which violation or
liability would have or would reasonably be expected to have a Material Adverse
Effect on the Company.
As used herein, the term "Environmental Law" means any federal,
state or local law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection or restoration
of the environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, wetlands, indoor air, pollution, contamination or any injury or
threat of injury to persons or property in connection with any Hazardous
Substance and the term "Hazardous Substance" means any substance in any
concentration that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is or
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may be the subject of regulatory action by any Governmental Authority in
connection with any Environmental Law.
3.20 Employee Benefit Plans.
(a) All employee benefit plans (within the meaning of Section
3(3) of ERISA), other than "multiemployer plans" within the meaning of Section
3(37) of ERISA (the "Plans"), covering current employees or former employees of
the Company and its subsidiaries (the "Employees"), to the extent subject to
ERISA, are in material compliance with ERISA. Except as set forth in Schedule
3.20, the Company is not a party to any "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to
be qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). There is no material pending or threatened litigation
relating to the Plans. Neither the Company nor any of its Subsidiaries has
engaged in a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject the
Company or any Subsidiary to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA in an amount which would be material.
(b) No material liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"). Neither the Company, any of its
Subsidiaries nor an ERISA Affiliate has contributed to a "multiemployer plan",
within the meaning of Section 3(37) of ERISA, at any time on or after September
26, 1980. No notice of a "reportable event", within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any Pension Plan or by any ERISA Affiliate within
the 12-month period ending on the date hereof or will be required to be filed in
connection with the transactions contemplated by this Plan.
(c) All contributions required to be made under the terms of any
Plan have been timely made or have been
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reflected on the consolidated financial statements of the Company included in
the Regulatory Documents. Neither any Pension Plan nor any single-employer plan
of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of ERISA
and no ERISA Affiliate has an outstanding funding waiver. Neither the Company
nor any of its Subsidiaries has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(d) The consummation of the transactions contemplated by this
Agreement will not (x) entitle any employees of the Company or any of its
Subsidiaries to severance pay, (y) accelerate the time of payment or vesting or
trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the Plans
or deferred compensation, stock option, stock purchase, stock appreciation
rights, stock based, incentive and bonus plans (collectively, the "Benefit
Plans") or (z) result in any breach or violation of, or a default under, any of
the Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement, none of the
Purchaser, the Company or any of its Subsidiaries will be obligated to make a
payment to an individual that would be a "parachute payment" to a disqualified
individual" as those terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
3.21 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 asserting that it 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 labor dispute involving it or any of its Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving its or any of its Subsidiaries' employees seeking
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to certify a collective bargaining unit or engaging in other organizational
activity.
SECTION 4
Representations, Warranties and
Acknowledgments of the Purchaser
The Purchaser hereby represents and warrants to the Company with
respect to the purchase of the Shares and Warrants hereunder as follows:
4.1 Execution, Delivery and Performance. The Purchaser has full
power and authority to execute and deliver this Agreement and each of the
agreements contemplated hereby to which the Purchaser is a party and to perform
the Purchaser's obligations hereunder and thereunder. This Agreement and each of
the agreements contemplated hereby to which the Purchaser is a party has been
duly authorized, executed and delivered by the Purchaser and is a valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights. No consent, approval, authorization,
order, filing, registration or qualification of or with any court, governmental
authority or third person is required to be obtained by the Purchaser in
connection with the execution and delivery of this Agreement or any of the
agreements contemplated hereby to which the Purchaser is a party or the
performance of the Purchaser's obligations hereunder or thereunder.
4.2 Investment. The Purchaser is acquiring the Shares and
Warrants for its own account and has no intention of distributing such
securities or the Warrant Shares in violation of the Securities Act or
applicable state securities or "blue sky" laws.
4.3 Organization. Purchaser is duly organized, validly existing
and in good standing under the laws of the state of its organization.
4.4 No Breach. The execution and delivery by the
Purchaser of each of the Documents and all other agreements
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and other instruments contemplated and the consummation of the transactions
contemplated thereby do not and will not (with or without the giving of notice,
the lapse of time or both) (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
Purchaser's or any Subsidiary's equity interests or assets, (iv) give any third
party the right to accelerate any obligation under, or (v) result in a violation
of, the Purchaser's certificate of formation and limited liability company
agreement, if the Purchaser is a limited liability company, or trust agreement,
if the Purchaser is a trust, or any law, statute, rule, regulation, instrument,
order, judgment or decree to which the Purchaser or any of its properties is
subject, or any contract to which the Purchaser is a party or by which it is
bound or to which any of its properties is subject, assuming that all applicable
waiting periods have expired under the HSR Act.
4.5 Financing. The Purchaser has or will have at the Closing
funds available to it to consummate the purchase of the Shares pursuant to the
terms of this Agreement.
SECTION 5
Conditions to the Purchaser's Obligations for the Closing
The obligation of the Purchaser to purchase and pay for the
Shares and Warrants to be purchased by the Purchaser at the Closing is subject
to the satisfaction on or before the date of the Closing of the following
conditions:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 3 hereof shall be true in all
material respects at and as of the Closing as though then made, except as
expressly contemplated thereby.
5.2 Registration Rights Agreement. A Registration Rights
Agreement substantially in the form of Exhibit A shall have been executed and
delivered by the Company and the Purchaser and shall be in full force and effect
as of the Closing.
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5.3 Warrant Agreement. A Warrant Agreement substantially in the
form of Exhibit B shall have been executed and delivered by the Company and the
Purchaser and shall be in full force and effect as of the Closing.
5.4 Opinion of the Company's Counsel. The Purchaser shall have
received from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel for the Company, her opinion,
dated the date of the Closing, in form and substance reasonably satisfactory to
the Purchaser, to the effect that, subject to customary exceptions:
(a) each of the Company and its Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws
of the state of its incorporation, and each of the Company and its
Subsidiaries has all requisite corporate power and authority to own and
operate its properties, to carry on its businesses as now conducted and
to carry out and perform its obligations under the terms of this
Agreement, the Warrant Agreement and the Registration Rights Agreement;
(b) the Company is duly licensed or qualified and is in good
standing as a foreign corporation in the State of California and each
other jurisdiction wherein the nature of the business transacted by the
Company or the nature of the property owned or leased by it requires
such licensing or qualification. Each of the Subsidiaries is duly
licensed or otherwise qualified in each state wherein the nature of the
business transacted by such Subsidiary or the nature of the property
owned or leased by it requires such licensing or qualification and where
failure to be so licensed or qualified would reasonably be expected to,
singly or in the aggregate, have a Material Adverse Effect on the
Company;
(c) the authorized capital stock of the Company consists of
50,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, and all of the outstanding shares of the capital stock of the
Company are validly issued, fully paid and nonassessable; upon the
issuance and sale of the Shares, the Shares will be validly issued,
fully paid and nonassessable; and upon the valid exercise (including
payment of the exercise
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price) of the Warrants, the Warrant Shares will be validly issued, fully
paid and nonassessable;
(d) the execution, delivery and performance of each of the
Documents and all other agreements and instruments contemplated thereby
and the consummation of all transactions contemplated thereby have been
duly authorized by all requisite corporate action of the Company; each
of the Documents and all other agreements and instruments contemplated
thereby constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, equitable subordination,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing; and to the best knowledge
of such counsel (except as provided below), the execution and delivery
by the Company of each of the Documents and all other agreements and
other instruments contemplated and the consummation of the transactions
contemplated thereby do not and will not (with or without the giving of
notice, the lapse of time or both) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or any
Subsidiary's capital stock or assets or (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) give any third party the right to accelerate any
obligation under or (iv) result in a violation of, the Certificate of
Incorporation or Bylaws of the Company (where such opinion shall not be
qualified as to such counsel's best knowledge), or any law, statute,
rule, regulation, instrument, order, judgment or decree to which the
Company or any of its properties is subject, or any contract to which
the Company is a party or by which it is bound or to which any of its
properties is subject;
(e) no consent, approval, authorization, registration or
qualification of any Governmental Authority or any third party is
required to be obtained by the Company or any of its Subsidiaries in
connection with the execution, delivery or performance by the Company of
each of the Documents, except such consents, approvals, authorizations,
registration or
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qualifications as may be required under the HSR Act, which shall have
been received prior to the Closing, and state securities laws, the
Securities Act, the Exchange Act and the rules and regulations of the
New York Stock Exchange;
(f) the Company has authorized the issuance and sale to the
Purchaser of the Shares and Warrants; each share of Common Stock issued
and sold to the Purchaser hereunder has, and each Warrant Share issued
upon the valid exercise of Warrants will have, the rights set forth in
the Company's Certificate of Incorporation, and each Warrant has the
terms and rights set forth in the Warrant Agreement; and
(g) the acquisition of the Shares and the Warrants and the
exercise of the Warrants by the Purchaser will not cause the Purchaser
or any of its Affiliates to become (i) an "Acquiring Person" for
purposes of the Rights Agreement or (ii) subject to the restrictions
against business combinations contained in Section 203 of the Delaware
General Corporation Law.
5.5 HSR Act. Any waiting period applicable to the consummation of
the transactions contemplated by this Agreement or the Concurrent Purchase
Agreement under the HSR Act shall have expired or been terminated, and no action
shall have been instituted by the Department of Justice or the Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall have not been withdrawn or terminated.
5.6 Amendment of the Rights Agreement. The Company shall have
caused the Rights Agreement to be amended to provide that the Purchaser and its
Affiliates, so long as the Purchaser and its Affiliates beneficially owns shares
of Common Stock equal to at least 50% of the number of Shares purchased
hereunder shall be an "Exempt Person" under the Rights Agreement.
5.7 Proceedings. All corporate and other proceedings taken or
required to be taken in connection with the transactions contemplated hereby to
be consummated at or prior to the Closing shall have been taken and all
documents incident thereto shall be satisfactory in form and substance to the
Purchaser.
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5.8 Closing Documents. The Company shall have delivered to the
Purchaser on the date of such Closing:
(a) An Officer's Certificate dated the date of such Closing,
stating that the conditions set forth in Section 5.1 have been satisfied;
(b) Copies of the Certificate of Incorporation and the Bylaws of
the Company, each certified by an officer of the Company;
(c) Copies of the resolutions adopted by the Company's Board of
Directors, authorizing the transactions contemplated hereby; and
(d) Such other documents relating to the transactions
contemplated by this Agreement as the Purchaser or their counsel may reasonably
request.
5.9 Waiver. Any condition specified in this Section 5 may be
waived in writing by the Purchaser.
SECTION 6
Conditions to the Company's Obligations for the Closing
The obligation of the Company to the Purchaser to issue and
deliver the Shares and Warrants to the Purchaser at the Closing is subject to
the satisfaction on or before the date of the Closing of the following
conditions:
6.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects on and as of the date of the Closing as if made
on and as of such date; and the Purchaser shall have performed and complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by the Purchaser prior to or at the
Closing.
6.2 Legal Matters. The Purchaser's purchase of and payment for
the Shares and Warrants shall not be prohibited by any applicable law, court
order or governmental regulation.
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6.3 Closing Documents. The Purchaser shall have delivered to the
Company on the date of such Closing:
(a) Copies of the certificate of formation and limited liability
company agreement, if the Purchaser is a limited liability company, or trust
agreement, if the Purchaser is a trust, each certified by an officer, if the
Purchaser is a limited liability company, or the trustee, if the Purchaser is a
trust; and
(b) Such other documents relating to the transactions
contemplated by this Agreement as the Company or its counsel may reasonably
request.
6.4 HSR Act. Any waiting period applicable to the consummation of
the transactions contemplated by this Agreement or the Concurrent Purchase
Agreement under the HSR Act shall have expired or been terminated, and no action
shall have been instituted by the Department of Justice or the Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall have not been withdrawn or terminated.
6.5 Waiver. Any condition specified in this Section 6 may be
waived in writing by the Company.
6.6 Concurrent Purchase Agreement. The Concurrent Purchase
Agreement shall be consummated simultaneously with the Closing.
SECTION 7
Covenants
7.1 Financial Statements and Other Information.
(a) Prior to the Closing, the Company shall furnish to the
Purchaser copies of all filings made by the Company with the SEC, promptly
following such filing.
(b) Prior to the Closing, the Company shall furnish to the
Purchaser the same information that it provides its directors, except for
discussions, analyses and other information pertaining to this Agreement and the
Documents. In addition, the Company shall, prior to the
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Closing, furnish to the Purchaser prompt notice of (a) any material change in
its business, operations or prospects, (b) the institution or threat of material
litigation, (c) any material change in the number of outstanding shares of
Common Stock or preferred stock, and (d) any event or condition that constitutes
a breach of this Agreement, or that might be reasonably expected to cause its
representations and warranties set forth herein not to be true and correct in
all material respects as of the Closing.
7.2 Directors. At the Closing, or as soon as practicable
thereafter, the Company shall cause ▇▇▇▇▇▇ ▇▇▇▇▇▇ to be elected to the Company's
Board of Directors and shall continue to recommend that such person or any other
person designated by the Purchaser be elected a member of the Board of Directors
so long as the Purchaser, the Concurrent Purchaser and their respective
Affiliates beneficially own in the aggregate shares of Common Stock equal to at
least 50% of the total number of Shares purchased hereunder and under the
Concurrent Purchase Agreement.
7.3 HSR Act Filing. If and when necessary, as promptly as
practicable, the Company and the Purchaser shall make all filings and
submissions under the HSR Act as may be reasonably required to be made in
connection with this Agreement and the transactions contemplated hereby. The
Company shall furnish to the Purchaser, and the Purchaser shall furnish to the
Company, such information and assistance as the other may reasonably request in
connection with the preparation of any such filings or submissions.
7.4 Conditions to Closing. The Company and the Purchaser shall
each use their best efforts to cause the conditions to the Closing, as described
herein in Sections 5 and 6, to be satisfied, and to cause the Closing to occur
promptly after satisfaction of the conditions thereto.
7.5 Use of Proceeds. Any consideration received by the Company
for the sale of the Shares and Warrants to the Purchaser shall be used solely
for working capital purposes, capital expenditures, repayment of indebtedness or
the payment of business expenses.
7.6 Pledge of Shares. If the Purchaser, pursuant to Section 8.6,
pledges any Shares, Warrants or Warrant Shares to secure indebtedness or other
obligations, the
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Company agrees that such pledgee shall be entitled to rely on the Opinion of the
Company's Counsel delivered pursuant to Section 5.4 and each of the closing
documents delivered pursuant to Section 5.8 as if such opinion or certificate
was addressed to such pledgee, and the Company, if reasonably requested by such
pledgee, shall provide opinions of counsel, reliance letters, certificates or
other documents which provide that the representations and warranties contained
in Sections 3.1, 3.3(c), 3.4 (first two sentences only) and 3.8 are correct in
all material respects as if made on such later date and which state that such
pledgee shall be entitled to rely on the documents delivered pursuant to
Sections 5.4, 5.8(a), (b) and (c) and this Section 7.6 (each, a "bring-down
document") none of which will the Company be obligated to reconfirm or in any
way certify as of any date subsequent to the Closing; provided, that the Company
shall be obligated to provide such bring-down documents on no more than two
occasions without charge to the Purchaser, and thereafter, the Purchaser shall
be required to reimburse the Company for all reasonable expenses relating
thereto; provided, further, the Company's obligations under this Section 7.6
shall expire two years after the Closing.
7.7 No-Action Letter. At the request of the Purchaser, the
Company agrees to file with the Commission as soon as practicable after the
Closing, but in no event later than the 120th day after the Closing, a request
for a no-action letter to the effect that the Company may file a shelf
registration statement under the Securities Act to register the offer and sale
by the Company of the Warrant Shares and Other Warrant Shares after the
occurrence of a Purchase Event (as defined in the Warrant Agreement and Other
Warrant Agreement, as the case may be) and such filing would not result in the
loss of the exemption from the registration requirements under the Securities
Act which was relied on by the Company for the offer and sale of any of the
Shares, Other Shares, Warrants or Other Warrants. The Purchaser agrees to
reimburse the Company for reasonable fees, disbursements and expenses of one
counsel retained in connection with such no-action letter.
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SECTION 8
Miscellaneous
8.1 Expenses. Each party hereto shall bear all expenses incurred
by it in connection with this Agreement or the transactions contemplated hereby.
8.2 Additional Purchases of Common Stock. Nothing in this
Agreement or any of the Documents shall restrict the Purchaser from acquiring
additional shares of Common Stock whether through open market purchases or
otherwise.
8.3 Amendments and Waivers. Except as otherwise provided herein,
any provision hereof may be amended or waived generally and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, if, but only if, the Company has obtained the written consent
of the Purchaser. No course of dealing between the Company or any of its
Subsidiaries, on the one hand, and the Purchaser on the other hand, or any delay
on the part of the Purchaser in exercising any rights hereunder or under any
agreement contemplated hereby, will operate as a waiver of any rights of any
such holder.
8.4 Termination. If the Closing does not occur by June 30, 1998,
this Agreement shall automatically terminate, and no party to this Agreement
shall have any liability or further obligation to any other party except that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
8.5 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive for a period of one year from the date of
the execution and delivery of this Agreement, regardless of any investigation
made by or on behalf of any party.
8.6 Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement and all of the provisions hereto shall bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns whether so expressed or not, but, except as expressly
contemplated herein, neither this Agreement nor
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any of the rights, interests or obligations hereunder shall be assigned,
directly or indirectly, by the Purchaser or the Company without the prior
written consent of the other; provided, that in connection with a bona fide
pledge of any Shares, Warrants or shares of common stock issuable upon exercise
of the Warrants to secure indebtedness or other obligations, the Purchaser may
assign its rights, interests and obligations hereunder to the beneficiary of
such pledge without the consent of the Company; and provided, further, that the
Purchaser may assign this Agreement to any Affiliate of the Purchaser or to
Concurrent Purchaser or any of its Affiliates without the consent of the
Company, so long as such assignment to any savings and loan institution, savings
and loan holding company, bank or similar regulated entity or any subsidiary of
the foregoing will not subject the Company or any of its Subsidiaries to
examination or supervision by any federal or state banking supervisory
authority.
8.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law or rule in any
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
8.8 Entire Agreement. This Agreement, together with the Documents
and that certain Confidentiality Agreement by and between the Company and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, dated March 9, 1998, is the entire agreement among the parties and,
when executed by the parties hereto, supersedes all prior agreements and
communications, either verbal or in writing, with respect to the subject matter
contained herein.
8.9 Descriptive Headings; Language Interpretation. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement. In the interpretation of this
Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words denoting
gender shall include all genders,
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(c) references to persons shall include corporations or other bodies and vice
versa, and (d) references to parties, sections, schedules, paragraphs and
exhibits shall mean the parties, sections, schedules, paragraphs and exhibits of
and to this Agreement.
8.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PROVISIONS THEREOF.
8.11 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
8.12 Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally or
three days after being mailed by certified or registered mail, return receipt
requested and postage prepaid, to the recipient. Such notices, demands and other
communications will be sent to the Company and the Purchaser at the addresses
indicated below:
If to the Company:
Aames Financial Corporation
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ Quicksilver
If to the Purchaser:
MacAndrews & Forbes Holdings Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
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With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
8.13 Remedies. The Company acknowledges that it would be
impossible to determine the amount of damages that would result from any breach
by it of any of the provisions of this Agreement and that the remedy at law for
any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that the Purchaser shall, in addition to any
other rights or remedies which it may have, including recission of this
Agreement, be entitled to seek such equitable and injunctive relief as may be
available from any court of competent jurisdiction to compel specific
performance of, or restrain the Company from violating any of, such provisions.
In connection with any action or proceeding for injunctive relief, the Company
hereby waives the claim or defense that a remedy at law alone is adequate and
agrees, to the maximum extent permitted by law, to have each provision of this
Agreement specifically enforced against it, without the necessity of posting
bond or other security against it, and consents to the entry of injunctive
relief against it enjoining or restraining any breach or threatened breach of
this Agreement.
8.14 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
8.15 Publicity. Purchaser and the Company shall consult with each
other before issuing any press release with respect to this Agreement and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be reasonably withheld;
provided, however, that a party may, without the prior consent of the other
party (but after prior consultation, to the extent practicable in the
circumstances) issue such press release or make such public statement as may
upon the advice of counsel be required by
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law or the rules and regulations of the New York Stock Exchange.
8.16 Legend. The certificates evidencing the Shares and the
shares of Common Stock issuable upon exercise of the Warrant shall bear the
following legend until such time as such shares are registered under the
Securities Act or the Purchaser or any transferee thereof delivers an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required under the Securities Act:
THESE SECURITIES WERE SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND MAY BE OFFERED
OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
8.17 Transfer Opinion. Notwithstanding anything to the contrary
stated herein, the Company's transfer agent and registrar shall not be required
to reflect the transfer of the Shares on the Company's stock ledger unless such
Shares have been transferred pursuant to a registration statement which is
effective under Section 5 of the Securities Act or the Company's transfer agent
and registrar has received an opinion of counsel, who is reasonably acceptable
to the Company, that the transfer is exempt from registration under the
Securities Act.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
AAMES FINANCIAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
THIRTY-FIVE EAST INVESTMENTS LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice Chairman
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