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EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
AMONG
NAB ASSET CORPORATION,
STANWICH FINANCIAL SERVICES CORP.,
AND
CENTEX FINANCIAL SERVICES, INC.
DATED AS OF MARCH 16, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF PURCHASED STOCK; THE CLOSING.................................2
SECTION 1.01 Purchase and Sale of Purchased Stock..................................2
SECTION 1.02 Escrow Arrangements...................................................2
SECTION 1.03 Purchase Price........................................................3
SECTION 1.04 Adjustment of the Purchase Price and the Closing Payment..............3
SECTION 1.05 Other Adjustments.....................................................3
SECTION 1.06 Centex Loan...........................................................4
SECTION 1.07 Closing...............................................................5
SECTION 1.08 Closing Deliveries; Certain Actions...................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................6
SECTION 2.01 Organization and Qualification........................................6
SECTION 2.02 Authority; Binding Effect.............................................7
SECTION 2.03 Absence of Conflicts..................................................7
SECTION 2.04 Governmental Consents and Filings.....................................7
SECTION 2.05 Capitalization........................................................8
SECTION 2.06 Subsidiaries..........................................................9
SECTION 2.07 Commission Reports...................................................10
SECTION 2.08 Financial Statements.................................................11
SECTION 2.09 Absence of Undisclosed Liabilities...................................11
SECTION 2.10 Absence of Certain Changes or Events.................................11
SECTION 2.11 Purchased Stock; Fairness Opinion....................................13
SECTION 2.12 Reorganization Plan..................................................13
SECTION 2.13 Disclosure Statement.................................................13
SECTION 2.14 Properties and Assets................................................13
SECTION 2.15 Mortgages............................................................14
SECTION 2.16 Contracts............................................................16
SECTION 2.17 Litigation...........................................................18
SECTION 2.18 Compliance with Laws and Other Requirements..........................19
SECTION 2.19 Environmental Matters................................................19
SECTION 2.20 Taxes................................................................19
SECTION 2.21 Employee Benefit Plans...............................................21
SECTION 2.22 Labor Matters........................................................24
SECTION 2.23 Permits..............................................................24
SECTION 2.24 Insurance............................................................25
SECTION 2.25 Transactions with Affiliates.........................................25
SECTION 2.26 Absence of Certain Business Practices................................25
SECTION 2.27 Disclosure...........................................................26
SECTION 2.28 Brokers' or Finders' Fees............................................26
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF SFS..........................................26
SECTION 3.01 Organization and Qualification.......................................26
SECTION 3.02 Authority; Binding Effect............................................26
SECTION 3.03 Absence of Conflicts.................................................27
SECTION 3.04 Governmental Consents and Filings....................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................................27
SECTION 4.01 Organization.........................................................27
SECTION 4.02 Authority; Binding Effect............................................27
SECTION 4.03 Absence of Conflicts.................................................28
SECTION 4.04 Governmental Consents and Filings....................................28
SECTION 4.05 Purchase for Investment..............................................28
SECTION 4.06 Disclosure Statement.................................................29
SECTION 4.07 Brokers' or Finders' Fees............................................29
SECTION 4.08 Share Ownership......................................................29
ARTICLE V REORGANIZATION SOLICITATION; BANKRUPTCY MATTERS..................................29
SECTION 5.01 Solicitation Materials; Solicitation of Acceptances..................29
SECTION 5.02 Certain Documents and Motions........................................30
SECTION 5.03 Reorganization Proceedings...........................................31
SECTION 5.04 Securities Laws......................................................32
ARTICLE VI CERTAIN COVENANTS...............................................................33
SECTION 6.01 Conduct of Business..................................................33
SECTION 6.02 Other Proposals......................................................35
SECTION 6.03 Access to Information; Audit Rights..................................37
SECTION 6.04 Best Efforts.........................................................39
SECTION 6.05 Notification of Certain Other Matters................................39
SECTION 6.06 Supplemental Disclosure..............................................39
SECTION 6.07 Consulting Agreement.................................................40
SECTION 6.08 Termination Fee Security.............................................40
ARTICLE VII CONDITIONS TO CLOSING..........................................................40
SECTION 7.01 Conditions to the Obligations of the Purchaser.......................40
SECTION 7.02 Conditions to the Obligations of the Company and SFS.................43
ARTICLE VIII INDEMNIFICATION...............................................................44
SECTION 8.01 Indemnification by SFS...............................................44
SECTION 8.02 Indemnification by the Purchaser.....................................44
SECTION 8.03 Third-Party Claims; Procedures.......................................45
SECTION 8.04 Survival of Representations, Warranties or Covenants.................46
SECTION 8.05 Remedies.............................................................47
SECTION 8.06 Cumulative Remedy....................................................48
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ARTICLE IX TERMINATION.....................................................................48
SECTION 9.01 Termination..........................................................48
SECTION 9.02 Effect of Termination................................................50
SECTION 9.03 Termination Payments.................................................51
ARTICLE X DEFINITIONS......................................................................52
SECTION 10.01 Definitions..........................................................52
ARTICLE XI MISCELLANEOUS...................................................................62
SECTION 11.01 Fees and Expenses....................................................62
SECTION 11.02 Notices..............................................................62
SECTION 11.03 Public Announcements.................................................63
SECTION 11.04 Amendment; Waivers...................................................63
SECTION 11.05 Entire Agreement.....................................................64
SECTION 11.06 Parties in Interest; Assignment......................................64
SECTION 11.07 Governing Law........................................................64
SECTION 11.08 Severability.........................................................64
SECTION 11.09 Specific Performance.................................................64
SECTION 11.10 Interpretation.......................................................65
SECTION 11.11 Counterparts.........................................................65
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LIST OF EXHIBITS
Exhibit A Form of Reorganization Plan
Exhibit B Opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx PC
Exhibit C Opinion of Counsel for SFS
Exhibit D Opinion of Counsel for Purchaser
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LIST OF SCHEDULES
Schedule 2.01 Certain Jurisdictions
Schedule 2.03 Certain Conflicts
Schedule 2.05 Capitalization
Schedule 2.06 Subsidiaries
Schedule 2.09 Certain Liabilities
Schedule 2.10 Certain Changes
Schedule 2.14 Real Property
Schedule 2.16 Certain Contracts
Schedule 2.17 Litigation
Schedule 2.18 Compliance with Laws
Schedule 2.19 Environmental Matters
Schedule 2.20 Taxes
Schedule 2.21 Employee Benefit Plans
Schedule 2.22 Labor Matters
Schedule 2.23 Permits
Schedule 2.24 Insurance
Schedule 2.25 Transactions with Affiliates
Schedule 2.28 Brokers' and Finders' Fees
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, entered into as of March 16,
2001 by and among NAB ASSET CORPORATION, a Texas corporation, STANWICH FINANCIAL
SERVICES CORP., a Rhode Island corporation ("SFS"), and CENTEX FINANCIAL
SERVICES, INC., a Nevada corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Company (as hereinafter defined) is engaged,
directly or indirectly through the Subsidiaries (as hereinafter defined), in the
business of originating, acquiring, warehousing and selling mortgage loans;
WHEREAS, the Purchaser, with the cooperation of the Company,
has commenced a review and examination of the businesses, properties, financial
condition and results of operations of the Company and its Subsidiaries;
WHEREAS, the Company intends to propose the Reorganization
Plan (as hereinafter defined), which will provide for, among other things, (i)
the issuance and sale (the "Stock Acquisition") by the Company to the Purchaser
of shares of Common Stock (as hereinafter defined) representing 49.9% of the
issued and outstanding Common Stock on the Closing Date (as hereinafter defined)
(the "Purchased Stock") and (ii) the distribution (the "Cash Distribution") of
cash to the Shareholders (as hereinafter defined) of the Company other than the
Principal Shareholders (as hereinafter defined) in exchange for the shares of
Common Stock held by such Shareholders other than the Principal Shareholders;
WHEREAS, the Company and the Purchaser desire to effectuate a
transaction pursuant to which the Company will, subject to obtaining the
Confirmation Order (as hereinafter defined) from the Bankruptcy Court (as
hereinafter defined) and to the fulfillment of certain other conditions,
consummate the Reorganization Plan;
WHEREAS, the Board of Directors of the Company deems it
advisable and in the best interests of the Company that the Reorganization Plan
be consummated upon the terms and subject to the conditions set forth herein,
and such Board of Directors has approved this Agreement and the transactions
contemplated hereby and has resolved, as of the date hereof, to recommend
acceptance of the Reorganization Plan to the Shareholders; and
WHEREAS, the Board of Directors of the Purchaser has approved
this Agreement and the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof
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and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED STOCK;
THE CLOSING
SECTION 1.01 Purchase and Sale of Purchased Stock. Upon the
terms and subject to the conditions set forth herein, on the Closing Date, the
Company shall issue, sell, transfer and deliver to the Purchaser the Purchased
Stock, free and clear of all Liens, and the Purchaser shall acquire and accept
the Purchased Stock from the Company. The Purchaser acknowledges and agrees that
the Purchased Securities will not be registered under the Securities Act or any
state securities law and that each certificate or instrument representing the
Purchased Securities shall bear a legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any applicable state securities laws. The
securities may not be offered for sale, sold, assigned, transferred or
pledged without registration under the Securities Act and any
applicable state securities laws or without an opinion of counsel
satisfactory to the corporation that such registration is not
required."
SECTION 1.02 Escrow Arrangements.
(a) Prior to the date hereof, the Purchaser has delivered an
Xxxxxxx Money Deposit in the amount of $250,000 in cash to the Xxxxxxx Money
Escrow Agent as the deposit under the Xxxxxxx Money Escrow Agreement. The
Xxxxxxx Money Escrow Agent shall be permitted to invest and reinvest the funds
held by it under the Xxxxxxx Money Escrow Agreement in the manner contemplated
thereby.
(b) Immediately after the execution of this Agreement by the
parties hereto, the Purchaser will cause the Xxxxxxx Money Escrow Agent to remit
to the Company up to a maximum of $50,000 of the Xxxxxxx Money Escrow Deposit
for the Company to pay fees and expenses incurred by or on behalf of the Company
or the Subsidiaries in connection with the transactions contemplated by this
Agreement from and after December 15, 2000 to and including the date of such
remittance. Upon such remittance, the Company shall execute a promissory note in
the amount of such remittance to the order of the Purchaser in the form
previously delivered to the Company.
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(c) Immediately prior to the commencement of the Bankruptcy
Case and after the successful completion of the Reorganization Solicitation, the
Purchaser will cause the Xxxxxxx Money Escrow Agent to remit to the Company as
much of the Xxxxxxx Money Escrow Deposit as is necessary for the Company to pay
fees and expenses incurred by or on behalf of the Company or the Subsidiaries in
connection with the transactions contemplated by this Agreement from and after
December 15, 2000 to and including the date of such remittance. Upon such
remittance, the Company shall execute a promissory note in the amount of such
remittance to the order of the Purchaser in the form previously delivered to the
Company.
SECTION 1.03 Purchase Price. Subject to Section 1.04 below, as
full consideration for the issuance, sale, transfer and delivery to the
Purchaser of the Purchased Stock, on the Closing Date, the Purchaser (i) shall
pay to the Disbursing Agent an amount in cash equal to the excess of the Closing
Payment over the Xxxxxxx Money Deposit (the "Purchase Payment"), (ii) shall take
all action on its part required to cause the Xxxxxxx Money Escrow Agent to
deliver the Xxxxxxx Money Deposit to the Disbursing Agent and (iii) shall pay to
the Company an amount in cash equal to the excess of the Purchase Price over the
Closing Payment (the "Capitalization Payment").
SECTION 1.04 Adjustment of the Purchase Price and the Closing
Payment. If the aggregate amount of fees and expenses incurred by or on behalf
of the Company or the Subsidiaries, including the Company's legal, financial,
advisory and other professional fees (exclusive of a maximum fee of $125,000
payable to Samco Capital Markets), in connection with the transactions
contemplated by this Agreement from and after December 15, 2000 to and including
the Closing Date (whether or not paid by such date) exceeds $250,000 (such
excess amount being referred to as "Excess Expenses"), the Purchase Price and
the Closing Payment shall be reduced on a dollar-for-dollar basis by the amount
of Excess Expenses up to a maximum of $50,000 in the aggregate.
SECTION 1.05 Other Adjustments.
(a) If the Closing occurs and the amount of Excess Expenses
exceeds $50,000, then, subject to Section 1.05(c), SFS agrees to pay the excess,
in which case the Company may offset such amounts exceeding $50,000 on a
dollar-for-dollar basis against amounts owed by the Company under the SFS Loan
in accordance with and subject to the provisions of Section 8.05.
(b) From time to time after the date hereof, the Purchaser may
deliver to the Company and SFS one or more written notices (each, a "Purchaser
Claim Notice") setting forth its determination as to the amount of any Purchaser
Claims which have been incurred by or imposed on the Purchaser, the Company or
the Subsidiaries prior to or on the date of such notice or which are more likely
than not to be incurred by
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or imposed on any of them at any time after such date, together with a brief
statement as to the basis for such determination. If the aggregate amount of
such Purchaser Claims identified by the Purchaser is in excess of the
Termination Threshold, then the Purchaser may elect either (i) if the Closing
occurs, subject to Section 1.05(c), to have SFS pay such amounts, in which case
the Company may offset all such amounts (including amounts up to and including
the Termination Threshold) on a dollar-for-dollar basis against amounts owed by
the Company under the SFS Loan in accordance with and subject to the provisions
of Section 8.05 or (ii) to terminate this Agreement in accordance with Section
9.01(d)(vi).
(c) Subject to Section 8.05(f), the maximum potential
liability under this Section 1.05 shall not exceed an amount equal to the SFS
Amount minus $200,000.
SECTION 1.06 Centex Loan.
(a) On the Closing Date, SFS shall borrow from the Purchaser
or an Affiliate of the Purchaser (the "Centex Lender") and the Centex Lender
shall lend to SFS $6,101,802 pursuant to a note (the "Centex Note") to the order
of the Centex Lender in a principal amount equal to $6,401,802 (which will
include the loan amount plus a loan commitment fee equal to $300,000 that will
be owed to the Centex Lender), and the Centex Lender shall advance $6,101,802 in
cash to SFS. The Centex Note (i) shall have an interest rate equal to 17.1% per
annum, compounded monthly, (ii) shall not contain any subordination provisions,
(iii) will be secured by the SFS Loan, (iv) will be non-recourse to any assets
or property of SFS except for such security, and (v) will provide that all
amounts paid by the Company on the SFS Loan (exclusive of the following, which
shall be paid directly to SFS or as SFS shall direct in writing in accordance
with the terms of the SFS Loan: the first $600,000 of accrued and unpaid
interest payments and the two principal prepayments discussed in Section 1.06(b)
and a portion of the final principal payment due on the SFS Loan equal to
$500,000 plus a portion of the interest that accrues on such principal payments
after the Closing Date calculated at a rate equal to 8% per annum and payable
with each such principal payment, as such amounts may be reduced prior to the
date of payment thereof by exercise of any rights of offset under Section 8.05)
will be made to a paying agent for remittance to the Centex Lender that is the
payee under the Centex Note until the Centex Note is paid in full. In the event
that the SFS Loan is in default or goes into default before the Closing, then
SFS agrees not to pursue any default remedies under the SFS Loan until the
earlier of (1) ten days after Closing or (2) the termination of this Agreement.
(b) The Company agrees to make a prepayment of the principal
on the SFS Loan to SFS in the amount of $250,000 on each of the six month
anniversary of the Closing Date and the one year anniversary of the Closing
Date. Such prepayments shall be subject to any rights of offset as set forth in
Section 8.05. The failure of the
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Company to make any such payments shall be deemed to constitute a default under
the promissory notes evidencing the SFS Loan, thereby entitling SFS or any other
holder thereof to exercise the remedies under paragraph 5 of each such note.
SECTION 1.07 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxx Xxxxx L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, as soon as
practicable following the satisfaction or waiver of the conditions set forth in
Article VII hereof, but in no event earlier than the first Business Day after
the first Court Day which is at least ten days after the date on which the
Reorganization Plan is confirmed by the Bankruptcy Court (or on such other date
as shall be mutually agreed upon by the parties in writing).
SECTION 1.08 Closing Deliveries; Certain Actions.
(a) At the Closing, the Company shall deliver, or cause to be
delivered, to the Purchaser each of the following:
(i) a copy of the entered Confirmation Order,
certified by the clerk of the Bankruptcy Court;
(ii) stock certificates, in definitive form, dated
the Closing Date and registered in the name of the Purchaser,
evidencing the Purchased Stock;
(iii) evidence satisfactory to the Purchaser of the
termination of all deferred compensation arrangements, loan
agreements and pledge agreements between MPS and any of its
officers or employees;
(iv) the officers' certificate referred to in Section
7.01(b) hereof; and
(v) the opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
referred to in Section 7.01(i)(A) hereof.
(b) At the Closing, the Purchaser shall deliver (i) to the
Disbursing Agent immediately available funds in the amount of the Purchase
Payment (by wire transfer to such account as the Disbursing Agent shall have
designated in writing at least two Business Days prior to the Closing Date) and
(ii) to the Company immediately available funds in the amount of the
Capitalization Payment (by wire transfer to such account as the Company shall
have designated in writing at least two Business Days prior to the Closing
Date).
(c) At the Closing, the Purchaser and the Company shall take
such action as is necessary in order to cause the Xxxxxxx Money Escrow Agent to
deliver the
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Xxxxxxx Money Deposit to the Disbursing Agent (by wire transfer to such account
as the Disbursing Agent shall have designated in writing at least two Business
Days prior to the Closing Date).
(d) At the Closing, the Purchaser shall deliver, or cause to
be delivered, to the Company each of the following:
(i) the officers' certificate referred to in Section
7.02(b) hereof; and
(ii) the opinion of Xxxxxxx X. Xxxxxx referred to in
Section 7.02(g) hereof.
(e) At the Closing, the amount of $6,101,802 borrowed by SFS
in accordance with Section 1.06(a) shall be delivered to SFS (by wire transfer
of immediately available funds to such bank or bank accounts as shall have been
previously designated by SFS).
(f) At the Closing, SFS shall deliver, or cause to be
delivered, to the Purchaser, each of the following:
(i) the executed Centex Note;
(ii) such documents as are required to grant to the
Purchaser and make effective a first priority perfected
security interest in and pledge of the SFS Loan to secure the
Centex Note; and
(iii) the opinion of Xxxxx X. Xxxxxx referred to in
Section 7.01(i)(B).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
SECTION 2.01 Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
presently conducted. The Company is duly qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of its activities or the character of the properties
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that it owns, leases or operates makes such qualification necessary, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. Schedule 2.01 hereto sets forth a correct and complete
list of all such jurisdictions in which the Company is duly qualified to
transact business as a foreign corporation. The Company has heretofore furnished
the Purchaser with a correct and complete copy of its Charter and Bylaws.
SECTION 2.02 Authority; Binding Effect. The Company has all
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by the Company of this Agreement have been
duly and validly authorized by all necessary corporate action on the part of the
Company, and no other corporate proceedings or shareholder actions (other than
the Reorganization Solicitation) on the part of or with respect to the Company
are necessary to authorize this Agreement, the performance by the Company of its
obligations hereunder or the consummation by it of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company and
(subject to making the filings and receiving the Consents contemplated by
Section 2.04) constitutes the legal, valid and binding obligation of the
Company, enforceable against it in accordance with the terms hereof.
SECTION 2.03 Absence of Conflicts. The execution and delivery
by the Company of this Agreement, the performance by the Company of its
obligations hereunder and the consummation by the Company of the transactions
contemplated hereby will not (i) conflict with, or result in any violation or
breach of, any provision of the Charter or Bylaws of the Company or the
Subsidiaries, (ii) except as set forth in Schedule 2.03 hereto, conflict with,
result in any violation or breach of, constitute a default under, give rise to
any right of termination or acceleration (with or without notice or the lapse of
time or both) pursuant to, or result in being declared void, voidable or without
further effect, any term or provision of any note, bond, mortgage, indenture,
lease, franchise, permit, license, Contract or other instrument or document to
which the Company or any Subsidiary is a party or by which its respective
properties or assets are bound, (iii) assuming that the filings referred to in
Section 2.04 are made and the Consents referred to in Section 2.04 are obtained,
conflict with, or result in any violation of, any law, ordinance, statute, rule
or regulation of any Governmental Authority or of any order, writ, injunction,
judgment or decree of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or its properties or assets or (iv) result in
the creation of, or impose on the Company or any Subsidiary the obligation to
create, any Lien upon the properties or assets of the Company or any Subsidiary.
SECTION 2.04 Governmental Consents and Filings. There is no
requirement applicable to the Company or any Subsidiary to obtain any Consent
of, or
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to make or effect any declaration, filing or registration with, any Governmental
Authority for the valid execution and delivery by the Company of this Agreement,
the due performance by the Company of its obligations hereunder or the lawful
consummation by it of the transactions contemplated hereby, except for (i)
filings by the Company required under the Exchange Act in connection with the
Reorganization Solicitation and (ii) the Confirmation Order and any other
notices, motions or approvals required by the Bankruptcy Court or the Bankruptcy
Code and the rules thereunder. No state takeover, business combination or
control share acquisition statute or other similar statute or regulation
prohibits, restrains or restricts the Stock Acquisition.
SECTION 2.05 Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Company consists of (i) 20,000,000 shares of Common Stock, of which 5,091,300
shares are issued and outstanding and (ii) 10,000,000 shares of Preferred Stock
of which no shares are issued and outstanding, and no shares of Common Stock or
Preferred Stock are held in the treasury of the Company. All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
are validly issued, fully paid and nonassessable. None of the issued and
outstanding shares of capital stock of the Company have been issued in violation
of, or subject to, any preemptive rights or rights of subscription. All offers,
issuances and sales by the Company of any shares of its capital stock or other
equity securities have been made in compliance with the registration and
qualification requirements of all applicable federal and state securities laws.
Except as set forth above, there are no shares of capital stock or other equity
securities of the Company outstanding as of the date hereof. Except as
contemplated by this Agreement, there are no outstanding options, warrants,
calls, rights, convertible securities or other agreements or commitments of any
character pursuant to which the Company is or may be obligated to issue or sell
any issued or unissued shares of its capital stock or other equity securities or
to purchase or redeem any shares of its capital stock or other equity securities
or make any other payments in respect thereof, and there are no shares of its
capital stock or other equity securities reserved for issuance for any purpose.
(b) As of the Closing Date, after giving effect to the
Reorganization Transactions, the authorized capital stock of the Company will
consist of such number of shares of Common Stock as are specified in the
Reorganization Plan. As of the Closing Date, the outstanding capital stock of
the Company will consist of 4,905,202 shares of Common Stock, including the
Purchased Stock to be issued on such date in accordance with the provisions of
Article I hereof, and no shares of capital stock of any class will be held in
the treasury of the Company. As of the Closing Date, all outstanding shares of
Common Stock will have been duly authorized and will be validly issued, fully
paid and nonassessable. None of the shares of Common Stock outstanding on the
Closing Date will have been issued in violation of, or subject to, any
preemptive
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rights or rights of subscription. All offers, issuances and sales by the Company
of any shares of Common Stock or other capital stock made prior to or on the
Closing Date, whether in connection with the Reorganization Transactions or
otherwise, will be made in compliance with the registration and qualification
requirements of all applicable federal and state securities laws. Except as set
forth on Schedule 2.05(b) hereto, as of the Closing Date, after giving effect to
the Reorganization Transactions, there will be no shares of capital stock or
other equity securities of the Company outstanding. As of the Closing Date,
after giving effect to the Reorganization Transactions, there will be no
outstanding options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character pursuant to which the Company will or
may be obligated to issue or sell any issued or unissued shares of its capital
stock or other equity securities or to purchase or redeem any shares of its
capital stock or other equity securities or make any other payments in respect
thereof, and there will be no shares of its capital stock or other equity
securities reserved for issuance for any purpose.
SECTION 2.06 Subsidiaries.
(a) Schedule 2.06(a) hereto sets forth (i) the name of each
Subsidiary, (ii) the jurisdiction of incorporation or formation of each
Subsidiary, (ii) the authorized, issued and outstanding capital stock or other
equity securities of, or ownership interests in, each Subsidiary and (iii) the
names of the stockholders, equity holders or holders of ownership interests in
each Subsidiary. Except as set forth in Schedule 2.06(a) hereto, the Company
does not own, directly or indirectly, or have voting rights with respect to, any
capital stock or other equity securities of, or other ownership interests in,
any corporation, partnership, limited liability company or other Person or have
any direct or indirect interest in any business.
(b) Each Subsidiary that is a corporation is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted. Each Subsidiary that is a limited partnership is duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its formation and has all requisite power and authority as a partnership to
own lease and operate its properties and to carry on its business as presently
conducted. Each Subsidiary is duly qualified to transact business as a foreign
corporation or foreign limited partnership (as the case may be) and is in good
standing in each jurisdiction in which the nature of its activities or the
character of the properties that it owns, leases or operates makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on such Subsidiary. Schedule
2.06(b) hereto sets forth a correct and complete list of all jurisdictions in
which each Subsidiary is duly qualified to transact business as a foreign
corporation or foreign limited partnership. The Company has heretofore furnished
the Purchaser with
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a correct and complete copy of the Charter and Bylaws or other organizational
document of each Subsidiary.
(c) Except as set forth in Schedule 2.06(c) hereto, all of the
issued and outstanding shares of capital stock or other equity securities of, or
ownership interests in, each Subsidiary (i) have been duly authorized, (ii) are
validly issued, (ii) are (in the case of shares of capital stock) fully paid and
nonassessable or not subject to any current or future capital calls and (iii)
are owned by the Company, directly or indirectly, free and clear of all Liens.
None of the issued and outstanding shares of capital stock or other equity
securities of, or ownership interests in, any Subsidiary have been issued in
violation of, or subject to, any preemptive rights or rights of subscription.
All offers, issuances and sales by the Company or any Subsidiary of any shares
of the capital stock or other equity securities of, or other ownership interests
in, any Subsidiary have been made in compliance with the registration and
qualification requirements of all applicable federal and state securities laws.
There are no outstanding options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character pursuant to which
the Company or any Subsidiary is or may be obligated to issue or sell any issued
or unissued shares of capital stock or other equity securities of, or ownership
interests in, any Subsidiary or to purchase or redeem any shares of capital
stock or other equity securities of, or ownership interests in, any Subsidiary
or make any other payments in respect thereof, and there are no shares of
capital stock or other equity securities of, or ownership interests in, any
Subsidiary reserved for issuance for any purpose.
SECTION 2.07 Commission Reports. The Company has filed all
reports, schedules, statements, forms and other documents required to be filed
with the Commission since January 31, 1998 (collectively, the "Commission
Reports"), all of which complied as of the filing date (or, in the case of any
Commission Report that has been amended, as of the date of amendment) in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and all applicable rules and regulations
thereunder. None of the Commission Reports contained as of the filing date (or,
in the case of any Commission Report that has been amended, as of the date of
amendment) any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any
Commission Report has been revised or superceded by a later filed Commission
Report, none of the Commission Reports contains, and no Commission Report filed
after the date of this Agreement and prior to the Closing Date will contain, any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
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SECTION 2.08 Financial Statements. Each of the Company's
consolidated financial statements (including, in each case, any notes thereto)
contained in the Commission Reports (the "Company Financial Statements") comply
or will comply as to form in all material respects with applicable accounting
requirements of the Commission with respect thereto, was prepared or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby (except as may be indicated in the notes thereto), and
fairly presents or will fairly present the consolidated financial position of
the Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of operations and changes in cash flows of the Company and
its Subsidiaries for the periods indicated. The total Shareholders Deficit as of
June 30, 2001 will not be in excess of $4,103,000. If the Closing occurs after
June 30, 2001 then the total Shareholders Deficit as of the Closing Date will
not be in excess of an amount equal to the sum of $4,103,000 plus $55,000 for
each full calendar month ending after June 30, 2001 (or a pro rata portion of
such amount for any partial calendar month) to the Closing Date.
SECTION 2.09 Absence of Undisclosed Liabilities. As of
September 30, 2000, there were no liabilities or obligations of the Company or
any of its Subsidiaries (whether accrued, contingent, absolute or otherwise),
except as set forth or referred to on Schedule 2.09 hereto and on the
consolidated balance sheet of the Company and its Subsidiaries as of September
30, 2000 or the notes thereto contained in the Company's Quarterly Report on
Form 10-Q relating to the fiscal quarter then ended (the "Latest Balance
Sheet"). Since the date of the Latest Balance Sheet, the Company has not
incurred any liabilities or obligations (whether accrued, contingent, absolute
or otherwise), except as set forth on Schedule 2.09 hereto and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice after September 30, 2000 which would not have a
Material Adverse Effect. Except as set forth on Schedule 2.09 hereto, the
Company does not know of any fact or circumstance which would reasonably be
expected to permit or give rise to a right of any maker or purchaser of a
Mortgage or purchaser of any servicing rights in respect of any Mortgage (x) to
demand repurchase of the Mortgage or the servicing rights thereto or (y) to
require indemnification in respect thereof.
SECTION 2.10 Absence of Certain Changes or Events. Since
September 30, 2000, except as contemplated by this Agreement or as set forth in
Schedule 2.10 hereto or in the Commission Reports filed during the period after
that date and prior to the date of this Agreement, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
regular course and in a manner consistent with past practice, and there has not
been with respect to the Company or its Subsidiaries (a) any Material Adverse
Change or any event, occurrence or development that will result in or could
reasonably be expected to result in a Material Adverse Change, or (b) (i) any
amendment or other change in its Charter of Bylaws or other organizational
document, except as specifically contemplated by this Agreement,
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(ii) any issuance, sale, pledge, disposal of or encumbrance or authorization of
any such issuance, sale ,pledge, disposal of or encumbrance of, any of the
capital stock of the Company or any Subsidiary, (iii) any damage, destruction or
loss (whether or not covered by insurance) with respect to any properties or
assets of the Company or any Subsidiary, (iv) any creation or imposition of any
Lien (other than Permitted Liens) with respect to any properties or assets of
the Company or any Subsidiary, (v) any revocation or termination, or any notice
of revocation or termination, of any Consents or of any license or authority to
conduct business held by the Company or any Subsidiary, (vi) any change in the
relationships between the Company or any Subsidiary on the one hand and any
Persons with whom they have business relationships that will result in or could
reasonably be expected to result in a Material Adverse Change, (vii) any
consolidation with or merger with or into, any Person, (viii) any
reclassification, combination, split or subdivision of any shares of capital
stock of the Company or any Subsidiary, (ix) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company or any redemption,
purchase or other acquisition of any of the capital stock or other securities of
the Company or any Subsidiary, (x) any sale, lease, transfer or other
disposition of any properties or assets of the Company or any Subsidiary, except
for (A) Mortgages and real estate owned by the Company or any Subsidiary as a
result of the foreclosure of any Mortgage, in each case, sold, transferred or
disposed of in the ordinary and regular course of business or (B) assets sold in
one or more series of related transactions in an amount not exceeding $15,000
per transaction or series of related transactions, provided that the total of
all such transactions shall not exceed $50,000 in aggregate (xi) any acquisition
(by merger, consolidation or acquisition of stock or assets) of any corporation,
partnership or other business organization or division thereof, (xii) any entry
into any Contract or transaction (including, but not limited to, any borrowing,
issuance of notes or other securities, capital expenditure or sale of assets)
other than in the ordinary and regular course of business, (xiii) any entry into
any Contract between the Company or any Subsidiary on the one hand and any of
their respective directors, officers or key employees on the other hand
providing for the employment of any director, officer or key employee or any
increase in the compensation, severance or termination benefits payable or to
become payable by the Company or any Subsidiary to any such director, officer or
key employee, or the making of any loan to or entry into any other material
transaction or arrangement with any such director, officer or key employee;
(xiv) any increase in the benefits payable by the Company or any Subsidiary
under any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option, stock purchase or other employee
benefit plan, program or arrangement made to, for or with any of the directors,
officers or employees of the Company or any Subsidiary, (xv) any incurrence,
assumption or guarantee by the Company or any Subsidiaries of any indebtedness
for borrowed money, (xvi) any material labor dispute, (xvii) any change by the
Company in its accounting principles, methods or practices, except for any
changes required by law or as a result of any mandatory change in accounting
standards or (xviii) any agreement or commitment to do any of the foregoing.
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SECTION 2.11 Purchased Stock; Fairness Opinion. The issuance
and sale of the Purchased Stock to the Purchaser have been duly authorized by
all necessary corporate action on the part of the Company and, assuming entry of
the Confirmation Order, the Purchased Stock, when issued and delivered to and
paid for by the Purchaser pursuant to this Agreement, (i) will be validly
issued, fully paid and nonassessable and free and clear from all Liens other
than those created by the Purchaser, if any, (ii) will not have been issued in
violation of, or subject to, any preemptive rights or rights of subscription, or
(iii) will have been made in compliance with the registration and qualification
requirements of all applicable federal and state securities laws. The Company
has received the opinion of Xxxxxx Xxxxxxx Xxxxxx Xxxxxx Inc., dated as of the
date of this Agreement, to the effect that the Reorganization Transactions are
fair to the Shareholders from a financial point of view and that the treatment
of the Principal Shareholders is less favorable than the treatment of the other
Shareholders.
SECTION 2.12 Reorganization Plan. The Board of Directors of
the Company has unanimously determined to propose a plan of reorganization (the
"Reorganization Plan") which will provide for, among other things, (i) the Stock
Acquisition and (ii) the Cash Distribution (collectively, the "Reorganization
Transactions"). As of the date hereof, the Board of Directors has further
unanimously determined to recommend acceptance of the Reorganization Plan by the
Shareholders of the Company.
SECTION 2.13 Disclosure Statement. The Disclosure Statement
and the Schedule 13E-3 shall comply at all relevant times with the applicable
requirements of the Exchange Act and the Bankruptcy Code and all other laws,
rules, regulations, decrees and orders promulgated thereunder. The Disclosure
Statement and Schedule 13E-3, including all information included or incorporated
by reference thereto, shall not (i) at any Time of Mailing, (ii) on the date of
the confirmation of the Reorganization Plan by the Bankruptcy Court or (iii) on
the Closing Date, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation or warranty is made with
respect to any information included in the Disclosure Statement and the Schedule
13E-3 that was furnished by the Purchaser to the Company in writing expressly
for use therein.
SECTION 2.14 Properties and Assets.
(a) Assets Generally. The Company and the Subsidiaries have
good and valid title to all material assets owned by them, in each case free and
clear of all Liens except (i) mechanics', carriers', workmen's, repairmen's or
other like liens arising
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under applicable law in the ordinary course of business, (ii) Liens arising
under original purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business if the
underlying obligations are not overdue for a period of more than 90 days, (iii)
Liens for Taxes which are not yet due and payable, (iv) mortgages, liens,
security interests and encumbrances which secure debt that is reflected as a
liability on the Company Financial Statements and the existence of which is
indicated in the notes thereto and (v) other imperfections of title or
encumbrances, if any, which do not, individually or in the aggregate, materially
impair the continued use and operation or the marketability of the assets to
which they relate (the mortgages, liens, security interests, encumbrances and
imperfections of title described in clauses (i) through (v) above are
hereinafter referred to collectively as "Permitted Liens").
All the material tangible personal property of the Company and
the Subsidiaries has been maintained in all material respects in accordance with
the past practice of the Company and the Subsidiaries and generally accepted
industry practice. Each item of material tangible personal property of the
Company and the Subsidiaries is in all material respects in good working order
and is adequate and sufficient for the Company's or Subsidiaries' intended
purposes, ordinary wear and tear excepted.
This Section 2.14(a) does not relate to real property or
interests in real property, such items being the subject of Section 2.14(b).
(b) Title to Real Property. Schedule 2.14(b) sets forth a complete list
of all real property and interests in real property leased by the Company and
the Subsidiaries (individually, a "Leased Property") and identifies any material
leases relating thereto. The Company or the applicable Subsidiary has good and
valid title to the leasehold estates in all Leased Property, free and clear of
all Liens and other similar restrictions of any nature whatsoever, except
Permitted Liens. The Company and the Subsidiaries own no real property in fee.
SECTION 2.15 Mortgages.
(a) Schedule 2.15(a) sets forth a complete list of all
Mortgages owned by the Company or the Subsidiaries as of February 28, 2001.
Except as set forth in Schedule 2.15(a), the Company or the Subsidiaries have
good, marketable and indefeasible title to, and are the sole owners and holders
of, all such Mortgages free and clear of all Liens. Except as set forth in
Schedule 2.15(a), none of the Company or the Subsidiaries have sold, assigned or
otherwise transferred any right or interest in or to the Mortgages and has not
pledged the Mortgages as collateral for any loan or obligation or other purpose.
Except for Mortgages relating to certain construction loans as to which the
total amount the Company is committed to advance and any portion remaining
unadvanced is set forth on Schedule 2.15(a), at the time of origination, the
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proceeds for each of the Mortgages were fully disbursed and none of the
Mortgages have any provisions for future advances.
(b) Each Mortgage that is owned by the Company or any
Subsidiary is the legal, valid and binding obligation of each mortgagor
thereunder, enforceable in accordance with its terms against each purported
signatory thereof, and not subject to any discount, allowance, set-off,
counterclaim, right of rescission, presently pending bankruptcy or other
defenses (including the defense of usury) which could result in any claim or
loss of value in excess of any applicable Mortgage Reserve Amount. No
foreclosure (including any non-judicial foreclosure) or any other legal action
has been brought by the Company or the Subsidiaries or, to the knowledge of the
Company, any senior lienholder in connection therewith which could result in any
claim or loss of value in excess of any applicable Mortgage Reserve Amount. To
the knowledge of the Company, each party to the Mortgages other than the Company
or the Subsidiaries has the legal capacity to execute such instrument and to
convey the property interest purported to be conveyed. Each Mortgage has been
duly and properly executed by all applicable mortgagors and none of such
Mortgages has been satisfied, cancelled, released, modified or waived,
subordinated or rescinded. The material documents pertaining to the Mortgages
(including credit underwriting files, servicing files, records of disbursement
and accounting records) are in the books and records of the Company or the
Subsidiaries, each of such documents is a true and correct original or copy
thereof, and such documents are sufficient to enforce the security interest
stated therein.
(c) Each action taken by the Company or the Subsidiaries with
respect to each Mortgage owned by the Company or any Subsidiary and any
application, agreement, form, document, letter, notice, statement, and other
material used by the Company or the Subsidiaries and, to the knowledge of the
Company, in connection with the solicitation, origination, closing, servicing
and sale of each such Mortgage complied at all relevant times in all material
respects with all state, federal and local laws and regulations, including the
Federal Truth-in-Lending Act, the Federal Equal Credit Opportunity Act, the Fair
Housing Act, the Fair Credit Reporting Act, and any similar law, regulation or
interpretation thereof affecting or regarding the solicitation, origination,
closing, servicing, sale or collection of Mortgages. In addition, to the
knowledge of the Company, each party to the Mortgages other than the Company or
any Subsidiary was also in such compliance.
(d) Each of the Mortgages owned by the Company and the
Subsidiaries represents a perfected security interest of the priority stated
therein, on residential real property, and such Mortgage was properly recorded,
and all subsequent assignments of the original Mortgage have been recorded in
their appropriate jurisdictions wherein such recordation is necessary to perfect
the lien as against creditors, or is in the process of being recorded.
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(e) Each of the Mortgages owned by the Company and the
Subsidiaries which relates to a first priority perfected security interest on
residential real property is covered by an ALTA lender's title insurance policy
or other form of title insurance generally accepted by lenders in the
jurisdiction where the mortgaged property is located and issued by a title
insurer qualified to do business in the jurisdiction where the mortgaged
property is located. For each of the Mortgages owned by the Company and the
Subsidiaries which relates to a perfected security interest on residential real
property of less than a first lien priority, the Company or a Subsidiary has
obtained a title report issued by a title insurer qualified to do business in
the jurisdiction where the mortgaged property is located. Schedule 2.15(e)
contains a list of Mortgages of less than first lien priority, including the
total amount of all loans secured thereby. Each of the Mortgages owned by the
Company or any Subsidiaries is covered by flood insurance if and to the extent
required by federal law. Pursuant to the terms of each such Mortgage, to the
knowledge of the Company, all improvements upon the mortgaged property are
insured by an insurer acceptable to FNMA against loss by fire and such other
risks as are customarily insured against.
(f) All buildings, improvements and other facilities
("Improvements") on each of the mortgaged properties relating to the Mortgages
are located solely within the boundaries of such mortgaged property, and each of
the Mortgages is secured solely by such mortgaged property and Improvements.
None of the mortgaged properties relating to the Mortgages is subject to any
existing, proposed, or to the Company's knowledge, threatened eminent domain
proceeding, condemnation proceeding or similar proceeding which could result in
the taking of all or part of the mortgaged property. None of the mortgaged
properties relating to the Mortgages contains any Hazardous Materials.
SECTION 2.16 Contracts.
(a) Schedule 2.16(a) hereto contains a correct and complete
list of each of the following Contracts to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or any of their respective
properties or assets are or may be bound:
(i) all employment, agency, consultation or
representation Contracts or other Contracts of any type with
any present officer, director, employee, agent, consultant or
other similar representative of the Company or any Subsidiary
(or former officer, director, employee, agent, consultant or
similar representative of the Company or any Subsidiary, if
there exists any present or future liability with respect to
such Contract, whether now existing or contingent), other than
(a) "at will" employment Contracts and (B) any Contract with a
consultant or similar representative which provides for
aggregate payments by the
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Company or any Subsidiary of less than $15,000 per annum and
is terminable by the Company or any Subsidiary without penalty
on not more than 90 days' notice;
(ii) all Contracts containing any provision or
covenant limiting the ability of the Company or any Subsidiary
to engage in any line of business or to compete with or to
obtain products or services from any Person;
(iii) all partnership, joint venture or similar
Contracts;
(iv) all Contracts relating to the borrowing of money
by the Company or any Subsidiary or providing for any direct
or indirect guarantee by the Company or any Subsidiary of any
indebtedness of any other Person;
(v) all Contracts which by their terms provide for
the creation, existence or maintenance of a Lien on any
properties or assets of the Company or any Subsidiary;
(vi) all leases or subleases of Property and all
other leases, subleases or rental or use Contracts, other than
any such leases, subleases or Contracts which provide for
aggregate payments by the Company or any Subsidiary of less
than $15,000 in any year and are terminable by the Company or
any Subsidiary without penalty on not more than 90 days'
notice;
(vii) all Contracts that involve the disposition or
acquisition by the Company or any Subsidiary after the date
hereof of any material properties or assets not in the
ordinary and regular course of business and not in a manner
consistent with past practice;
(viii) all Contracts (including, but not limited to,
those relating to allocations of expenses, personnel, services
or facilities) between or among the Company or any Subsidiary
on the one hand and any of their respective Affiliates (other
than direct or indirect wholly owned Subsidiaries of the
Company) on the other hand;
(ix) all outstanding proxies, powers of attorney or
similar delegations of authority of the Company or any
Subsidiary outside the ordinary course of business;
(x) all Contracts containing any "change of control"
provision or agreement;
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(xi) all Contracts that involve the payment or
potential payment by or to the Company or any Subsidiary of
aggregate amounts exceeding $15,000 in any year, other than
Contracts which are terminable by the Company without penalty
on not more than 90 days' notice; and
(xii) all other Contracts that are material to the
Company or any Subsidiary or that could prevent, impede or
otherwise affect in any material respect the consummation of
the transactions contemplated by this Agreement.
(b) Prior to the date hereof, the Company has provided or made
available to the Purchaser correct and complete copies of all of the Contracts
identified or required to be identified in Schedule 2.16(a) hereto or (in the
case of oral Contracts) written descriptions of all of the material terms
thereof.
(c) Each Contract identified or required to be identified on
Schedule 2.16(a) hereto is in full force and effect and constitutes a legal,
valid and binding obligation of the Company or the applicable Subsidiary and is
enforceable against the Company or the applicable Subsidiary in accordance with
its terms. To the knowledge of the Company, each such Contract is a legal, valid
and binding obligation of each other party thereto and is enforceable against
such party in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws of general application relating to creditors'
rights and to general principles of equity. Neither the Company nor, to the
knowledge of the Company, any other party to any such Contract is in violation
or breach of or default under any such Contract, except any violation, breach or
default which could not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 2.16(c) hereto, no such Contract
contains any provision which prohibits or restricts, or provides that the other
party thereto may terminate such Contract in the event or by reason of, the
transactions contemplated by this Agreement, or contains any other provision
that would be altered or otherwise become applicable by reason of such
transactions.
SECTION 2.17 Litigation. Except as set forth in Schedule 2.17
hereto, there is no action, suit, inquiry or other proceeding (or, to the
knowledge of the Company, investigation) pending or threatened against or
affecting the Company or any Subsidiary or any of their respective properties or
assets in any court or before any arbitrator or any foreign or United States
federal, state or local Governmental Authority (i) which could reasonably be
expected to have a Material Adverse Effect or (ii) which questions or seeks to
enjoin or prevent or which could otherwise be reasonably expected to affect in
any material respect the transactions contemplated by this Agreement. Except as
reflected on Schedule 2.17 hereto, there are no pending or threatened complaints
filed or asserted by any consumer or by any Governmental Authority against
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the Company or any Subsidiary regarding any violation of statutory requirements
or any consumer protection law or rule.
SECTION 2.18 Compliance with Laws and Other Requirements.
Except as set forth on Schedule 2.18, neither the Company nor any Subsidiary is
in breach or violation of, or default under, any provision of its Charter or
Bylaws or in the case of any Subsidiary that is a limited partnership, other
organizational document, any term or provision of any note, bond, mortgage,
indenture, lease, franchise, permit, license, Contract or other instrument or
document to which it is a party or by which its properties or assets are or may
be bound or, any term of any law, ordinance, statute, rule or regulation of any
Governmental Authority, including, without limitation, GNMA, FNMA, FHLMC or the
Department of Housing and Urban Development, or of any order, writ, injunction,
judgment or decree of any court, arbitrator or Governmental Authority applicable
to it or its properties or assets, except for any breach, violation or default
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. The Company does not know of any proposed law,
ordinance, statute, rule or regulation of any Governmental Authority which, if
enacted or promulgated, could be reasonably expected to have a Material Adverse
Effect.
SECTION 2.19 Environmental Matters. Except as described in
Schedule 2.19, the Company and the Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws. For purposes of the
immediately preceding sentence, compliance with Environmental Laws includes, but
is not limited to, the possession by the Company and the Subsidiaries of all
permits and other governmental authorizations required under applicable
Environmental Laws. The Company and the Subsidiaries are in material compliance
with the terms and conditions thereof. Except as described in Schedule 2.19,
neither the Company nor any of the Subsidiaries has received written notice of,
or is the subject of any facts, circumstances or conditions that could
reasonably be expected to result in, any Environmental Claims which has had or,
if continued, would have, individually or in the aggregate, a Material Adverse
Effect.
SECTION 2.20 Taxes. Except as set forth in Schedule 2.20:
(a) All material Tax Returns required to be filed on or before
the Closing Date by or on behalf of, or in which is required to be reported the
income or other items of, the Company or any Subsidiary have been or will be
filed within the time prescribed by law (including extensions of time approved
by the appropriate taxing authority). Such Tax Returns accurately and completely
set forth or will accurately and completely set forth in all material respects
all liabilities for Taxes (if any) and any other items (including, but not
limited to, items of income, gain, loss, deduction, and credit) required (under
applicable tax law) to be reflected or included in such Tax Returns.
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(b) The Company and each Subsidiary has paid or will pay, on a
timely basis, all Taxes of the Company and each such Subsidiary that are due on
or before the Closing Date (including, but not limited to, Taxes shown to be due
on the Tax Returns described in the preceding paragraph), except those Taxes
that are being disputed in good faith and for which adequate provision has been
made in the consolidated financial statements of the Company and its
Subsidiaries.
(c) To the extent required by GAAP, adequate provision has
been made by the Company and each Subsidiary on the Latest Balance Sheet for the
payment of Taxes due after the Closing Date.
(d) As of the date of this Agreement, neither the Company nor
any Subsidiary has obtained an extension of time to file any Tax Return. The
Company and each Subsidiary will prepare their federal income tax returns, as
well as any state, corporate and partnership tax returns, for the tax year
ending December 31, 2000, and all subsequent tax years and periods in a timely
manner and on a basis consistent with past practice, and the Purchaser shall be
given the opportunity to review any such Tax Returns before they are filed.
(e) There are no Liens for Taxes upon any of the properties or
assets of the Company or any Subsidiary, except Liens for Taxes not yet due.
(f) There are no pending audits, actions, proceedings,
disputes, claims or, to the knowledge of the Company, investigations with
respect to any Taxes payable by or asserted against the Company or any
Subsidiary and, to the knowledge of the Company, there is no basis on which any
claim for material Taxes can be asserted with respect to the Company or any
Subsidiary. Neither the Company nor any Subsidiary has received notice from any
taxing authority of its intent to examine or audit any Tax Returns of the
Company or any Subsidiary.
(g) The taxable year or periods for the assessment of federal
income Tax of the Company and its Subsidiaries are closed either by agreement
with the Internal Revenue Service or by operation of the applicable statute of
limitations for all taxable periods through the taxable period ended December
31, 1996. The taxable years or periods for the assessment of state and local
income or franchise Tax of the Company and its Subsidiaries are closed either by
agreement with the appropriate taxing authority or by application of the
applicable statute of limitations for all periods through the taxable period
ended December 31, 1996. Neither the Company nor any Subsidiary (i) has given or
been requested to give waivers of any statute of limitations relating to the
payment of Taxes for taxable periods for which the applicable statutes of
limitations have not expired or (ii) has made any election which would result or
has resulted in an adjustment under Section 481 of the Internal Revenue Code.
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(h) The Company and its Subsidiaries are not and have not been
subject to tax in any jurisdiction outside the United States.
(i) No agreements relating to allocation or sharing of, or
liability or indemnification for, Taxes exist (i) among the Company and any of
the Subsidiaries or (ii) among the Company and any of its Shareholders or
Affiliates.
(j) All Taxes required to be withheld, collected or deposited
by the Company or any Subsidiary (including, but not limited to, amounts paid or
owing to any employee, creditor, independent contractor or other Person) have
been timely withheld, collected or deposited and, to the extent required, have
been timely paid to the relevant taxing authority.
(k) Neither the Company nor any Subsidiary has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code or agreed to have
Section 341(f)(2) of the Internal Revenue Code apply to any disposition of a
Section 341(f) asset (as such term is defined in Section 341(f)(4) of the
Internal Revenue Code).
(l) Neither the Company nor any Subsidiary has made any
payments, is obligated to make any payments, or is a party to any agreement that
could obligate it to make any payments that will not be deductible under Section
280G of the Internal Revenue Code.
(m) Neither the Company nor any Subsidiary has ever been a
member of an affiliated group of corporations (as defined in Section 1504(a) of
the Internal Revenue Code) other than the group of which the Company is
currently the common parent. Neither the Company nor any Subsidiary is or will
be liable for the Taxes of any other corporation by reason of being a member of
any such affiliated group other than any corporation which is a member of the
group of which the Company currently is the common parent.
SECTION 2.21 Employee Benefit Plans.
(a) Schedule 2.21(a) sets forth a true, complete and correct
list of all "employee benefit plans" (as defined in Section 3(3) of ERISA) and
any other employee benefit plans, arrangements, agreements or payroll practices
(including, without limitation, severance pay, vacation pay, company awards,
salary continuation for disability, profit sharing, hospitalization, sick leave,
deferred compensation, bonus or other incentive or executive compensation,
fringe benefit and stock purchase plans, agreements, arrangements practices or
policies) maintained by the Company or any Subsidiary or to which the Company or
any Subsidiary contributes or is obligated to contribute with respect to
employees of the Company or any Subsidiary or with respect to which the Company
or any Subsidiary has any liability or reasonable expectation of liability
(collectively, the "Employee Benefit Plans"). The term "Employee Benefit
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Plan" also includes any of the aforementioned benefits that are provided through
plans or programs sponsored by Administaff Companies, Inc. ("Administaff"), but
only to the extent that such benefits are provided to individuals providing
services for the Company or a Subsidiary. Schedule 2.21(a) sets forth the name,
current annual compensation rate (including bonus and commissions), title and
current base salary rate of the 10 most highly compensated present employees of
the Company or any Subsidiary. There is no trade or business (whether or not
incorporated) which is under common control, or treated as a single employer,
with the Company or any Subsidiary under Section 414 of the Internal Revenue
Code or ERISA Section 4001 (other than the group of which the Company is the
common parent). Except as set forth on Schedule 2.21(a), neither the Company nor
any Subsidiary is subject to any legal, contractual, equitable or other
obligation (nor have they any formal plan or commitment, whether legally binding
or not) to enter into any form of compensation or employment agreement or to
establish any employee benefit plan of any nature, including (without
limitation) any pension, profit sharing, welfare, post-retirement welfare, stock
option, stock or cash award, deferred compensation or incentive or executive
compensation plan, policy or practice or to modify or change any existing
Employee Benefit Plan. No Employee Benefit Plans cover persons employed outside
of the United States. No Employee Benefit Plans are subject to Section 4063 or
4064 of ERISA. No Employee Benefit Plans are "multiemployer plans" as defined in
Section 3(37) of ERISA (collectively, the "Multiemployer Plans"). No Employee
Benefit Plans provide for medical or other insurance benefits to current or
future retired employees or former employees of the Company or any Subsidiary
after termination of employment (other than as required by Section 4980B of the
Internal Revenue Code and at the former employee's own expense). No Employee
Benefit Plan is a "defined benefit plan" as defined in Section 3(35) of ERISA,
or a "pension plan" as defined in Section 3(2) of ERISA, except as noted in
Schedule 2.21(a). No under-funded pension plan subject to Section 412 of the
Internal Revenue Code has been terminated by or transferred out of the Company
or any Subsidiary. Neither the Company nor any Subsidiary has participated in or
contributed to, or had an obligation to contribute to, any Multiemployer Plan
and has no withdrawal liability with respect to any Multiemployer Plan.
(b) Each of the Employee Benefit Plans intended to qualify
under Section 401 of the Internal Revenue Code (collectively, the "Qualified
Plans") so qualifies, has been maintained in compliance with, and currently
complies with, all qualifications requirements of the Internal Revenue Code in
form and operation and nothing has occurred with respect to the operation of any
such plan which could cause the loss of such qualification or the imposition of
any material liability, penalty or tax under ERISA or the Internal Revenue Code.
Any entity maintained or contributed to by the Company or any Subsidiary and
which is intended to be an association described in Section 501(c)(9) of the
Internal Revenue Code is exempt from federal income Tax under Section 501(a) of
the Internal Revenue Code.
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(c) To the knowledge of the Company, all contributions and
premiums required by law or by the terms of each Employee Benefit Plan or any
agreement relating thereto have been timely made (without regard to any waivers
granted with respect thereto).
(d) There has been no "reportable event," as that term is
defined in Section 4043 of ERISA and the regulations thereunder, with respect to
any of the Qualified Plans which would require the giving of notice, or any
event requiring notice to be provided, under Section 4063(a) of ERISA.
(e) There has been no violation of ERISA that could result in
a material liability with respect to the filing of applicable returns, reports,
documents or notices regarding any of the Employee Benefit Plans with the
Secretary of Labor or the Secretary of the Treasury or the furnishing of such
notices or documents to the participants or beneficiaries of the Employee
Benefit Plans.
(f) The Company has delivered to the Purchaser (i) the
employee booklets from Administaff that describe the benefits that Administaff
provides to its employees who are leased to the Company and its Subsidiaries,
and (ii) the contract between Administaff and Mortgage Portfolio Services, Inc.
These booklets describe each and every benefit plan, program or practice
applicable to such leased employees.
(g) There are no pending actions, suits or proceedings which
have been asserted, instituted or overtly threatened against any Employee
Benefit Plan, the assets of any such plan or the Company, or the plan
administrator or fiduciary of any Employee Benefit Plan with respect to the
operation of any such plan (other than routine, uncontested benefit claims), and
there are no facts or circumstances which could reasonably be expected to form
the basis for any such action, suit or proceeding. Neither the Company nor any
Subsidiary nor any fiduciary of any plan which is not a Multiemployer Plan has
engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA
or 4975 of the Internal Revenue Internal Revenue Code.
(h) Each of the Employee Benefit Plans has been maintained and
administered, in all material respects, in accordance with its terms and all
provisions of applicable Legal Requirements, including, but not limited to, the
requirements with respect to leased employees, as defined in Section 414(n) of
the Internal Revenue Code. There has been no breach or violation of or default
under any Employee Benefit Plan that will subject the Company or any Subsidiary
or such Employee Benefit Plan to any taxes, penalties or claims. All amendments
and actions required to bring each of the Employee Benefit Plans into conformity
with all of the applicable provisions of ERISA and other applicable Legal
Requirements have been made or taken except to the extent that such amendments
or actions are not required by law to be made or taken until a date after the
Closing Date and are disclosed on Schedule 2.21(h).
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(i) Each Employee Benefit Plan complies in all material
respects with all applicable requirements of (i) the Age Discrimination in
Employment Act of 1967, as amended, and the regulations thereunder; (ii) Title
VII of the Civil Rights Act of 1964, as amended, and the regulations thereunder;
(iii) the health care continuation provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"); (iv) the Health Insurance
Portability and Accountability Act of 1996 ("HIPPA"); and (v) the Medicare
Secondary Payor Provisions of Section 1862(b) of the Social Security Act.
(j) Except as set forth on Schedule 2.21(j), the Company is
not a party to any agreement, contract or arrangement that would result in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Internal Revenue Code.
(k) Except as set forth in Schedule 2.21(k) hereto, the
Company will not have, by reason of the transactions contemplated by this
Agreement, any obligation to make any payment to any employee pursuant to any
Employee Benefit Plan.
(l) Except as set forth on Schedule 2.21(l), the Company (or,
if applicable, any Subsidiary) has the right to, in any manner, and without the
consent of any employee, beneficiary or dependent, employees' organization or
other Person, terminate, modify or amend any of the Employee Benefit Plans (or
its participation in any such Employee Benefit Plans) at any time sponsored,
maintained or contributed to by the Company (or Subsidiary, if applicable),
effective as of any date before, on or after the Closing Date except to the
extent that any retroactive amendment would be prohibited by Section 204(g) of
ERISA or would adversely affect a vested accrued benefit or a previously granted
award under any such plan not subject to Section 204(g) of ERISA.
SECTION 2.22 Labor Matters. Except as set forth on Schedule
2.22, (i) neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by them nor does the Company know of any activities or proceedings of
any labor union to organize any such employees and (ii) there are no unfair
labor practice complaints pending against the Company or any Subsidiary before
the National Labor Relations Board.
SECTION 2.23 Permits. Except as set forth in Schedule 2.23
hereto, the Company and its Subsidiaries own or validly hold all licenses,
franchises, permits, approvals, authorizations, exemptions, classifications,
certificates, registrations and similar documents or instruments (collectively,
"Permits") that are required in connection with the conduct of their respective
businesses, including, but not limited to, Permits required under Environmental
Laws, except in cases where the failure to own or hold such Permits,
individually or in the aggregate, could not reasonably be expected to
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have a Material Adverse Effect. All Permits owned or held by the Company or any
Subsidiary are valid and in full force and effect. No proceeding is pending or
threatened which could result in the revocation or termination of any such
Permits, and the Company knows of no basis on which any such proceeding could be
commenced. Except as set forth on Schedule 2.23, the consummation of the
transactions contemplated by this Agreement will not affect the continued
validity, effectiveness or terms and conditions of all Permits owned or held by
the Company or the Subsidiaries.
SECTION 2.24 Insurance. Schedule 2.24 sets forth true and
correct summaries of all liability and other insurance policies maintained by
the Company and its Subsidiaries, and accurately states the coverages,
deductible amounts and carriers of each such insurance policy. All such
insurance policies are in full force and effect and no notice of cancellation or
termination has been received with respect to any such policy. All such
insurance policies are maintained with reputable and, to the knowledge of the
Company, financially sound insurance companies and associations. There are no
circumstances known to the Company that would enable any insurance company or
association to avoid liability under any of the insurance policies maintained by
the Company or any Subsidiary, other than pursuant to express exclusions and
limitations of such policies. The coverage provided by such insurance policies
with respect to events occurring prior to the Closing Date will not be affected
in any manner by, and will not terminate or lapse by reason of, any of the
transactions contemplated by this Agreement. The loss, damage or destruction of
any properties and assets of the Company or its Subsidiaries which are not fully
covered by insurance would not have a Material Adverse Effect.
SECTION 2.25 Transactions with Affiliates. Except as set forth
in Schedule 2.25 hereto, since September 30, 2000, neither the Company nor any
Subsidiary has purchased, acquired or leased any property or services from, or
sold, transferred or leased any property or services to, or loaned or advanced
any money to, or borrowed any money from, or guaranteed or otherwise become
liable for any indebtedness or other obligations of, or acquired any capital
stock, obligations or securities of, or made any management, consulting or
similar fee arrangement with, or entered into or consummated any other material
transaction, agreement or arrangement with or for the benefit of, any officer,
director or employee of the Company or any of its Affiliates, other than
compensation and benefits (including travel advances) provided to any such
officer, director or employee in the ordinary course of business and consistent
with past practice. No Affiliate of the Company or an Subsidiary (other than the
Company or any Subsidiary) has any direct or indirect ownership interest in any
Person in which the Company or any Subsidiary has any direct or indirect
ownership interest or with which the Company or any Subsidiary competes or has a
business relationship.
SECTION 2.26 Absence of Certain Business Practices. Neither
the Company nor any of its Affiliates, directors, officers, employees or agents
has, directly
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or indirectly, given or agreed to give any gift or similar benefit to any
competitor or governmental employee or official (domestic or foreign) which
could reasonably be expected to subject the Company to any damage or penalty in
any civil, criminal or governmental litigation or proceeding.
SECTION 2.27 Disclosure. The representations and warranties by
the Company contained in this Agreement, and the statements contained in any
Schedule required hereby or any other document, certificate or other writing
delivered or to be delivered by or on behalf of the Company pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby, do not and will not contain any untrue statement of a material fact, and
do not and will not omit to state any material fact required in order to make
the statements therein, in the light of the circumstances under which they were
or will be made, not misleading.
SECTION 2.28 Brokers' or Finders' Fees. Except as set forth in
Schedule 2.28 hereto, no broker, finder or investment banker is entitled to any
brokerage or finder's fee or other fees or commissions in connection with this
Agreement or the transactions contemplated hereby based upon arrangements made
by or on behalf of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SFS
SFS hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01 Organization and Qualification. SFS is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its organization and has all requisite corporate power and
authority to own, lease and operate its properties. SFS is duly qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to be so qualified or in good standing could
affect in any manner the performance by it of its obligations under this
Agreement or the Centex Note.
SECTION 3.02 Authority; Binding Effect. SFS has all requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and the Centex Note and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Centex Note by SFS has been duly and validly authorized by all necessary
corporate action on the part of SFS, and no other corporate proceedings or
shareholder actions on the part of or with respect to SFS is necessary to
authorize this Agreement and the Centex Note, the performance by it of its
obligations hereunder and thereunder or the consummation by it of the
transactions contemplated hereby and thereby. This Agreement has been, and as
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of the Closing Date the Centex Note will be, duly executed and delivered by SFS
and constitute the legal, valid and binding obligation of SFS, enforceable
against it in accordance with the terms hereof. SFS holds, and at the Closing
Date will hold, the SFS Loan free and clear of all Liens.
SECTION 3.03 Absence of Conflicts. The execution and delivery
by SFS of this Agreement and the Centex Note, the performance by SFS of its
obligations hereunder and thereunder and the consummation by SFS of the
transactions contemplated hereby and thereby will not (i) conflict with, or
result in any violation or breach of, any provision of the Charter or Bylaws of
SFS, (ii) conflict with, result in any violation or breach of, constitute a
default under, give rise to any right of termination or acceleration (with or
without notice or the lapse of time or both) pursuant to, or result in being
declared void, voidable or without further effect, any term or provision of any
note, bond, mortgage, indenture, lease, franchise, permit, license, Contract or
other instrument or document to which SFS is a party or by which its properties
or assets are bound or (iii) conflict with, or result in any violation of, any
law, ordinance, statute, rule or regulation of any Governmental Authority or of
any order, writ, injunction, judgment or decree of any court, arbitrator or
Governmental Authority applicable to SFS or its properties or assets.
SECTION 3.04 Governmental Consents and Filings. There is no
requirement applicable to SFS to obtain any Consent of, or to make or effect any
declaration, filing or registration with, any Governmental Authority for the
valid execution and delivery by SFS of this Agreement and the Centex Note, the
due performance by SFS of its obligations hereunder and thereunder or the lawful
consummation by SFS of the transactions contemplated hereby and thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company
and SFS as follows:
SECTION 4.01 Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as presently conducted.
SECTION 4.02 Authority; Binding Effect. The Purchaser has all
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by the Purchaser of this Agreement has been
duly and validly
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authorized by all necessary corporate action on the part of the Purchaser, and
no other corporate proceedings or shareholder actions on the part of or with
respect to the Purchaser are necessary to authorize this Agreement, the
performance by it of its obligations hereunder and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and constitutes a legal, valid and binding agreement
of the Purchaser, enforceable against it in accordance with the terms hereof.
SECTION 4.03 Absence of Conflicts. The execution and delivery
by the Purchaser of this Agreement, the performance by it of its obligations
hereunder and the consummation by it of the transactions contemplated hereby
will not (i) conflict with, or result in any violation or breach of, any
provision of the Charter or Bylaws of the Purchaser, (ii) conflict with, result
in any violation or breach of, or constitute a default under, any term or
provision of any note, bond, mortgage, indenture, lease, franchise, permit,
license, Contract or other instrument or document to which the Purchaser is a
party or by which its properties or assets are or may be bound or (iii) conflict
with, or result in any violation of, any law, ordinance, statute, rule or
regulation of any Governmental Authority or of any order, writ, injunction,
judgment or decree of any court, arbitrator or Governmental Authority applicable
to the Purchaser or its properties or assets.
SECTION 4.04 Governmental Consents and Filings. There is no
requirement applicable to the Purchaser to obtain any Consent of, or to make or
effect any declaration, filing, or registration with, any Governmental Authority
for the valid execution and delivery by the Purchaser of this Agreement, the due
performance by the Purchaser of its obligations hereunder or the lawful
consummation by it of the transactions contemplated hereby.
SECTION 4.05 Purchase for Investment.
(a) The Purchaser is an "accredited investor" for purposes of
Regulation D under the Securities Act and is acquiring the Purchased Securities
at the Closing for investment for its own account, and not with a view to
selling or otherwise distributing the Purchased Securities in violation of the
Securities Act. Purchaser's principal executive office is located at the address
set forth in Section 11.02 of this Agreement.
(b) The Purchaser has sufficient knowledge and experience in
investing in companies similar to the Company so as to be able to evaluate the
risks and merits of its investment in the Company, and it is able financially to
bear the risks thereof.
(c) The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management and has
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received (or had made available to it) any financial and business documents
requested by it.
(d) The Purchaser understands that (i) the Purchased
Securities have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to section 4(2) thereof or Rule 506 under the Securities
Act, (ii) the Purchased Securities must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration, (iii) the Purchased Securities will bear a legend to such
effect and (iv) the Company will make a notation on its transfer books to such
effect.
SECTION 4.06 Disclosure Statement. None of the information
furnished by the Purchaser in writing expressly for use in the Disclosure
Statement shall contain any untrue statement of a material fact or omit to state
any material fact required in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
SECTION 4.07 Brokers' or Finders' Fees. The Purchaser has not
authorized any broker, finder or investment banker to act on its behalf in
connection with this Agreement or the transactions contemplated hereby in such a
manner as to give rise to a valid claim against the Company or SFS for any
brokerage or finder's fee or other fees or commissions.
SECTION 4.08 Share Ownership. The Purchaser beneficially owns
117,500 shares of the Company's Common Stock.
ARTICLE V
REORGANIZATION SOLICITATION;
BANKRUPTCY MATTERS
SECTION 5.01 Solicitation Materials; Solicitation of
Acceptances.
(a) As promptly as practicable following the date hereof, the
Company (1) shall prepare, file with the Commission and distribute to the
Shareholders (i) a letter to such Shareholders, (ii) the Disclosure Statement
and (iii) the form of acceptance of the Reorganization Plan to be executed by
such Shareholders (collectively, the "Solicitation Materials") and (2) shall
prepare and file with the Commission the Schedule 13E-3 pursuant to the Exchange
Act. The aforementioned letter to the Shareholders, the Disclosure Statement and
the Schedule 13E-3 shall contain the recommendation of the Board of Directors of
the Company that the Shareholders give their acceptance to the Reorganization
Plan, unless such recommendation has been withdrawn or modified because the
Overbid Termination
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Conditions have been met. The Solicitation Materials and the Schedule 13E-3 will
comply as to form with all applicable requirements of the Exchange Act and the
Bankruptcy Code and all other laws, rules, regulations, decrees and orders
promulgated thereunder.
(b) In preparing the Solicitation Materials and the Schedule
13E-3, the Company shall use its reasonable best efforts to (i) obtain and
furnish all information required to be included therein under the Exchange Act
and the Bankruptcy Code and all other laws, rules, regulations, decrees and
orders promulgated thereunder, (ii) file with the Commission pursuant to the
Exchange Act preliminary copies of the Solicitation Materials and the Schedule
13E-3 for review and comment, (iii) respond promptly to any comments made by the
Commission with respect to preliminary copies of the Solicitation Materials and
the Schedule 13E-3 and (iv) have the Solicitation Materials cleared with the
Commission at the earliest practical date. The Purchaser and its counsel shall
be given a reasonable opportunity to review and comment upon the Solicitation
Materials and the Schedule 13E-3 prior to the time they are filed with the
Commission. The Company shall provide the Purchaser and its counsel with a copy
of any written comments or telephonic notification of any verbal comments that
are received by the Company or its counsel from the Commission or its staff with
respect to the Solicitation Materials or the Schedule 13E-3 and shall further
provide the Purchaser and its counsel with a copy of any written responses and
telephonic notification of any verbal responses by the Company or its counsel.
(c) If at any time prior to the Closing Date any fact, event
or development relating to the Company or any of its Affiliates is discovered by
the Company which is required under applicable law to be set forth in a
supplement to the Disclosure Statement or an amendment to and the Schedule
13E-3, the Company shall prepare, file with the Commission or the Bankruptcy
Court, use its reasonable best efforts to cause the Bankruptcy Court to approve,
and disseminate to the Shareholders any such supplements and amendments in
accordance with applicable law.
(d) The Company shall use its reasonable best efforts to
obtain the requisite number of acceptances of the Reorganization Plan from
Shareholders in order to meet all applicable requirements with respect to
accepting classes of claims and interests under Section 1126 of the Bankruptcy
Code.
SECTION 5.02 Certain Documents and Motions.
(a) As promptly as practicable after the successful completion
of the Reorganization Solicitation, the Company shall commence the Bankruptcy
Case in the United States Bankruptcy Court for the Northern District of Texas;
provided, however, that in no event will the Company be obligated to commence
the Bankruptcy Case until the first Business Day after the date on which the
Company shall have obtained the
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requisite number of acceptances from Shareholders with respect to the
Reorganization Plan in order to meet all applicable requirements with respect to
accepting classes of claims and interests under Section 1126 of the Bankruptcy
Code.
(b) Promptly upon the commencement of the Bankruptcy Case, and
in no event later than five Business Days thereafter, the Company shall (i) file
the Disclosure Statement and the Reorganization Plan and the certification of
votes for acceptance or rejection of the Reorganization Plan with the Bankruptcy
Court and (ii) seek from the Bankruptcy Court, and take all steps necessary to
obtain, a hearing at the earliest practicable date for approval of the
Reorganization Solicitation and confirmation of the Reorganization Plan.
(c) Promptly upon the commencement of the Bankruptcy Case, and
in no event later than five Business Days thereafter, the Company shall file the
Interim Motion with the Bankruptcy Court and shall use its reasonable best
efforts to cause the Bankruptcy Court to enter the Interim Order.
SECTION 5.03 Reorganization Proceedings.
(a) The Company shall use its reasonable best efforts to
obtain confirmation of the Reorganization Plan by the Bankruptcy Court using the
acceptances of the Reorganization Plan received by the Company pursuant to the
Reorganization Solicitation.
(b) The Company shall comply with the Bankruptcy Code and all
other laws, rules, regulations, decrees and orders promulgated thereunder in
connection with obtaining confirmation of the Reorganization Plan and all other
matters in connection with the Bankruptcy Case. Without limiting the generality
of the foregoing, the Company shall promptly prepare and file with the
Bankruptcy Court all motions, schedules, statements of financial affairs,
reports, and all other papers and filings required by the Bankruptcy Code and
all other applicable laws, rules, regulations, orders or decrees (the
"Bankruptcy Filings"). The Purchaser and its counsel shall be given a reasonable
opportunity to review and comment upon the Bankruptcy Filings prior to the time
they are filed with the Bankruptcy Court.
(c) The extent, method, and means of notice of the filing of
the Bankruptcy Case and meetings of creditors, hearings, objection dates, bar
dates for filing proofs of claims or interests, the hearing on approval of the
Reorganization Solicitation and the confirmation of the Bankruptcy Plan, and
other significant events in connection with the Bankruptcy Case, given to
creditors, parties in interest, and other parties entitled or expected to
receive any such notice, shall be decided by the Company in consultation with,
and subject to the approval of, the Purchaser.
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(d) The Company shall use its reasonable best efforts to
obtain, and shall not take, or omit to take, any action which could reasonably
be expected to prevent or impede, or result in the revocation of, (i) the
confirmation of the Reorganization Plan, (ii) a full and complete discharge of
all debts of the Company (to the fullest extent possible under Section 1141(d)
of the Bankruptcy Code), except as otherwise specifically provided in the
Reorganization Plan, and (iii) the vesting upon the entry of the Confirmation
Order of the property of the Company in the reorganized entity free and clear of
all claims and interests of creditors and equity security holders in accordance
with the Reorganization Plan. To the extent that the Reorganization Plan
requires the Company to take any action in the Bankruptcy Case, including, but
not limited to, designating executory contracts to be assumed or rejected and
making elections concerning treatment of claims, the Company shall take such
action after consultation with and, in the case of any election to be made,
obtaining the approval of the Purchaser.
(e) The Reorganization Plan will be in the form attached as
Exhibit A hereto with such changes therein as shall be approved by the Company
and by the Purchaser, in each case in such party's reasonable discretion. The
Company shall not consent to any amendment or supplement to, or modification of,
the Reorganization Plan or the Disclosure Statement that purports to effect any
change in the terms or conditions of the transactions contemplated by this
Agreement which is, in the reasonable judgment of the Purchaser, unfavorable to
it or any change in the manner in which the total payments and distributions
under the Reorganization Plan is allocated among Shareholders without the prior
written consent of the Purchaser. The Company agrees that it will not impair
(within the meaning of Section 1124 of the Bankruptcy Code) the treatment of
SFS's claims arising out of the SFS Loan pursuant to the Reorganization Plan
without the prior written consent of SFS. The Company hereby acknowledges and
agrees that (i) the amount owed by the Company under the SFS Loan as of February
28, 2001 was $7,710,038.99, consisting of $7,101,801.99 of principal and
$608,237.00 of accrued and unpaid interest, (ii) the Company has no defenses,
setoffs, counterclaims or recoupments to, against or in respect of the SFS Loan
except for any rights of offset that may hereafter arise pursuant to this
Agreement and (iii) in entering into and performing its obligations under this
Agreement, SFS is and will be relying on, among other things, the foregoing
acknowledgements set forth in this sentence.
SECTION 5.04 Securities Laws. The Company shall comply with
all filing and other requirements of the Exchange Act, and the rules and
regulations thereunder, and any other applicable federal or state securities
laws, rules or regulations in connection with the Reorganization Solicitation
and the consummation of the Reorganization Transactions.
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ARTICLE VI
CERTAIN COVENANTS
SECTION 6.01 Conduct of Business. From the date hereof until
the Closing Date, the Company and its Subsidiaries shall conduct their
businesses in the ordinary and regular course of business and consistent with
past practice and shall use their reasonable best efforts to preserve intact the
business organizations of the Company and its Subsidiaries, to keep available
the services of their present officers and employees and maintain their present
relationships with Governmental Authorities and other Persons having business
relationships with the Company or any Subsidiary. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date, except
as provided in this Agreement or the Reorganization Plan, neither the Company
nor any Subsidiary shall, directly or indirectly, do, or propose or commit to
do, any of the following without the prior written consent of the Purchaser:
(a) amend or make any other change in its Charter or Bylaws or
other organization documents, except as specifically contemplated by this
Agreement;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock or other equity securities of, or ownership interests in, the Company or
any Subsidiary or any options, warrants, calls or other rights to acquire any
shares of capital stock or other equity securities of, or ownership interests
in, the Company or any Subsidiary;
(c) sell, lease, transfer or otherwise dispose of any material
properties or assets of the Company or any Subsidiary (whether or not reflected
on the books of the Company or any Subsidiary and whether real, personal or
mixed, tangible or intangible) except for (A) Mortgages and real estate owned by
the Company or any Subsidiary as a result of the foreclosure of any Mortgage, in
each case, sold, transferred or disposed of in the ordinary and regular course
of business or (B) assets sold in one or more series of related transactions in
an amount not exceeding $15,000, provided that the total of all such
transactions shall not exceed $50,000 in aggregate;
(d) consolidate with, or merge with or into, any Person;
(e) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property) with respect to the capital
stock of the Company or redeem, purchase or otherwise acquire any capital stock
or other equity interests of, or ownership interests in, the Company or any
Subsidiary;
(f) reclassify, combine, split or subdivide any shares of the
capital stock of the Company or any Subsidiary;
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(g) incur or assume any indebtedness for borrowed money or
issue any debentures, notes or other debt securities or assume, guarantee,
endorse or otherwise become liable (whether directly, contingently or otherwise)
for the obligations of any other Person, except in connection with the
origination of Mortgages in the ordinary and regular course of business and
consistent with past practice;
(h) make any loans, advances or capital contributions to, or
investments in, any other Person, except in connection with the origination of
Mortgages in the ordinary and regular course of business and consistent with
past practice;
(i) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof;
(j) create or incur any Liens upon the properties or assets of
the Company or any Subsidiary or suffer to exist any such Liens (other than
Permitted Liens), except in connection with the origination of Mortgages in the
ordinary and regular course of business and consistent with past practice;
(k) enter into any Contracts or commitments or engage in any
transactions not in the ordinary and regular course of business and consistent
with past practice, including, without limitation, opening any new business
locations (including any net branch arrangement) or entering into any Contracts
or commitments to do the same;
(l) engage in any transactions with any Affiliate (other than
transactions between the Company and any of its direct or indirect wholly owned
Subsidiaries), except on terms and conditions at least as favorable to the
Company as those that would apply in the case of a similar arms'-length
transaction;
(m) enter into any agreement, arrangement or understanding
with any director, officer or key employee of the Company or any Subsidiary
providing for the employment of any such director, officer or key employee or
any increase in the compensation, severance or termination benefits payable or
to become payable by the Company or any Subsidiary to any such director, officer
or key employee or make any loan to or enter into any other material transaction
or arrangement with any such director, officer or key employee;
(n) increase the benefits payable by the Company or any
Subsidiary under, enter into or adopt any new, or amend any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, program or arrangement
made to, for or with any of the directors, officers or employees of the Company
or any Subsidiary;
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(o) fail to keep all of the properties and assets of insurable
character of the Company or any Subsidiary insured in accordance with the past
practices of the Company;
(p) cancel or compromise any material claim, waive or release
any material rights or change or terminate any material Contract of the Company
or any Subsidiary, except in the ordinary and regular course of business and
consistent with past practice; (q) fail to maintain in full force and effect all
Permits that are required in connection with the conduct of the businesses of
the Company or any Subsidiary;
(r) change the accounting principles or methods of the Company
or any Subsidiary, except as required by law or as a result of any mandatory
change in accounting standards;
(s) fail to maintain the books and records of the Company or
any Subsidiary in the usual, regular and ordinary manner;
(t) make any tax elections or settle or compromise any income
tax liability, except in the ordinary and regular course of business and
consistent with past practice;
(u) prior to the Closing Date, take any action which would
cause any representation or warranty of the Company contained in this Agreement
to be untrue or incorrect as of the date when made or (except in the case of
representations and warranties made as of a specific date) as of any future
date; and
(v) authorize, or commit or agree to take, any of the
foregoing actions.
SECTION 6.02 Other Proposals.
(a) From the date hereof until the Closing Date, the Company
shall not, and shall use its best efforts to ensure that its Affiliates,
directors, officers, agents or other representatives (including, but not limited
to, any investment banker, financial advisor, attorney or accountant) do not,
directly or indirectly initiate any contact with, solicit, encourage or enter
into or continue any negotiations, understandings or agreements with any Third
Party with respect to, or in connection with, or furnish or disclose any
non-public information regarding the Company or its Subsidiaries or their
respective businesses to any Third Party in connection with, any Acquisition
Proposal. Notwithstanding the foregoing, to the extent required by the fiduciary
obligations of the Board of Directors of the Company after consultation with
legal counsel, (i) the
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Company may, in response to an unsolicited request therefor, furnish non-public
information with respect to the Company or its Subsidiaries or their respective
businesses to any Qualified Third Party pursuant to a customary confidentiality
agreement having terms no less favorable to the Company than those in the
Confidentiality Agreement and discuss such information (but not any Acquisition
Proposal and not any non-public information relating to the structure of the
transactions contemplated hereby) with such Qualified Third Party and (ii) upon
receipt by the Company of an Acquisition Proposal from a Qualified Third Party,
if (A) the Company has complied fully and in a timely manner with its
obligations to notify the Purchaser of the receipt of such Acquisition Proposal
(and the identity of the offeror and the material terms of such proposal) in
accordance with Section 6.02(b) hereof, (B) the Board of Directors of the
Company has reasonably determined that such Acquisition Proposal, if
consummated, would constitute an Overbid Transaction and (C) the Company has
delivered a written notice to the Purchaser (an "Overbid Notice") advising it of
the foregoing determination by the Board of Directors (which notice shall be
accompanied by copies of the form of definitive agreement or other documentation
proposed to be entered into in connection with the Acquisition Proposal, if any
are then prepared), the Company may participate in discussions and negotiations
with such Qualified Third Party regarding such Acquisition Proposal.
Furthermore, if (v) the Company has delivered an Overbid Notice to the Purchaser
(after compliance in full with each of the conditions precedent to the delivery
of such a notice set forth in clauses (i) and (ii) of the immediately preceding
sentence), (w) the Purchaser shall not have delivered to the Company within ten
calendar days after receipt of such Overbid Notice a written offer (a "Topping
Offer") to amend the terms of this Agreement in order to provide for
consideration having a value at least $100,000 greater than the value of the
consideration provided for under the Acquisition Proposal to which such Overbid
Notice relates, (it being understood and agreed that, if the Purchaser does
deliver a Topping Offer to the Company, the Company shall immediately cease to
participate in discussions or negotiations with such Qualified Third Party
regarding such Acquisition Proposal, unless and until the conditions precedent
to engaging in such discussion or negotiations specified in this Section 6.02(a)
are satisfied by a proposal thereafter submitted by such Qualified Third Party),
(x) the terms of the Acquisition Proposal shall not have been modified in a
manner adverse to the Company or the Shareholders after the date of the Overbid
Notice (it being understood and agreed that the Company shall promptly advise
the Purchaser in writing of the nature of any change in the terms thereof), (y)
the Company shall have paid or shall have arranged for the payment of the
Termination Fee to the Purchaser in accordance with Section 9.03 and the Company
shall have paid or shall have arranged for the payment of the notes referred to
in Sections 1.02(b) and 1.02(c) and (z) the Company shall have taken all action
on its part required to cause the Xxxxxxx Money Escrow Agent to deliver the
Xxxxxxx Money Deposit to the Purchaser (the conditions set forth in clauses (v),
(w), (x), (y) and (z) above being hereinafter collectively referred to as the
"Overbid Termination Conditions"), the Company may terminate this Agreement and
enter into an agreement
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with a Qualified Third Party with respect to or in connection with an Overbid
Transaction. It is expressly understood and agreed that, if any Affiliates,
directors, officers, agents or other representatives (including, but not limited
to, any investment banker, financial advisor, attorney or accountant) of the
Company, whether or not such persons are purporting to act on behalf of the
Company, engage in any conduct involving the furnishing of information to, the
solicitation of, or participation in discussions or negotiations with, a Third
Party which, if performed by the Company, would constitute a breach of the
provisions of this Section 6.02(a), then, notwithstanding anything to the
contrary contained herein, such Third Party shall not be deemed a Qualified
Third Party for purposes of this Agreement.
(b) In the event the Company shall directly or indirectly
receive any offer, proposal or inquiry regarding an Acquisition Proposal, the
Company shall notify the Purchaser prior to the close of the same Business Day
upon which it receives such offer, proposal or inquiry (or if an offer, proposal
or inquiry is received after the close of business on a Business Day or on a day
that is not a Business Day, as promptly as practicable after receipt but in no
event later than 10:00 a.m. on the next Business Day) and shall, in any such
notice to the Purchaser, indicate the identity of the offeror and all of the
material terms of such offer, proposal or inquiry.
(c) The Company shall not modify, or release any Third Party
from any confidentiality or standstill agreement to which the Company or any
Subsidiary is a party (exclusive of those in which the Company is solely the
recipient rather than the provider of confidential information).
SECTION 6.03 Access to Information; Audit Rights.
(a) From the date hereof until the Closing Date, the Company
shall permit the Purchaser, and its Affiliates, directors, officers, agents or
other representatives to make a full investigation of the business, prospects,
properties, financial condition and results of operations of the Company and its
Subsidiaries and will afford the Purchaser and such representatives full access
to the offices, buildings, real properties, records, files, books of account,
tax returns, agreements and commitments, record books and stock books of the
Company and its Subsidiaries and to their directors, officers, independent
accountants, agents and other representatives, at such reasonable times and as
often as the Purchaser may reasonably request. Upon request by the Purchaser,
the Company shall request its present and former independent accountants to
afford the Purchaser and its representatives access to all accountants' working
papers for all audits and reviews of the financial statements of the Company and
its Subsidiaries. The Company shall afford to the Purchaser and its
representatives access to all such further information relating to the business,
prospects, properties, financial condition and results of operations as the
Purchaser or such representatives may reasonably request. No investigation
pursuant to this Section 6.03 shall affect any
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representations or warranties made by the Company in this Agreement or the
conditions to the obligations of any party hereto to consummate the transactions
contemplated hereby. The provisions of the Confidentiality Agreement shall apply
to any information provided to the Purchaser, or its Affiliates, directors,
officers, agents or other representatives, pursuant to this Section 6.03;
provided, however, that as of the Closing Date, the Confidentiality Agreement
shall terminate and be of no further force and effect.
(b) No later than three Business Days prior to the proposed
Closing Date, the Company shall deliver to the Purchaser a certificate of the
chief financial officer of the Company setting forth (i) a calculation of the
amount of the Company's total Shareholders Deficit and of the Company's
Payables, in each case as of the most recent practicable date (which, if the
Closing is to occur on or after the fifteenth calendar day of a month, shall not
be earlier than the end of the most recently completed calendar month) and (ii)
an estimate of the total amount of all losses to be incurred by the Company from
the date of the calculation of total Shareholders Deficit referred to in clause
(i) above to the proposed Closing Date. The foregoing certificate shall include
supporting calculations in reasonable detail for all amounts shown thereon and,
in the case of any estimates, shall state that such estimates are based upon the
best information currently available to management of the Company. In addition
to the rights set forth in paragraph (a) above, the Purchaser may audit the
books and records of the Company to, among other things, ensure compliance with
the Company's representations and warranties contained in the last two sentences
of Section 2.08 hereof. If the Purchaser disputes the Company's compliance with
the representations and warranties contained in the last two sentences of
Section 2.08 hereof, the Purchaser will promptly deliver to the Company a
written notice (a "Dispute Notice") identifying the disputed item and setting
forth a reasonably detailed statement of the basis thereof. For a period of 7
days following the date of delivery of a Dispute Notice by Purchaser (the
"Resolution Period"), Purchaser and the Company shall negotiate in good faith in
an attempt to resolve the disputed items. If, at the end of the Resolution
Period, the parties have not reached agreement as to all disputed items, all
unresolved disputed items shall be submitted to an Independent Accountant, who
shall be jointly engaged by the Purchaser and the Company within 7 days after
the end of the Resolution Period for the purpose of making a final determination
with respect to such items. The parties shall take all action reasonably
required to cause the Independent Accountant to make its determination within 10
days after the date of its engagement, which determination shall be made in
accordance with this Section 6.03(b). Upon making its determination, the
Independent Accountant shall deliver to the Purchaser and the Company a report
outlining its finding. Such report shall be final, conclusive and binding on the
parties hereto and not subject to appeal, absent fraud or manifest error. The
Purchaser and the Company shall each bear one-half of all the fees and expenses
incurred in connection with the engagement of the Independent Accountant. The
Purchaser can delay the
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Closing during the pendency of the dispute resolution proceedings set forth in
this Section 6.03(b).
SECTION 6.04 Best Efforts. Subject to the terms and conditions
of this Agreement, each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things which are necessary, proper or advisable under applicable laws
and regulations or otherwise in order to consummate and make effective the
transactions contemplated by this Agreement and to cause the Closing to occur on
or before June 30, 2001. Without limiting the generality of the foregoing, each
of the parties hereto shall execute and deliver, or cause to be executed and
delivered, all agreements, certificates and other instruments and shall use its
reasonable best efforts promptly to obtain all waivers, permits, consents,
approvals and other authorizations from, and to effect all registrations,
filings and notices with or to, any Governmental Authorities or other Persons
which are necessary or appropriate in connection with said transactions or in
order to fulfill all conditions to obligations of the parties under this
Agreement.
SECTION 6.05 Notification of Certain Other Matters. From the
date hereof until the Closing Date, the Company shall promptly notify the
Purchaser of:
(a) any actions, suits, inquiries, investigations or
proceedings commenced or threatened against or affecting the Company or any
Subsidiary which, if pending on the date hereof, would have been required to
have been set forth or described in any Schedule required hereby or which relate
to the transactions contemplated by this Agreement;
(b) any notice or other communication from any Person alleging
that the Consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(c) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and
(d) any fact, development or occurrence that constitutes a
Material Adverse Change or, so far as reasonably can be foreseen at the time of
its occurrence, could have a Material Adverse Effect.
SECTION 6.06 Supplemental Disclosure. From the date hereof
until the Closing Date, the Company shall have the continuing obligation
promptly to supplement or amend the Schedules required hereby or any writing
previously delivered to the Purchaser with respect to any matter hereafter
arising or discovered which, if existing or known at the date hereof, would have
been required to be set forth or described in a Schedule required hereby or in
any writing delivered to the Purchaser; provided, however, that for the purpose
of the rights and obligations of the parties
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hereunder, any such supplemental or amended disclosure shall not be deemed to
have been disclosed as of the date hereof unless so agreed to in writing by the
Purchaser. In addition, the Company shall deliver to the Purchaser on or before
the Closing a complete list of all Mortgages owned by the Company or the
Subsidiaries as of a date within five Business Days of the Closing Date.
SECTION 6.07 Consulting Agreement. The Company and the
Purchaser agree to negotiate in good faith and use their respective reasonable
best efforts to enter into a consulting and operating assistance agreement with
each other (the "Consulting Agreement") within five Business Days after the date
of this Agreement, which agreement will contain provisions whereby the Purchaser
will provide certain services to the Company in connection with the monitoring
and supervision of the conduct of the business of the Company and its
Subsidiaries and that the Company and its Subsidiaries will consult and
cooperate with the Purchaser in connection with certain operating and business
decisions. In the event the Purchaser is to be paid any fees pursuant to the
Consulting Agreement, such fees shall not be deemed fees in connection with the
transactions contemplated by this Agreement pursuant to Sections 1.04 and
1.05(a) hereof.
SECTION 6.08 Termination Fee Security. The Company agrees to
use commercially reasonable efforts to provide security for the Termination Fee
as soon as practicable after the execution of this Agreement.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 Conditions to the Obligations of the Purchaser.
The obligations of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, prior to or concurrently
with the Closing, of the following conditions (any one or more of which may be
waived, in whole or in part, by the Purchaser):
(a) Representations and Warranties; Covenants and Agreements.
Each of the representations and warranties of the Company contained in this
Agreement that is not qualified by a "materiality" standard shall be true and
correct in all material respects as of the Closing Date as if made on such date,
each of the representations and warranties of the Company contained in this
Agreement that is qualified by a "materiality" standard shall be true and
correct as of the Closing Date as if made on such date and the Company shall
have performed and complied in all material respects with all provisions,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by them prior to or on the Closing Date.
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(b) Officers' Certificate. The Company shall have delivered to
the Purchaser a certificate of the chief executive officer or chief financial
officer of the Company, dated as of the Closing Date, certifying that, the
conditions set forth in paragraph (a) above have been fulfilled.
(c) Reorganization Solicitation. The Company shall have
obtained pursuant to the Reorganization Solicitation acceptances from a number
of Shareholders that meets all applicable requirements with respect to accepting
classes of claims and interests under Section 1126 of the Bankruptcy Code.
(d) Confirmation of the Reorganization Plan and Entry of the
Confirmation Order; Consummation of the Reorganization Plan. The Confirmation
Order shall have been entered by the Bankruptcy Court, and shall be in form and
substance reasonably satisfactory to the Purchaser. The Confirmation Order shall
provide that, upon the Closing, the Reorganization Plan shall be deemed to have
been substantially consummated. Either (i) no stay of the Confirmation Order
shall be in effect or (ii) if such a stay has been granted by the Bankruptcy
Court or any other court of competent jurisdiction, such stay shall have been
dissolved. The Confirmation Order shall not have been modified, amended,
dissolved, revoked or rescinded and shall be in full force and effect on the
Closing Date. Without the necessity of any further action or proceedings by the
Company, the Confirmation Order shall have (x) as of the date of such order and
as of the Closing Date, effected a full and complete discharge and release of,
and thereby extinguished, all debts of the Company (to the fullest extent
possible under Section 1141(d)(1) of the Bankruptcy Code) except as otherwise
specifically provided in the Reorganization Plan and (y) vested the property of
the Company in the reorganized entity, free and clear of all claims and
interests of creditors in accordance with the Reorganization Plan and the
Confirmation Order.
(e) Other Bankruptcy Proceedings. Except as contemplated by
this Agreement, no proceeding shall have been instituted, consented to,
continued or reopened by or against the Company or any Subsidiary seeking to
adjudicate any of them a bankrupt or seeking reorganization, arrangement,
adjustment, protection, relief or composition of any of their debts under any
law relating to bankruptcy, insolvency or reorganization or relief of debtors,
seeking the entry of any order for relief or the appointment of a receiver,
trustee, custodian or other similar official for any of them or any substantial
part of any of their property or seeking relief for or against the Company which
would have the effect of terminating, staying, enjoining or abating the
Bankruptcy Case, transferring its venue or converting the Bankruptcy Case or any
other proceeding by or against the Company into a case under Chapter 7 of the
Bankruptcy Code (any such proceeding being hereinafter referred to as a
"Bankruptcy Proceeding"), unless any such Bankruptcy Proceedings shall have been
dismissed with prejudice by a Final Order of the court before which such
proceedings shall have been instituted, consented to, continued or reopened.
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(f) Litigation. No action, suit or proceeding before any
federal or state court or other Governmental Authority shall have been
instituted or threatened which, in the reasonable judgment of the Purchaser,
shall have the effect or be expected to have the effect of (i) making illegal,
impeding or otherwise restraining or prohibiting any of the transactions
contemplated by this Agreement; (ii) imposing any material limitations on the
ownership or operation by the Company, any Subsidiary or the Purchaser of any
substantial portion of its business or assets, or compelling the Company, any
Subsidiary or the Purchaser to dispose of or hold separate any substantial
portion of its business or assets, as a result of or in connection with any such
transactions or (iii) imposing any material limitations on the ability of the
Purchaser to exercise full rights of ownership with respect to any of the
Purchased Stock (including, but not limited to, the right to vote the Purchased
Stock on all matters submitted to the stockholders of the Company), or
compelling the Purchaser to dispose of any of the Purchased Stock.
(g) Other Governmental Action. No statute, rule or regulation
shall have been enacted by any Governmental Authority which shall have any of
the effects referred to in paragraph (f) above.
(h) Consents. All of the Consents from, and registrations,
filings and notices with or to, any Governmental Authorities or other Persons
required in connection with the transactions contemplated by this Agreement
shall have been obtained or effected, as the case may be.
(i) Opinion of Counsel. The Purchaser shall have received (A)
an opinion, dated as of the Closing Date, of Xxxxxxxx Xxxxxxxx & Xxxxxx PC,
counsel for the Company, in the form attached as Exhibit B hereto and (B) an
opinion, dated as of the Closing Date, of Xxxxx X. Xxxxxx, counsel for SFS, in
the form attached as Exhibit C hereto.
(j) Directors and Officers. The Company shall (i) have taken
all corporate action necessary to ensure that the individuals selected by Centex
(as evidenced by a written instrument delivered to the Company prior to Closing)
shall be appointed to the offices chosen by Centex and that the Company's
officers holding such positions have either resigned or otherwise have been
removed from such offices effective as of the Closing, (ii) have taken all
corporate action necessary to ensure that the individuals nominated by Centex
(as evidenced by a written instrument delivered to the Company prior to Closing)
shall become members of the board of directors of the Company effective as of
the Closing and (iii) deliver to Centex copies of the resignations of each of
the members of the Company's board of directors to become effective as of the
Closing.
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SECTION 7.02 Conditions to the Obligations of the Company and
SFS. The obligations of the Company and SFS to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, prior to or
concurrently with the Closing, of the following conditions:
(a) Representations and Warranties; Covenants and Agreements.
(i) 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
Closing Date as if made on such date; and (ii) the Purchaser shall have
performed and complied in all material respects with all provisions, covenants
and conditions contained in this Agreement which are required to be performed or
complied with by it prior to or on the Closing Date.
(b) Officers' Certificate. The Purchaser shall have delivered
to the Company and SFS a certificate of the chief executive officer of the
Purchaser, dated as of the Closing Date, certifying that the conditions set
forth in paragraph (a) above have been fulfilled.
(c) Reorganization Solicitation. The Company shall have
obtained pursuant to the Reorganization Solicitation acceptances from a number
of Shareholders that meets all applicable requirements with respect to accepting
classes of claims and interests under Section 1126 of the Bankruptcy Code.
(d) Confirmation of the Reorganization Plan and Entry of the
Confirmation Order; Consummation of the Reorganization Plan. The Confirmation
Order shall have been entered by the Bankruptcy Court. The Confirmation Order
shall provide that, upon Closing, the Reorganization Plan shall be deemed to
have been substantially consummated. Either (i) no stay of the Confirmation
Order shall be in effect or (ii) if such a stay has been granted by the
Bankruptcy Court or any other court of competent jurisdiction, such stay shall
have been dissolved. The Confirmation Order shall not have been modified,
amended, dissolved, revoked or rescinded and shall be in full force and effect
on the Closing Date.
(e) Litigation. No action, suit or proceeding before any
federal or state court or other Governmental Authority shall have been
instituted or threatened which shall have the effect of making illegal, impeding
or otherwise restraining or prohibiting any of the transactions contemplated by
this Agreement.
(f) Other Governmental Action. No statute, rule or regulation
shall have been enacted by any Governmental Authority which has the effect
referred to in paragraph (d) above.
(g) Opinion of Counsel. The Company and SFS shall have
received an opinion, dated as of the Closing Date, of Xxxxxxx X. Xxxxxx,
Executive Vice
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President, Chief Legal Officer and Secretary of the Purchaser, in the form
attached as Exhibit D hereto.
(h) Impairment. In the case of SFS, the treatment of SFS's
claims arising out of the SFS Loan shall not be impaired (within the meaning of
Section 1124 of the Bankruptcy Code) under the Reorganization Plan.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Indemnification by SFS. In accordance with the
terms and subject to the terms and conditions of this Article VIII, from and
after the Closing, SFS shall indemnify and hold harmless the Purchaser, the
Company, the Subsidiaries and their Representatives (collectively, the
"Purchaser Indemnified Parties") from and against any and all demands, claims,
actions, causes of action, proceedings, assessments, losses, damages,
liabilities, settlements, judgments, fines, penalties, interest, costs and
expenses (including fees and disbursements of counsel) which are asserted
against, imposed upon or incurred by any such Person as a result of or in
connection with the breach or alleged breach by the Company or SFS of any of
their respective representations, warranties, covenants or agreements contained
in this Agreement (all such demands, claims, actions, causes of action,
proceedings, assessments, losses, damages, liabilities, settlements, judgments,
fines, penalties, interest, costs and expenses for which indemnification is
provided pursuant to this Section 8.01 being hereinafter collectively referred
to as the "Purchaser Claims"); provided, however, that (A) this indemnification
shall only become operative and effective if the Closing occurs and then only to
the extent that all such Purchaser Claims incurred hereunder exceeds $150,000
and, in such event, shall include the entire amount of such Purchaser Claims
(including amounts up to and including $150,000), (B) subject to the terms of
Section 8.05(f), the maximum potential liability of SFS pursuant to this Section
8.01 in respect of Purchaser Claims shall be an amount equal to the SFS Amount
minus $200,000, and (C) the obligation of SFS to provide indemnification
pursuant to this Section 8.01 in respect of any Purchaser Claims shall terminate
as of the date of expiration of the applicable survival period set forth in
Section 8.04, unless the Purchaser shall have given notice to SFS prior to such
date identifying such Purchaser Claims with reasonable particularity and
asserting that it is entitled to indemnification by SFS against such Purchaser
Claims pursuant to this Section 8.01. For the avoidance of doubt, it is
acknowledged and agreed that SFS shall have no liability or obligation, under
this Agreement or otherwise, for or relating in any manner to (i) the Consulting
Agreement and (ii) the promissory notes referred to in Sections 1.02(b) and
1.02(c).
SECTION 8.02 Indemnification by the Purchaser. In accordance
with the terms and subject to the conditions of this Article VIII, from and
after the Closing,
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the Purchaser shall indemnify and hold harmless the Company and SFS and their
respective Representatives for, from and against any and all demands, claims,
actions, causes of action, proceedings, assessments, losses, damages,
liabilities, settlements, judgments, fines, penalties, interest, costs and
expenses (including fees and disbursements of counsel) which are asserted
against, imposed upon or incurred by any such Person as a result of or in
connection with the breach or alleged breach by the Purchaser of any of its
representations, warranties, covenants or agreements contained in this Agreement
(all such demands, claims, actions, causes of action, proceedings, assessments,
losses, damages, liabilities, settlements, judgments, fines, penalties,
interest, costs and expenses for which indemnification is provided pursuant to
this Section 8.02 being hereinafter collectively referred to as the "Company
Claims"); provided, however, that (A) the maximum liability of the Purchaser
pursuant to this Section 8.02 in respect of such Company Claims shall be an
amount equal to the Purchase Price (as adjusted in accordance with Section 1.04)
and (B) the obligation of the Purchaser to provide indemnification pursuant to
this Section 8.02 in respect of any Company Claims shall terminate as of the
applicable survival period set forth in Section 8.04, unless the Person entitled
to indemnification shall have given notice to the Purchaser prior to such date
identifying such Company Claims with reasonable particularity and asserting that
it is entitled to indemnification by the Purchaser against such Company Claims
pursuant to this Section 8.02.
SECTION 8.03 Third-Party Claims; Procedures. The obligations
of the parties provided for under Sections 8.01 and 8.02 hereof in respect of
any Purchaser Claims or Company Claims, as the case may be ("Claims"), made or
asserted by a third party ("Third-Party Claims") shall be performed in
accordance with the following procedures:
(a) Each Person entitled to indemnification under Section 8.01
or 8.02 (each, an "Indemnified Party") shall give the party or parties from whom
it is seeking indemnification hereunder (collectively, the "Indemnifying Party")
written notice as promptly as reasonably practicable after the written assertion
of any Third-Party Claim or commencement of any action, suit or proceeding in
respect thereof (it being understood that notice shall be deemed to have been
delivered as promptly as reasonably practicable if given no later than seven
days after the assertion of such a claim or commencement of any such action,
suit or proceeding); provided, however, that, if an Indemnified Party fails to
give Indemnifying Party written notice as provided herein, Indemnifying Party
shall only be relieved of its obligations under this Article VIII in respect of
such Third-Party Claim if and to the extent that the Indemnifying Party is
materially prejudiced thereby (whether as a result of the forfeiture of
substantive defenses or otherwise).
(b) Promptly after receipt of written notice of a Third-Party
Claim as contemplated by Section 8.03(a), the Indemnifying Party may in its sole
discretion elect
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to assume the defense of such Third-Party Claim with counsel reasonably
satisfactory to the Indemnified Party; provided, however, that (i) if the
Indemnifying Party fails, within a reasonable time after receipt of written
notice of such Third-Party Claim, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party, the Indemnified Party shall
have the right to undertake the defense, compromise and settlement of such
Third-Party Claim on behalf of and for the account and risk of the Indemnifying
Party, subject to the right of the Indemnifying Party (upon notifying the
Indemnified Party of its election to do so) to assume the defense of such
Third-Party Claim with counsel reasonably satisfactory to the Indemnified Party
at any time prior to the settlement, compromise, judgment or other final
determination thereof, (ii) if in the reasonable judgment of the Indemnified
Party a direct or indirect conflict of interest exists between the Indemnified
Party and the Indemnifying Party in respect of the Third-Party Claim that would
prohibit the assumption of the defense by the Indemnified Party under the
applicable principles of legal ethics, the Indemnified Party shall (upon written
notice to the Indemnifying Party of its election to do so) have the right to
undertake the defense, compromise and settlement of such Third-Party Claim on
behalf of and for the account and risk of the Indemnifying Party (it being
understood and agreed that the Indemnifying Party shall not be entitled to
assume the defense of such Third-Party Claim), (iii) if the Indemnified Party in
its sole discretion so elects, it shall be entitled to employ separate counsel
and to participate in the defense of such Third-Party Claim (and the
Indemnifying Party shall cooperate with the Indemnified Party so as to allow it
to participate in the defense thereof), but the fees and expenses of counsel so
employed shall (except as otherwise contemplated by clauses (i) and (ii) above)
be borne solely by the Indemnified Party and (iv) without the prior written
consent of the Indemnified Party, the Indemnifying Party shall not settle or
compromise any Third-Party Claim, or consent to the entry of any judgment
relating thereto, that does not include as an unconditional term thereof the
grant by the claimant or plaintiff to each Indemnified Party of a release from
any and all liability in respect thereof.
SECTION 8.04 Survival of Representations, Warranties or
Covenants. The representations and warranties of the parties and the rights of
the parties to indemnification in the event of a breach or alleged breach
thereof shall survive the Closing and shall continue in full force and effect
until the second anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Sections 2.18 (Compliance with
Laws), 2.19 (Environmental Matters), 2.20 (Taxes) and 2.21 (Employee Benefit
Plans) shall survive until the expiration of the latest statute of limitations
applicable to Third-Party Claims that could be asserted against the Purchaser,
the Company, the Subsidiaries or SFS based on the matters covered by such
representations and warranties. All covenants and agreements of the parties
hereto shall be continuing and shall survive the Closing Date pursuant to the
terms hereof.
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SECTION 8.05 Remedies.
(a) In addition to any other remedy the Purchaser Indemnified
Parties may have under this Agreement, the Purchaser Indemnified Parties shall
have the right to offset against any amounts required to be paid (but not yet
then paid) to SFS by the Company pursuant to the SFS Loan (i) all Excess
Expenses that exceed $50,000 and (ii) any Purchaser Claims (subject to the
limitations set forth in Section 8.01); provided that the Purchaser Indemnified
Parties may not pursue any other collection remedies with respect to the first
$1.0 million of Purchaser Claims and Excess Expenses that exceed $50,000 unless
the Company has first offset such amount against the SFS Loan to the extent
possible, and provided further that such offset shall be applied to the two
prepayments referred to in Section 1.06(b) and a portion of the final principal
amount due on the SFS Loan equal to $500,000. At any time, the Purchaser or the
Company may provide to SFS written notice of its intent to offset (the "Offset
Notice") against amounts under the SFS Loan by setting forth the amounts (the
"Offset Amount") of Excess Expenses or Purchaser Claims, as the case may be.
(b) SFS may dispute any Offset Amount if, and only if, SFS
delivers a written notice to the Company and the Purchaser setting forth in
reasonable detail the amount and nature of each disputed matter (each such
notice being hereinafter referred to as a "Response Notice") within 10 days
after receiving the Offset Notice relating thereto. Each party shall provide the
other with such additional information as may be reasonably requested as to the
basis of such dispute. The parties shall attempt in good faith to resolve any
dispute as to any matter set forth in a Response Notice. If within 10 days
following the date of the receipt of the Response Notice, the dispute cannot be
resolved through negotiation, mediation or some other form of alternative
dispute resolution, the dispute shall be submitted for resolution to binding
arbitration pursuant to Section 8.05(c).
(c) Any dispute or controversy arising under this Section 8.05
that is required to be settled by arbitration pursuant to the terms of this
Section 8.05, shall be settled by arbitration by one arbitrator in accordance
with the rules of the American Arbitration Association, whose decision shall be
final, binding and non-appealable. The arbitrator shall be selected pursuant to
the rules of the American Arbitration Association from a panel of independent
and disinterested persons with at least ten years experience in significant
corporate, business or accounting matters, and who are familiar with the
purchase and sale of business concerns. The arbitration shall be administered in
Dallas, Texas. The expenses of both parties in the arbitration, including
reasonable attorneys' fees and arbitration expenses, shall be paid by the party
that does not prevail in such arbitration. If each party prevails in part, the
arbitrator will determine the appropriate allocation of expenses among the
parties. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The parties may pursue all other remedies
with respect to any claim not subject to arbitration.
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(d) Upon (i) the expiration of the 10-day period commencing on
the date of delivery of an Offset Notice, in the event SFS fails to deliver a
Response Notice within such 10-day period or (ii) the resolution of any dispute
in respect of an Offset Amount, either through negotiation, mediation, some
other form of alternative dispute resolution or arbitration, the aggregate
amount required to be paid pursuant to the SFS Loan shall immediately and
without necessity of any further action on the part of the Company, the
Purchaser, SFS or any other Person, be reduced by an amount equal to the Offset
Amount, as adjusted as a result of the resolution of any dispute (it being
understood that, for each $1.00 of such Offset Amount, $1.00 of the amount
required to be paid pursuant to the SFS Loan shall be decreased). The rights of
offset granted in Section 8.05(a) shall in no way limit the rights of the
Purchaser Indemnified Parties to seek indemnification under Section 8.01 or the
other remedies of the Purchaser Indemnified Parties against SFS.
(e) The exercise by the Company or the Purchaser of such right
of offset shall not in any case be construed as a breach of, or a default under,
this Agreement or the SFS Loan.
(f) The maximum potential liability of SFS under this Article
VIII shall be reduced dollar-for-dollar by any liability of SFS under Section
1.05, and vice versa.
SECTION 8.06 Cumulative Remedy. The remedy set forth in this
Article VIII shall be cumulative and shall not limit or affect any other remedy
that any party to this Agreement may have in respect of a breach by the other
party of its covenants and agreements to be performed at or after the Closing.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination. At any time prior to Closing, this
Agreement may be terminated:
(a) by mutual written consent of the parties hereto;
(b) automatically and without any action or notice by any
party, upon the approval of an Acquisition Proposal by the Bankruptcy Court and
payment to Purchaser of the Termination Fee;
(c) by either the Purchaser or the Company:
(i) if any federal or state court or other
Governmental Authority shall have issued an order, writ,
injunction, judgment or decree
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which shall have the effect of making illegal, impeding or
otherwise restraining or prohibiting any of the transactions
contemplated by this Agreement and such order, writ,
injunction, judgment or decree shall have become final and
nonappealable; or
(ii) if the Closing shall not have occurred on or
before June 30, 2001 for any reason; provided, however, that
if the Closing shall have not occurred for any reason beyond
the control of the Company, such date shall be extended for a
period not to exceed 30 days (unless extended by mutual
agreement of the parties);
(d) by the Purchaser if:
(i) ten calendar days shall have elapsed after the
delivery by the Company of an Overbid Notice to the Purchaser,
unless the Company shall have notified the Purchaser in
writing prior to such time that it has irrevocably determined
not to participate in any further discussions or negotiations
with any Third Party with respect to the Acquisition Proposal
that was the subject of such notice;
(ii) the Company shall have become a proponent or
co-proponent of any plan of reorganization under the
Bankruptcy Code other than the Reorganization Plan;
(iii) there shall have been any violation or breach
on the part of the Company of any covenant or agreement
contained in Section 6.02 (Other Proposals), and such
violation or breach has not been waived by the Purchaser;
(iv) there shall have been any violation or breach on
the part of the Company of any covenant or agreement contained
in Article V hereof or Section 6.03, 6.04 or 6.05 hereof which
shall not have been cured within five days after receipt of
notice of such violation or breach from the Purchaser;
(v) there shall have been any material violation or
breach by the Company of any covenant or agreement (other than
the covenants and agreements referred to in clauses (iii) and
(iv) above) contained in this Agreement which shall not have
been cured within 30 days after receipt of notice of such
violation or breach from the Purchaser;
(vi) there shall have been any violation or breach by
the Company of any representation or warranty contained in
this Agreement, which in the reasonable judgment of the
Purchaser, has resulted or is
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reasonably expected to result in any Purchaser Claims in an
aggregate amount exceeding the Termination Threshold (it being
understood and agreed that for purposes of this clause (vi)
all such representations and warranties shall be construed as
if they were not qualified in any manner as to materiality);
or
(vii) there shall have occurred any event, fact or
development which, in the reasonable judgment of the
Purchaser, has rendered the fulfillment of any condition to
the obligations of the Purchaser set forth in Section 7.01
hereof impossible; provided, however, that, in the case of any
termination pursuant to this clause (vii) the Purchaser has
diligently and in good faith performed or complied in all
material respects with the agreements and covenants required
to be performed by it hereunder.
(e) by the Company or SFS if
(i) all of the Overbid Termination Conditions shall
have been satisfied;
(ii) there shall have been any material violation or
breach by the Purchaser of any covenant or agreement contained
in this Agreement which shall not have been cured within 10
days after receipt of notice of such violation or breach from
the Company; or
(iii) there shall have occurred any event, fact or
development which, in the reasonable judgment of the Company
or SFS, has rendered the fulfillment of any condition to the
obligations of the Company or SFS set forth in Section 7.02
hereof impossible; provided, however, that, in the case of any
termination pursuant to clause (ii) above or this clause
(iii), the Company has diligently and in good faith performed
or complied in all material respects with the agreements and
covenants required to be performed by it hereunder.
SECTION 9.02 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 9.01 hereof, this
Agreement shall forthwith become void and of no further force or effect, and
there shall be no liability hereunder on the part of any party or its
Affiliates, directors, officers, shareholders, agents or other Representatives;
provided, however, that (i) this Section 9.02 and Sections 9.03, 11.01 and 11.03
hereof shall survive any termination of this Agreement and (ii) nothing
contained herein shall relieve any party from liability for any breach of this
Agreement.
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SECTION 9.03 Termination Payments.
(a) If this Agreement is terminated for any reason (other than
(1) pursuant to Sections 9.01(a), (c)(i), or (e)(ii), (2) by the Purchaser
pursuant to Section 9.01(c)(ii), (3) due to the failure of a condition in
Section 7.02 to be satisfied despite the fact that the Company has diligently
and in good faith performed or complied in all material respects with the
agreements and covenants required to be performed by it hereunder or (4) due to
the occurrence of any intervening and superseding event (other than an
Acquisition Proposal) which is outside the control of the Company, its
Shareholders or creditors) and within eighteen (18) months of such termination
the Company or any of the Subsidiaries enters into an agreement related to an
Acquisition Proposal or consummates an Acquisition Proposal, then the Company
shall pay to the Purchaser a fee of five hundred thousand dollars ($500,000)
(the "Termination Fee"), which fee shall be paid no later than one Business Day
after the date of consummation of any Acquisition Proposal, as the case may be,
by wire transfer of immediately available funds to such account as the Purchaser
shall designate in a written notice delivered to the Company. For the avoidance
of doubt, the parties acknowledge and agree that SFS shall have no liability for
the Termination Fee.
(b) If this Agreement is terminated for any reason, the
parties shall take all action necessary in order to cause the Xxxxxxx Money
Escrow Agent promptly to deliver the Xxxxxxx Money Deposit as follows:
(i) to the Purchaser, if this Agreement is terminated
(whether automatically or by the Purchaser or the Company) for
any reason other than as specified in clause (ii) below; or
(ii) Subject to the proviso set forth in this
subparagraph (ii), to the Company, if (A) the Closing does not
occur by the time specified in Section 9.01(c)(ii), (B) this
Agreement is terminated by the Purchaser or the Company as a
result of such failure to close and (C) both the Purchaser and
the Company have diligently and in good faith performed or
complied in all material respects with the agreements and
covenants required to be performed by each of them hereunder;
provided, however that the Company shall only be entitled to
receive that portion of the Xxxxxxx Money Deposit which will
reimburse the Company for the reasonable expenses, including
professional fees, incurred and paid by it in connection with
the transactions contemplated by this Agreement from and after
December 15, 2000 to the date of termination. Any amounts in
excess of the amount paid to the Company under this
subparagraph (ii) shall be paid by the Xxxxxxx Money Escrow
Agent to the Purchaser. If the amount of the Xxxxxxx Money
Deposit is insufficient to reimburse the Company for the
expenses to which it is
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entitled pursuant to this Section 9.03(b)(ii) (such
insufficient amount is hereinafter referred to as the "Expense
Reimbursement Shortfall"), the Purchaser will forgive an
aggregate amount due under the notes referred to in Sections
1.02(b) and 1.02(c) (up to the maximum amount due under such
notes) equal to the Expense Reimbursement Shortfall. Prior to
the payment of all or any portion of the Xxxxxxx Money Deposit
to the Company pursuant to this Section 9.03(b) or the
forgiveness of the notes as described in the preceding
sentence, the Company shall provide to the Purchaser, in form
reasonably satisfactory to the Purchaser, evidence of all
reimbursable expenses described in this subparagraph (ii).
(c) If either the Purchaser or the Company is required for any
reason to seek judicial enforcement of any of the obligations of the other party
under this Section 9.03, such other party shall pay, or reimburse, all costs and
expenses (including fees and disbursements of counsel) that are incurred by the
party enforcing the provisions of this Section 9.03.
(d) Any amounts paid pursuant to this Section 9.03 shall be
paid without set-off or deduction of any kind.
(e) Exercise by the Company of its rights granted pursuant to
Section 6.02 and/or this Article IX will not be deemed to be a breach of the
Company's obligation pursuant to Article V.
ARTICLE X
DEFINITIONS
SECTION 10.01 Definitions. As used in this Agreement, the
terms set forth below shall have the following meanings:
"Acquisition Proposal" means any bona fide written proposal
relating to an acquisition of all or any substantial part of the Company or any
Subsidiary or their respective businesses (whether by merger, consolidation,
purchase of assets or purchase of stock) or any other transaction of a similar
nature.
"Administaff" has the meaning set forth in Section 2.21(a)
hereof.
"Affiliate" means, with respect to any Person, any other
Person who, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether by
contract or otherwise.
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"Agreement" means this Stock Purchase Agreement, as the same
may be amended from time to time.
"Bankruptcy Case" means the case under the Bankruptcy Code to
be commenced by the Company.
"Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Section Section 101 et. seq., as amended by the Bankruptcy Reform Act of
1994, and as amended from time to time, to the extent applicable to the
Bankruptcy Case, and includes the Rules of Bankruptcy Procedure and the
applicable local rules of the United States Bankruptcy Court and the United
States District Court for the Northern District of Texas.
"Bankruptcy Court" means the United States Bankruptcy Court
for the Northern District of Texas or such other court as may hereafter exercise
original jurisdiction over the Bankruptcy Case or any proceeding therein.
"Bankruptcy Filings" has the meaning set forth in Section
5.03(b) hereof.
"Bankruptcy Proceeding" has the meaning set forth in Section
7.01(e) hereof.
"Business Day" means any day except a Saturday, Sunday or
federal holiday.
"Bylaws" means, with respect to any corporation, the bylaws of
such corporation, as in effect from time to time on or after the date hereof.
"Capitalization Payment" has the meaning set forth in Section
1.03 hereof.
"Cash Distribution" has the meaning set forth in the recitals.
"Centex Lender" has the meaning set forth in Section 1.06(a)
hereof.
"Centex Note" has the meaning set forth in Section 1.06(a)
hereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (including any successor
statute).
"Charter" means, with respect to any corporation, the
certificate or articles of incorporation (or similar governing document) of such
corporation, as in effect from time to time on or after the date hereof.
"Closing" has the meaning set forth in Section 1.07 hereof.
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"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 1.07 hereof.
"Closing Payment" means, at the date of determination, the
amount equal to the product of (A) $0.125 and (B) the number of shares of Common
Stock held by Shareholders other than Principal Shareholders.
"Common Stock" means the Common Stock, par value $.10 per
share, of the Company.
"Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act or the
Exchange Act.
"Commission Reports" has the meaning set forth in Section 2.07
hereof.
"Company" means NAB Asset Corporation and its successors
(including, with respect to actions to be taken on or after the effective date
of the Reorganization Plan, the reorganized entity in which the property of the
Company will be vested in accordance with the Reorganization Plan and the
Confirmation Order).
"Company Financial Statements" has the meaning set forth in
Section 2.08 hereof.
"Confidentiality Agreement" means the letter agreement, dated
as of January 2, 2001 between the Company and Centex Corporation.
"Confirmation Order" means an order of the Bankruptcy Court,
in form and substance reasonably satisfactory to the Company and the Purchaser,
confirming the Reorganization Plan and approving the performance by the Company
of this Agreement pursuant to Section 1129 of the Bankruptcy Code.
"Consent" means any consent, approval, permit, notice, action
or authorization of any Person not a party to this Agreement.
"Consulting Agreement" has the meaning set forth in Section
6.07 hereof.
"Contract" means any contract, subcontract, letter contract,
agreement, purchase order, delivery order, arrangement, understanding or other
instrument, obligation or commitment of any kind or character (whether oral or
written, pending or executory).
"Court Day" means a day which is not a Saturday, Sunday or
legal holiday listed in Bankruptcy Rule 9006(a).
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"Disbursing Agent" means one or more disbursing agents to be
designated by the Company with the consent of the Purchaser (which shall not be
unreasonably withheld) for the purposes set forth in the Reorganization Plan.
"Disclosure Statement" means the disclosure and solicitation
statement to be disseminated to all creditors and Shareholders of the Company
who are entitled to accept or reject the Reorganization Plan in accordance with
the Exchange Act and in compliance with Section 1126(b) of the Bankruptcy Code.
"Dispute Notice" has the meaning set forth in Section 6.03(b)
hereof.
"Xxxxxxx Money Deposit" means the funds held and invested by
the Xxxxxxx Money Escrow Agent under the Xxxxxxx Money Escrow Agreement, as such
amount may be adjusted in accordance with Sections 1.02(b) and 1.02(c).
"Xxxxxxx Money Escrow Agent" means Commerce Land Title, Inc.
in its capacity as escrow agent under the Xxxxxxx Money Escrow Agreement.
"Xxxxxxx Money Escrow Agreement" means the Escrow Agreement,
entered into as of January 31, 2001 among the Purchaser, the Company and the
Xxxxxxx Money Escrow Agent.
"Employee Benefit Plan" has the meaning set forth in Section
2.21(a) hereof.
"Environmental Claim" means any claim (including, but not
limited to, any claim under CERCLA), action, cause of action, investigation or
notice by any Person alleging potential liability (including, without
limitation, potential liability for investigatory costs, assessment costs,
cleanup costs, response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the release by the Company or any Subsidiary (or any of their respective
predecessors) into the environment of any Hazardous Materials at any location,
whether or not owned by the Company or any Subsidiary (or any of their
respective predecessors), (b) the presence of any Hazardous Materials at any
location owned or leased by the Company or any Subsidiary (or any of their
respective predecessors), or (c) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law by the Company or any
Subsidiary or any of their respective predecessors.
"Environmental Laws" means all federal, state, local and
foreign laws (including common law), statutes, codes, ordinances, rules and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws, statutes, codes, ordinances, rules and regulations
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relating to emissions, discharges, releases or threatened releases of Hazardous
Materials, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended (including any successor statute).
"ERISA Affiliate" means, with respect to the Company, any
corporation or other trade or business under common control with the Company
(within the meaning of Section 414 of the Internal Revenue Code or Section
4001(a)(14) or 4001(b) of ERISA), either presently or at any time since April 2,
1984.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (including any successor statute).
"Excess Expenses" has the meaning set forth in Section 1.04
hereof.
"Expense Reimbursement Shortfall" has the meaning set forth in
Section 9.03(b)(ii) hereof.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"Final Order" means an order or judgment of the Bankruptcy
Court or any other court exercising jurisdiction over the subject matter and the
parties that has not been reversed, stayed, modified or vacated and as to which
no appeal, petition for certiorari or request for reargument or other review or
rehearing has been requested or is pending; and as to which the time to appeal,
petition for certiorari or seek reargument, other review or rehearing has
expired or the right to do so has been fully and effectively waived in writing;
or, if an appeal, reargument, writ of certiorari, review or rehearing thereof
has been sought, the order or judgment has been affirmed by the highest court to
which the order was appealed, from which the reargument, review or rehearing was
sought, or the petition for writ of certiorari has been denied, and the time to
take any further appeal or to seek certiorari or further reargument, review or
rehearing has expired.
"FNMA" means Federal National Mortgage Association.
"GAAP" means United States generally accepted accounting
principles as in effect at the time of the application thereof as described in
or contemplated by this Agreement.
"GNMA" means Government National Mortgage Association.
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"Governmental Authority" means any nation or government, any
state or political subdivision thereof, any federal or state court and any other
agency or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Materials" means (i) any substance, material or
waste defined or characterized as hazardous, extremely hazardous, toxic or
dangerous within the meaning of any Environmental Law, (ii) any substance,
material or waste classified as a contaminant or pollutant under any
Environmental Law or (iii) any other substance (including, but not limited to,
petroleum), material or waste, the manufacture, processing, distribution, use,
treatment, storage, placement, disposal, removal or transportation of which is
subject to regulation under any Environmental Law.
"Independent Accountant" shall mean an independent accounting
firm of international standing jointly selected by the Purchaser and the
Company.
"Interim Motion" means a motion filed with the Bankruptcy
Court by the Company to enter the Interim Order.
"Interim Order" means an order in form and substance
reasonably satisfactory to the Purchaser (i) approving the provisions of and
authorizing the performance of the Company under Article VI and Section 9.03
hereof, (ii) providing that, so long as the Agreement has not been terminated in
accordance with Section 9.01 hereof, the Bankruptcy Court shall not permit
consideration of or approve an Acquisition Proposal unless the Company has fully
complied with all the provisions of Section 6.02 hereof as they apply to such
Acquisition Proposal and such Acquisition Proposal constitutes an Overbid
Transaction, (iii) providing that the Termination Fee shall be secured as set
forth in the Reorganization Plan and (iv) providing that such interim order
cannot be amended or modified without the consent of the Purchaser, which
consent shall not be unreasonably withheld.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as the same may be amended from time to time (including any successor
statute).
"Lien" means (i) any mortgage, pledge, hypothecation,
assignment, security interest, option, lien or any preference, priority or other
right or interest granted pursuant to a security agreement or preferential
arrangement of any kind or character whatsoever (including, but not limited to,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction), and (ii) any other lien,
charge, levy or encumbrance, whether arising by operation of law or otherwise.
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"Material Adverse Change" means any change, event, effect or
occurrence that has or would reasonably be expected to have Material Adverse
Effect.
"Material Adverse Effect" means any change, event, effect or
occurrence that (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a whole,
(ii) impairs, or would reasonably be expected to impair, the ability of the
Company to perform its obligations under this Agreement in any material respect
or (iii) prevents or materially delays, or would reasonably be expected to
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
"Mortgage Reserve Amount" means amounts reserved, if any, in
the Company Financial Statements which have been specifically allocated for
claims in respect of, any diminution in value of, or collection issues in
respect of, Mortgages held by the Company or any Subsidiaries.
"Mortgages" means mortgages, deeds of trust, security deeds or
other instruments creating a lien on residential real property to secure
repayment of such loan and any and all rights, benefits, collateral, payments,
recoveries, proceeds and obligations arising therefrom or in connection
therewith which are owned by the Company or any Subsidiary.
"MPS" means Mortgage Portfolio Services, Inc., a Delaware
corporation.
"Multiemployer Plans" has the meaning set forth in Section
2.21(a) hereof.
"Offset Amount" has the meaning set forth in Section 8.05(a)
hereof.
"Offset Notice" has the meaning set forth in Section 8.05(a)
hereof.
"Overbid Notice" has the meaning set forth in Section 6.02(a)
hereof.
"Overbid Termination Conditions" has the meaning set forth in
Section 6.02(a) hereof.
"Overbid Transaction" means an Acquisition Proposal made in
writing by a Qualified Third Party (i) which would provide for consideration
attributable to the Shareholders other than the Principal Shareholders having a
fair market value, as determined by an investment banking firm of national
standing selected by the Company and reasonably acceptable to the Purchaser,
which exceeds the Purchase Price (or, if the Purchaser has delivered a Topping
Offer to the Company, the Topping Offer Amount) by at least $1,000,000 and (ii)
the terms and conditions of which are
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reasonably determined by the Board of Directors of the Company to be, when taken
in their entirety, no less favorable to the Company or the Shareholders than the
terms and conditions set forth in this Agreement.
"Payables" means, as of a particular date, the amounts owed by
the Company (i) in the ordinary course of business to third-party vendors which
relate to the normal business activity of the Company, (ii) for obligations to
employees and directors in the ordinary course of business, (iii) for taxes due
and (iv) for Allowed Administrative Claims (as defined in the Reorganization
Plan) in the Bankruptcy Case.
"Permits" has the meaning set forth in Section 2.23 hereof.
"Permitted Liens" has the meaning set forth in Section 2.14
hereof.
"Person" means any individual, corporation, partnership,
association, trust or any other entity or organization of any kind or character,
including a Governmental Authority.
"Preferred Stock" means the preferred stock, par value $.10
per share, of the Company.
"Principal Shareholders" means Consumer Portfolio Services,
Inc., Greenhaven Associates, Inc., and the Purchaser.
"Purchase Payment" has the meaning set forth in Section 1.03
hereof.
"Purchase Price" means the sum of (i) $930,000 and (ii) the
amount of Payables identified on the certificate delivered to the Purchaser
pursuant to Section 6.03(b) hereof.
"Purchased Stock" has the meaning set forth in the recitals.
"Purchaser" means Centex Financial Services, Inc., a Nevada
corporation.
"Purchaser Claims" has the meaning set forth in Section 8.01.
"Purchaser Claim Notice" has the meaning set forth in Section
1.05(b). hereof.
"Purchaser Indemnified Parties" has the meaning set forth in
Section 8.01 hereof.
"Qualified Plans" has the meaning set forth in Section 2.21(b)
hereof.
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"Qualified Third Party" means (subject to the last sentence of
Section 6.02(a) hereof) a Third Party who the Board of Directors of the Company
has reasonably determined based on the advice of its financial advisors is
financially able to consummate an Overbid Transaction.
"Reorganization Plan" has the meaning set forth in Section
2.12 hereof.
"Reorganization Solicitation" means the solicitation by the
Company of acceptances of the Reorganization Plan in accordance with the
Exchange Act and in compliance with Section 1126(b) of the Bankruptcy Code.
"Reorganization Transactions" has the meaning set forth in
Section 2.12 hereof.
"Representative" means, with respect to a Person, the
Affiliates of such Person, and its and their respective stockholders, partners,
members, officers, directors, employees, agents and other representatives.
"Resolution Period" has the meaning set forth in Section
6.03(b) hereof.
"Response Notice" has the meaning set forth in Section 8.05(b)
hereof.
"Schedule 13E-3" means a transaction statement on Schedule
13E-3 to be filed by the Company with the Commission pursuant to Section
13(e)(3) of the Exchange Act and Rule 13e-3 thereunder in connection with the
transactions contemplated by this Agreement.
"Securities Act" means the Securities Act of 1933, as amended
(including any successor statute).
"SFS" means Stanwich Financial Services Corp., a Rhode Island
corporation.
"SFS Amount" means the principal amount and all accrued
interest owed in respect of the SFS Loan on the Closing Date.
"SFS Loan" means collectively the loans evidenced by those two
certain Promissory Notes both issued March 15, 2000 and effective as of March 7,
2000 by the Company to SFS in the respective principal amounts of $3,553,169.20
and $4,000,000.
"Shareholders" means, at any date, the holders of the
Company's Common Stock.
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"Shareholders Deficit" means the shareholders deficit of the
Company and its Subsidiaries on a consolidated basis computed in accordance with
GAAP. The calculation of Shareholders Deficit will exclude the aggregate amount
of fees and expenses incurred by the Company or the Subsidiaries, including the
Company's legal, financial, advisory and other professional fees (including a
fee of $125,000 that may become payable to Samco Capital Markets), in connection
with the transactions contemplated by this Agreement from and after December 15,
2000 to and including the Closing Date.
"Solicitation Materials" has the meaning set forth in Section
5.01(a) hereof.
"Stock Acquisition" has the meaning set forth in the recitals
hereof.
"Subsidiary" means with respect to the Company (i) any
corporation or other Person of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are owned directly or indirectly by
the Company or (ii) any partnership of which the Company or any Subsidiary is a
general partner or of which the Company directly or indirectly owns partnership
interests which entitle it to receive more than 50% of the distributions made by
such partnership.
"Tax Returns" means any returns, declarations, reports, claims
for refund and informational returns or statements relating to Taxes, including
any schedules or attachments thereto.
"Taxes" means all taxes, charges, fees, levies or other
assessments (including, without limitation, income, gross receipts, excise,
property, sales, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges) imposed by any
Governmental Authority, whether computed on a separate, consolidated, unitary or
combined basis or in any other manner, and includes any interest, penalties and
additions to any Tax.
"Termination Fee" has the meaning set forth in Section 9.03(a)
hereof.
"Termination Threshold" means $150,000.
"Third Party" means any Person other than the Company or the
Purchaser or any of their respective Affiliates.
"Time of Mailing" means the time the Disclosure Statement (or
any supplement thereto) is mailed to Shareholders.
"Topping Offer" has the meaning set forth in Section 6.02(a)
hereof.
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"Topping Offer Amount" means the amount of the consideration
specified in the most recent Topping Offer delivered by the Purchaser to the
Company pursuant to Section 6.02(a) hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Fees and Expenses. Except as expressly provided
herein, all fees and expenses incurred by any of the parties hereto in
connection with this Agreement or any of the transactions contemplated hereby
shall be borne and paid solely by the party incurring such fees and expenses.
SECTION 11.02 Notices. All notices and other communications
hereunder shall be in writing and shall be given by delivery in person, by
registered or certified mail (return receipt requested and with postage prepaid
thereon), by overnight mail or courier service, or by cable, telex or facsimile
transmission to the parties at the following addresses (or at such other address
as any party shall have furnished to the others in accordance with the terms of
this Section 11.02):
if to the Purchaser:
Centex Financial Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facs: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with copies to (which shall not constitute notice to the
Purchaser):
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facs: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx
if to the Company:
NAB Asset Corporation
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Facs: (000) 000-0000
Attention: Xxxx Xxxxxx
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with copies to (which shall not constitute notice to the
Company):
Winstead Xxxxxxxx & Xxxxxx PC
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facs: (000) 000-0000
Attention: Xxxx Xxxxxxx
if to SFS:
Stanwich Financial Services Corp.
One Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facs: (000) 000-0000
Attention: President
All notices and other communications hereunder that are addressed as provided in
or pursuant to this Section 11.02 shall be deemed duly and validly given (a) if
delivered in person, upon delivery, (b) if delivered by registered or certified
mail (return receipt requested and with postage paid thereon), 72 hours after
being placed in a depository of the United States mails, (c) if delivered by
overnight courier service, upon delivery, and (d) if delivered by cable, telex
or facsimile transmission, upon transmission thereof and receipt of the
appropriate answer back.
SECTION 11.03 Public Announcements. The Company, SFS and the
Purchaser will consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement, the
Bankruptcy Case, the Reorganization Plan or the other transactions contemplated
by this Agreement, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
by obligations pursuant to any listing agreement with any national securities
exchange or automated quotation system upon which the securities of such issuer
are traded.
SECTION 11.04 Amendment; Waivers. The terms and provisions of
this Agreement may be modified or amended only by a written instrument executed
by each of the parties hereto, and compliance with any term or provision hereof
may be waived only by a written instrument executed by each party entitled to
the benefits of the same. Except as expressly provided herein to the contrary,
no failure to exercise any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege granted hereunder.
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SECTION 11.05 Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto and the certificates, opinions and documents
delivered in accordance with the provisions hereof), the Confidentiality
Agreement and the Xxxxxxx Money Escrow Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof
supersedes all prior written or oral agreements and understandings and all
contemporaneous oral agreements and understandings among the parties or any of
them with respect to the subject matter hereof and thereof. All Exhibits and
Schedules hereto are expressly made a part of this Agreement.
SECTION 11.06 Parties in Interest; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (it being understood and agreed that nothing
contained in this Agreement is intended to confer any rights, benefits or
remedies of any kind or character on any Shareholder or, except as expressly
provided herein, any other Person under or by reason of this Agreement). No
party may assign this Agreement without the prior written consent of each of the
other parties hereto; provided, however, that after the Closing Date, the
Purchaser may assign this Agreement to any of its Affiliates without the consent
of any other party, but such assignment shall not relieve the Purchaser of any
of its obligations hereunder to the extent that such obligations are not
performed by the assignee. It is expressly understood and agreed that any
attempted or purported assignment by any party of this Agreement in violation of
this Section 11.06 shall be null and void.
SECTION 11.07 Governing Law. This Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of
Texas, without regard to the principles of conflicts of law that would result in
the application of the laws of any other jurisdiction.
SECTION 11.08 Severability. In the event any provision
contained herein shall be held to be invalid, illegal or unenforceable for any
reason, the invalidity, illegality or unenforceability thereof shall not affect
any other provision hereof.
SECTION 11.09 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with the terms hereof.
Accordingly, the parties agree that each of them shall be entitled to seek
injunctive relief to prevent breaches of the terms of this Agreement and to seek
specific performance of the terms hereof, in addition to any other remedy now or
hereafter available at law or in equity, or otherwise.
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SECTION 11.10 Interpretation.
(a) The headings herein are for convenience of reference only,
do not constitute a part of this Agreement and shall not be deemed to limit,
extend or otherwise affect the meaning of any of the provisions hereof.
(b) In interpreting the provisions of this Agreement, time is
of the essence in the performance of the obligations of the parties.
(c) The obligations of the Company set forth in this Agreement
shall in no event be limited by or subject to their obligations under any other
agreement or document to which any of them is a party or is bound as of the date
hereof.
SECTION 11.11 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
COMPANY:
NAB ASSET CORPORATION
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
----------------------------
Title: Chief Financial Officer
---------------------------
SFS:
STANWICH FINANCIAL SERVICES CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------
Title: President
---------------------------
PURCHASER:
CENTEX FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------
Title: Executive Vice President
---------------------------
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EXHIBIT A
C. Xxxx Xxxxxxx
Bar No. ________
Xxxxxx X. Xxxxxxxxx
Bar No. ________
XXXXXXXX XXXXXXXX & XXXXXX PC
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ATTORNEYS FOR NAB ASSET CORPORATION
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
--------------------------------------------------------------------------------
In re: )
) Chapter 11
NAB ASSET CORPORATION, )
) Case No. ________________
Debtor. )
--------------------------------------------------------------------------------
NAB ASSET CORPORATION'S PLAN OF REORGANIZATION
Dated: __________, 2001
74
TABLE OF CONTENTS
Page
----
PLAN OF REORGANIZATION............................................................................................1
ARTICLE I DEFINITIONS AND RULES OF INTERPRETATION.................................................................1
1.1 "Acquisition Proposal"........................................................................1
1.2 "Administrative Claim"........................................................................2
1.3 "Affiliate"...................................................................................2
1.4 "Allowed".....................................................................................2
1.5 "Ballot"......................................................................................3
1.6 "Bankruptcy Code".............................................................................3
1.7 "Bankruptcy Court"............................................................................3
1.8 "Bankruptcy Rules"............................................................................3
1.9 "Bar Date"....................................................................................4
1.10 "Business Day"................................................................................4
1.11 "Capitalization Payment"......................................................................4
1.12 "Cash"........................................................................................4
1.13 "Centex"......................................................................................4
1.14 "Claim".......................................................................................4
1.15 "Class".......................................................................................4
1.16 "Closing".....................................................................................4
1.17 "Closing Date"................................................................................4
1.18 "Closing Payment".............................................................................5
1.19 "Collateral Document".........................................................................5
1.20 "Common Stock"................................................................................5
1.21 "Common Stock Interest".......................................................................5
1.22 "Confirmation"................................................................................5
1.23 "Confirmation Date"...........................................................................5
1.24 "Confirmation Hearing"........................................................................5
1.25 "Confirmation Order"..........................................................................5
1.26 "Court Day"...................................................................................6
1.27 "Debtor"......................................................................................6
1.28 "Disbursing Agent"............................................................................6
1.29 "Disclosure Statement"........................................................................6
1.30 "Disputed Claim"..............................................................................6
1.31 "Distribution Date"...........................................................................7
1.32 "Xxxxxxx Money Deposit".......................................................................7
1.33 "Xxxxxxx Money Escrow Agent"..................................................................7
1.34 "Xxxxxxx Money Escrow Agreement"..............................................................7
1.35 "Estate"......................................................................................7
1.36 "Excepted Claims".............................................................................7
1.37 "Excess Expenses".............................................................................7
1.38 "Exonerated Parties"..........................................................................8
1.39 "Final Order".................................................................................8
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1.40 "Governmental Authority"......................................................................8
1.41 "Interests"...................................................................................8
1.42 "Interim Motion"..............................................................................8
1.43 "Interim Order"...............................................................................9
1.44 "Miscellaneous Secured Claim".................................................................9
1.45 "NAB".........................................................................................9
1.46 "New Purchase Agreement"......................................................................9
1.47 "New Purchaser"...............................................................................9
1.48 "Other Priority Claim"........................................................................9
1.49 "Overbid Transaction"........................................................................10
1.50 "Person".....................................................................................10
1.51 "Petition Date"..............................................................................10
1.52 "Plan".......................................................................................10
1.53 "Principal Shareholders".....................................................................10
1.54 "Priority Tax Claim".........................................................................10
1.55 "Professional"...............................................................................11
1.56 "Purchase Payment"...........................................................................11
1.57 "Qualified Third Party"......................................................................11
1.58 "Record Date"................................................................................11
1.59 "Released Matters"...........................................................................11
1.60 "Released Parties"...........................................................................11
1.61 "Reorganization Case"........................................................................12
1.62 "Reorganized Board"..........................................................................12
1.63 "Reorganized NAB"............................................................................12
1.64 "Schedules"..................................................................................12
1.65 "Secured Claim"..............................................................................12
1.66 "SFS"........................................................................................12
1.67 "Solicitation Materials".....................................................................12
1.68 "Stock Acquisition"..........................................................................13
1.69 "Stock Purchase Agreement"...................................................................13
1.70 "Subsidiary".................................................................................13
1.71 "Termination Fee"............................................................................13
1.72 "Termination Fee Security"...................................................................13
1.73 "Third Party"................................................................................13
1.74 "Topping Offer"..............................................................................13
1.75 "Topping Offer Amount".......................................................................14
1.76 "Trade Debt".................................................................................14
1.77 "Unsecured Claim"............................................................................14
1.78 "Voting Deadline"............................................................................14
ARTICLE II TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY
TAX CLAIMS .............................................................................................14
2.1 Administrative Claims........................................................................14
2.2 Priority Tax Claims..........................................................................15
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ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS...............................................................15
3.1 General Rules of Classification..............................................................15
ARTICLE IV TREATMENT OF CLAIMS AND INTERESTS.....................................................................16
4.1 Class 1 (Allowed Other Priority Claims)......................................................16
4.2 Class 2 (Allowed Miscellaneous Secured Claims)...............................................16
4.3 Class 3 (Allowed Unsecured Claims)...........................................................17
4.4 Class 4 (Common Stock Interests).............................................................18
ARTICLE V IMPAIRMENT OF CLAIMS AND INTERESTS: VOTING.............................................................18
5.1 Impaired and Unimpaired Claims and Interests.................................................18
ARTICLE VI CONDITIONS PRECEDENT TO CONFIRMATION AND
EFFECTIVE DATE...................................................................................................19
6.1 Conditions to Confirmation...................................................................19
6.2 Conditions to Occurrence of Closing Date.....................................................19
6.3 Notice to Bankruptcy Court...................................................................19
ARTICLE VII MEANS OF IMPLEMENTING THE PLAN.......................................................................20
7.1 Closing Under Stock Purchase Agreement.......................................................20
7.2 Corporate Action.............................................................................20
7.3 Effectiveness of Securities, Instruments and Agreements......................................20
7.4 Management of Reorganized NAB................................................................21
7.5 Cash Distribution............................................................................21
7.6 Setoff.......................................................................................22
7.7 Surrender of Common Stock....................................................................22
7.8 Releases.....................................................................................23
ARTICLE VIII TREATMENT OF EXECUTORY CONTRACTS AND
UNEXPIRED LEASES.................................................................................................24
8.1 Assumption and Rejection of Executory Contracts and Unexpired Leases.........................24
8.2 Employee Compensation and Benefit Programs...................................................25
8.3 Rejection Claims.............................................................................25
8.4 Assumption Claims............................................................................25
ARTICLE IX EFFECTUATION OF OVERBID TRANSACTION...................................................................26
9.1 Automatic Effectuation of Overbid Transaction................................................26
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ARTICLE X EFFECTS OF PLAN CONFIRMATION...........................................................................27
10.1 Discharge and Injunction.....................................................................27
10.2 Revesting....................................................................................28
10.3 Distributions to Disbursing Agent............................................................28
10.4 Retention and Enforcement of Causes of Action................................................28
10.5 Cancellation and Release of Liens............................................................29
10.6 Retention of Jurisdiction....................................................................29
10.7 Failure of Bankruptcy Court to Exercise Jurisdiction.........................................31
10.8 Official Committees..........................................................................31
ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................31
11.1 Payment of Statutory Fees....................................................................31
11.2 Procedure for Determining Certain Claims.....................................................31
11.3 Cramdown.....................................................................................32
11.4 Modification of the Plan.....................................................................32
11.5 Withdrawal of Plan...........................................................................33
11.6 Substantial Consummation of Plan.............................................................33
11.7 Reservation of Rights........................................................................33
11.8 Section 1145 Exemption.......................................................................34
11.9 Section 1146 Exemption.......................................................................34
11.10 Unclaimed Property...........................................................................34
11.11 Limitation of Liability......................................................................34
11.12 Final Order..................................................................................36
11.13 Record Date for Distribution.................................................................36
11.14 Notices and Distributions....................................................................37
11.15 Saturday, Sunday or Legal holiday............................................................38
11.16 Time.........................................................................................38
11.17 Severability of Provisions...................................................................39
11.18 Headings.....................................................................................39
11.19 Binding Effect...............................................................................40
11.20 Governing Law................................................................................40
11.21 Interpretation of Plan and Related Documents.................................................40
11.22 Filing of Additional Documents...............................................................40
11.23 Further Assurances...........................................................................40
11.24 Withholding and Reporting Requirements.......................................................41
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PLAN OF REORGANIZATION
NAB Asset Corporation hereby proposes the following plan of
reorganization pursuant to chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). ALL HOLDERS OF CLAIMS AND INTERESTS ARE URGED TO READ WITH
CARE THE PLAN AND THE ACCOMPANYING DISCLOSURE AND SOLICITATION STATEMENT IN
EVALUATING HOW THE PLAN WILL AFFECT THEIR CLAIMS AND/OR INTERESTS.
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
Unless the context requires otherwise, the following terms shall have
the following meanings when used with the initial letter capitalized. Such
meanings shall be equally applicable to both the singular and plural, and
masculine and feminine, forms of the terms defined. The words "herein,"
"hereof," "hereto," "hereunder" and others of similar import refer to the Plan
as a whole and not to any particular section, subsection or clause contained in
the Plan. Captions and headings to articles, sections, schedules and exhibits
are inserted for convenience of reference only and are not intended to be part
of or to affect the interpretation of the Plan. The rules of construction set
forth in Section 102 of the Bankruptcy Code shall apply. Any term used herein
that is not defined herein but is defined in the Bankruptcy Code or Bankruptcy
Rules shall have the meaning ascribed to such term in the Bankruptcy Code or
Bankruptcy Rules (with the Bankruptcy Code controlling in the case of a conflict
or ambiguity).
1.1 "Acquisition Proposal" means any bona fide written proposal
relating to an acquisition of all or any substantial part of NAB or any
Subsidiary or their respective
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businesses (whether by merger, consolidation, purchase of assets or purchase of
stock) or any other transaction of a similar nature.
1.2 "Administrative Claim" means, except as otherwise set forth herein,
a Claim to the extent that it is of the kind described in section 503(b) of the
Bankruptcy Code and is entitled to priority under section 507(a)(1) of the
Bankruptcy Code, including, without limitation, (a) any actual and necessary
expenses of preserving the Estate, (b) any actual and necessary expenses of
operating the business of the Debtor, (c) any actual indebtedness or obligations
incurred or assumed by the Debtor during the pendency of the Reorganization Case
in connection with the conduct of its business, (d) any actual expenses
necessary or appropriate to comply with the Stock Purchase Agreement or to
facilitate or effectuate the Plan, (e) any amount required to be paid under
section 365(b)(1) of the Bankruptcy Code in connection with assumption of
executory contracts or unexpired leases, and (f) all allowances of compensation
or reimbursement of expenses to the extent allowed by the Bankruptcy Court under
sections 330(a), 331 or 503(b)(2), (3), (4) or (5) of the Bankruptcy Code.
1.3 "Affiliate" means, with respect to any Person, any other Person
who, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. As used in this definition, the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether by contract or
otherwise.
1.4 "Allowed" means (a) with respect to an Administrative Claim of the
kind described in section 503(b)(2), (3), (4) or (5) of the Bankruptcy Code, an
Administrative Claim that has been allowed by a Final Order, to the extent so
allowed; (b) with respect to any other
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Administrative Claim (except Trade Debt), an Administrative Claim with respect
to which a request for payment has been timely filed pursuant to SECTION 11.2 of
the Plan or with respect to which no such filing is necessary, and to which no
objection has been timely filed; (c) with respect to a Disputed Claim, a claim
that has been allowed by a Final Order, to the extent so allowed; or (d) with
respect to any other Claim, a Claim with respect to which a proof of claim has
been timely filed by the Bar Date and to which no objection or motion to
estimate for purposes of allowance in the Reorganization Case has been timely
filed, or if no proof of claim was so filed, which was or hereafter is listed on
the Schedules as liquidated in amount and not disputed or contingent.
1.5 "Ballot" means the ballot and/or master ballot, as is appropriate
in the circumstances, distributed to a holder of a Class 4 Interest for the
purpose of, among other things, voting on the Plan.
1.6 "Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Section.101 et seq., as amended by the Bankruptcy Reform Act of 1994, and
as amended from time to time.
1.7 "Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of Texas or such other court as may hereafter exercise
original jurisdiction over the Reorganization Case or any proceeding therein.
1.8 "Bankruptcy Rules" means the Bankruptcy Rules promulgated under 28
U.S.C. Section 2075 and the local rules and standing orders of the Bankruptcy
Court, as amended from time to time.
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1.9 "Bar Date" means the date by which the Bankruptcy Court orders that
Claims must be filed.
1.10 "Business Day" means any day other than a Saturday, Sunday or
federal holiday.
1.11 "Capitalization Payment" means an amount in Cash equal to the
excess of (i) the sum of (a) $930,000, and (b) the amounts identified pursuant
to SECTION 6.03(B) of the Stock Purchase Agreement and owed by NAB (1) in the
ordinary course of business to third-party vendors which relate to the normal
business activity of NAB, (2) for obligations to employees and directors in the
ordinary course of business, (3) for taxes due, and (4) for Allowed
Administrative Claims, over (ii) the Closing Payment.
1.12 "Cash" means lawful currency of the United States of America and
its equivalents.
1.13 "Centex" means Centex Financial Services, Inc., a Nevada
corporation.
1.14 "Claim" means a "claim" as defined in section 101(5) of the
Bankruptcy Code against the Debtor or property of the Debtor, arising before the
Closing Date.
1.15 "Class" means a category or group of holders of Claims or
Interests as designated pursuant to ARTICLE 3 of the Plan.
1.16 "Closing" means the closing of the transactions contemplated by
the Stock Purchase Agreement.
1.17 "Closing Date" means the date on which the Closing occurs.
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1.18 "Closing Payment" means, at the date of determination, the amount
equal to (i) the product of (a) $0.125 and (b) the number of shares of Common
Stock held by holders other than Principal Shareholders, less (ii) any Excess
Expenses up to a maximum of $50,000 in the aggregate.
1.19 "Collateral Document" means each instrument, agreement, and
document to be issued or executed in connection with the Plan.
1.20 "Common Stock" means the shares of Common Stock, par value $.10
per share, of NAB on the Petition Date.
1.21 "Common Stock Interest" means any right arising from the
ownership, beneficial or otherwise, of Common Stock, and any outstanding rights
to acquire Common Stock, and all Claims arising from rescission of a purchase or
sale of such stock or right to acquire such stock or for damages arising from
such purchase or sale.
1.22 "Confirmation" means entry of the Confirmation Order.
1.23 "Confirmation Date" means the date on which the Confirmation Order
is entered on the docket by the Clerk of the Bankruptcy Court.
1.24 "Confirmation Hearing" means the hearing with respect to the Plan
required by section 1128(a) of the Bankruptcy Code.
1.25 "Confirmation Order" means the order of the Bankruptcy Court, in
form and substance reasonably satisfactory to the Debtor and Centex, confirming
the Plan pursuant to
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section 1129 of the Bankruptcy Code and approving the Debtor's performance of
the Stock Purchase Agreement.
1.26 "Court Day" means a day which is not a Saturday, Sunday or legal
holiday listed in Bankruptcy Rule 9006(a).
1.27 "Debtor" means NAB, as debtor in possession in the Reorganization
Case.
1.28 "Disbursing Agent" means one or more disbursing agents, to be
designated by NAB with Centex's consent (which shall not be unreasonably
withheld) prior to Confirmation, which will receive the distributions to be made
to Class 4 under the Plan and make such distributions to the holders of Class 4
Interests as are provided in the Plan.
1.29 "Disclosure Statement" mean the Debtor's Disclosure and
Solicitation Statement pertaining to the Plan, dated _______________, 2001,
together with any appendices or documents attached thereto or otherwise
incorporated by reference therein, as the same may be amended, modified,
restated or supplemented from time to time.
1.30 "Disputed Claim" means a Claim (a) that the Debtor or Reorganized
NAB has scheduled as unliquidated, disputed, contingent or subject to offset and
which has not been allowed by a Final Order, or (b) as to which an objection or
motion to estimate for purposes of allowance in the Reorganization Case has been
timely filed, but has not been withdrawn or resolved by a Final Order.
Notwithstanding the foregoing, a Claim which is Allowed in the Plan is not a
Disputed Claim.
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1.31 "Distribution Date" means on or as soon as practicable after the
later of (a) the Closing Date and (b) the date on which a Claim becomes an
Allowed Claim by Final Order and all other conditions to distribution with
respect to such Claim shall have been satisfied.
1.32 "Xxxxxxx Money Deposit" means the funds held and invested by the
Xxxxxxx Money Escrow Agent under the Xxxxxxx Money Escrow Agreement, as such
amount may be adjusted in accordance with SECTION 1.02(B) of the Stock Purchase
Agreement.
1.33 "Xxxxxxx Money Escrow Agent" means Commerce Land Title, Inc. in
its capacity as escrow agent under the Xxxxxxx Money Escrow Agreement.
1.34 "Xxxxxxx Money Escrow Agreement" means the Escrow Agreement
entered into as of January 31, 2001 by and among Centex, NAB and the Xxxxxxx
Money Escrow Agent, a true and correct copy of which is attached hereto as
Exhibit B.
1.35 "Estate" means the estate of the Debtor created in the
Reorganization Case pursuant to section 541 of the Bankruptcy Code.
1.36 "Excepted Claims" mean Claims as to which the Bankruptcy Court
orders that no proof of claim or request for payment of Administrative Claim
need be filed.
1.37 "Excess Expenses" means the aggregate amount of fees and expenses
incurred by or on behalf of the Debtor or the Subsidiaries, including the
Debtor's legal, financial, advisory and other professional fees (exclusive of a
maximum fee of $125,000 payable to Samco Capital Markets), in connection with
the transactions contemplated by the Stock Purchase Agreement from and after
December 15, 2000 to and including the Closing Date (whether or not paid by such
date) in excess of $250,000.
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1.38 "Exonerated Parties" means the Debtor, Reorganized NAB, Centex and
the Disbursing Agent as well as each of their respective stockholders,
directors, officers, agents, employees, members, accountants, attorneys,
financial advisors and representatives, or any one or more of the foregoing.
1.39 "Final Order" means an order or judgment of the Bankruptcy Court
or any other court exercising jurisdiction over the subject matter and the
parties that has not been reversed, stayed, modified, amended or vacated and as
to which no appeal, petition for certiorari or request for reargument or other
review or rehearing has been requested or is pending; and as to which the time
to appeal, petition for certiorari or seek reargument, other review or rehearing
has expired or the right to do so has been fully and effectively waived in
writing; or, if an appeal, reargument, writ of certiorari, review or rehearing
thereof has been sought, the order or judgment has been affirmed by the highest
court to which the order was appealed, or from which the reargument, review or
rehearing was sought, or the petition for writ of certiorari has been denied,
and the time to take any further appeal or to seek certiorari or further
reargument, review or rehearing has expired.
1.40 "Governmental Authority" means any nation or government, any state
or political subdivision thereof, any federal or state court and any other
agency or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.41 "Interests" means Common Stock Interests in the Debtor.
1.42 "Interim Motion" means a motion filed with the Bankruptcy Court by
the Company to enter the Interim Order.
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1.43 "Interim Order" means an order in form and substance reasonably
satisfactory to Centex (i) approving the provisions of and authorizing the
performance of the Company under ARTICLE 6 and SECTION 9.03 of the Stock
Purchase Agreement, (ii) providing that, so long as the Stock Purchase Agreement
has not been terminated in accordance with SECTION 9.01 thereof, the Bankruptcy
Court shall not permit consideration of or approve an Acquisition Proposal
unless NAB has fully complied with all the provisions of SECTION 6.02 thereof as
they apply to such Acquisition Proposal and such Acquisition Proposal
constitutes an Overbid Transaction, (iii) providing that the Termination Fee
shall be secured by a first priority lien and security interest in the
Termination Fee Security and (iv) providing that such interim order cannot be
amended or modified without the consent of Centex, which consent shall not be
unreasonably withheld.
1.44 "Miscellaneous Secured Claim" means any Secured Claim.
1.45 "NAB" means NAB Asset Corporation, a Texas corporation, and the
Debtor in the Reorganization Case.
1.46 "New Purchase Agreement" means an amended version of the Stock
Purchase Agreement or any other substantially similar Stock Purchase Agreement
between the New Purchaser and NAB.
1.47 "New Purchaser" means the purchaser under a New Purchase Agreement
other than Centex.
1.48 "Other Priority Claim" means any Claim to the extent entitled to
priority in payment under section 507(a) (3), (4), (5) or (6) of the Bankruptcy
Code.
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1.49 "Overbid Transaction" means an Acquisition Proposal made in
writing by a Qualified Third Party (i) which would provide for consideration
attributable to the holders of Common Stock, other than the Principal
Shareholders, having a fair market value, as determined by an investment banking
firm of national standing selected by NAB and reasonably acceptable to Centex,
which exceeds the Purchase Payment (or, if Centex has delivered a Topping Offer
to NAB, the Topping Offer Amount) by at least $1 million and (ii) the terms and
conditions of which are reasonably determined by the board of directors of NAB
to be, when taken in their entirety, no less favorable to NAB or the holders of
Common Stock than the terms and conditions set forth in the Stock Purchase
Agreement.
1.50 "Person" means any individual, corporation, partnership,
association, trust or any other entity or organization of any kind or character,
including a Governmental Authority.
1.51 "Petition Date" means the date on which the petition for relief
commencing the Reorganization Case is filed.
1.52 "Plan" means this Plan of Reorganization, and any exhibits and
schedules attached hereto (which are hereby incorporated by reference) as the
same may be amended, modified or supplemented from time to time in accordance
with the provisions set forth herein, the Bankruptcy Code and the Bankruptcy
Rules.
1.53 "Principal Shareholders" means Consumer Portfolio Services, Inc.,
Greenhaven Associates, Inc., and Centex.
1.54 "Priority Tax Claim" means any Claim to the extent entitled to
priority payment under section 507(a)(8) of the Bankruptcy Code.
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1.55 "Professional" means those persons retained at the expense of the
Estate in the Reorganization Case pursuant to an order of the Bankruptcy Court
in accordance with sections 327, 328 or 1103 of the Bankruptcy Code.
1.56 "Purchase Payment" means an amount in Cash equal to the excess of
the Closing Payment over the Xxxxxxx Money Deposit.
1.57 "Qualified Third Party" means (subject to the last sentence of
SECTION 6.02(a) of the Stock Purchase Agreement) a Third Party who the board of
directors of NAB has reasonably determined, based on the advice of its financial
advisors, is financially able to consummate an Overbid Transaction.
1.58 "Record Date" means, for purposes of voting, ___________, 2001,
and for purposes of distribution, the Petition Date.
1.59 "Released Matters" means any and all claims, obligations, suits,
judgments, damages, rights, causes of action and liabilities whatsoever
(including, without limitation, those arising under the Bankruptcy Code),
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, based in whole or in part on any act, omission,
transaction, event or other occurrence taking place before, on or after the
Petition Date and to and including the Closing Date, and in any way relating to
the Debtor (before, on or after the Petition Date), the Reorganization Case, the
Stock Purchase Agreement or the Plan.
1.60 "Released Parties" means each of the Debtor's agents, employees,
members, accountants, attorneys, financial advisors and representatives, present
and former
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officers and directors, the entities that elected such directors to the extent
that they are or may be liable for the actions or inactions of such directors,
SFS, Centex and its Subsidiaries, and their respective present and former
officers, directors, agents, employees, members, accountants, attorneys,
financial advisors and representatives, or any one or more of the foregoing.
1.61 "Reorganization Case" means the case under chapter 11 of the
Bankruptcy Code commenced by the Debtor.
1.62 "Reorganized Board" means individually or collectively as is
appropriate in the context, the board of directors of Reorganized NAB on and
after the Closing Date.
1.63 "Reorganized NAB" means NAB on and after the Closing Date.
1.64 "Schedules" means the Debtor's Schedules of Assets and
Liabilities, which may be filed with the Clerk of the Bankruptcy Court pursuant
to Bankruptcy Rule 1007.
1.65 "Secured Claim" means a Claim which constitutes a secured claim
under section 506(a) or 1111 (b) of the Bankruptcy Code.
1.66 "SFS" means Stanwich Financial Services Corp., a Rhode Island
corporation.
1.67 "Solicitation Materials" means the Disclosure Statement and all
exhibits and letters thereto, and all Ballots and instructions and other
materials provided by the Debtor to entities entitled to vote on the Plan.
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1.68 "Stock Acquisition" means the issuance and sale by NAB to Centex
of shares of Common Stock representing 49.9% of the issued and outstanding
Common Stock on the Closing Date.
1.69 "Stock Purchase Agreement" means the Stock Purchase Agreement,
dated as of March 16, 2001, among NAB, SFS, and Centex, a true and correct copy
of which is attached hereto as Exhibit A.
1.70 "Subsidiary" means with respect to NAB (i) any corporation or
other Person of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are owned directly or indirectly by NAB or (ii) any
partnership of which NAB or any Subsidiary is a general partner or of which NAB
directly or indirectly owns partnership interests which entitle it to receive
more than 50% of the distributions made by such partnership.
1.71 "Termination Fee" means $500,000, which fee shall be paid no later
than one Business Day after the date of consummation of any Acquisition
Proposal, by wire transfer of immediately available funds to such account as
Centex shall designate in a written notice delivered to NAB.
1.72 "Termination Fee Security" means [_____________________________].
1.73 "Third Party" means any Person other than NAB or Centex or any of
their respective Affiliates.
1.74 "Topping Offer" means a written offer by Centex, in accordance
with SECTION 6.02(a) of the Stock Purchase Agreement, to amend the terms of the
Stock Purchase
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Agreement in order to provide for consideration having a value at least $100,000
greater than the value of the consideration provided for under the Acquisition
Proposal.
1.75 "Topping Offer Amount" means the amount of the consideration
specified in the most recent Topping Offer delivered by Centex to NAB pursuant
to SECTION 6.02(a) of the Stock Purchase Agreement.
1.76 "Trade Debt" means any Claim for goods provided or services
rendered in the ordinary course of business to the Debtor on or after the
Petition Date.
1.77 "Unsecured Claim" means a Claim that is not a Secured Claim, an
Administrative Claim, a Priority Tax Claim, an Other Priority Claim or a Common
Stock Interest. 1.78 "Voting Deadline" means the date by which Ballots for
acceptance or rejection of the Plan must be received by the tabulating agent in
order to be counted.
ARTICLE II
TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS
2.1 Administrative Claims. Each Allowed Administrative Claim shall be
paid in full in Cash in full satisfaction, settlement, release, extinguishment
and discharge of such claim (a) at the option of the Debtor (before the Closing
Date) or Reorganized NAB (on or after the Closing Date) (i) in the ordinary
course of business as such Claim matures or (ii) on the Distribution Date,
unless the holder thereof agrees to less favorable treatment of such Claim
(including, without limitation, any treatment that may be provided for in any
documentation, statute or regulation governing such Claim) or (b) on such other
date as the Bankruptcy Court
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may order; provided, however, that all Trade Debt will be paid in the ordinary
course of business. Notwithstanding the foregoing, the Debtor's or Reorganized
NAB's failure to object to any Administrative Claim in the Reorganization Case
shall be without prejudice to Reorganized NAB's right to contest or otherwise
defend against such Claim in any forum when and if such Claim is sought to be
enforced by the holder thereof after the Closing Date.
2.2 Priority Tax Claims. Each Allowed Priority Tax Claim shall be paid
in full in Cash on the Distribution Date, unless the holder thereof agrees to
less favorable treatment of such Claim (including, without limitation, any
treatment that may be provided for in any documentation, statute or regulation
governing such Claim); provided, however, that the Debtor may elect to have any
Allowed Priority Tax Claim paid in deferred Cash payments over a period not to
exceed six (6) years after the date of assessment of such Priority Tax Claim, of
a value, as of the Closing Date, equal to the amount of such Allowed Priority
Tax Claim, which option shall be exercised by written notice given to the holder
of a Priority Tax Claim delivered on or before the Distribution Date specifying
a payment schedule, a rate of interest and the date by which an objection to
such treatment must be filed and served. Reorganized NAB shall have the right to
prepay without penalty or premium any Allowed Priority Tax Claim, in whole or in
part.
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS
3.1 General Rules of Classification. Claims and Interests shall be
treated in accordance with the classifications scheme set forth in this ARTICLE
3. A Claim or Interest that is properly included in more than one class is in a
Class to the extent that it qualifies within the description of such Class and
is in a different Class to the extent that it qualifies within the description
of such different Class, but the same portion of a Claim or Interest may not be
in
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more than one Class. In accordance with section 1123(a)(1) of the Bankruptcy
Code, Administrative Claims and Priority Tax Claims are not classified and shall
be paid in accordance with the provisions set forth in ARTICLE 2 of the Plan.
(a) Class 1 Claims. Class 1 shall consist of all Allowed Other
Priority Claims.
(b) Class 2 Claims. Class 2 shall consist of all Allowed
Miscellaneous Secured Claims.
(c) Class 3 Claims. Class 3 shall consist of all Allowed
Unsecured Claims.
(d) Class 4 Common Stock Interests. Class 4 shall consist of
all Common Stock Interests.
ARTICLE IV
TREATMENT OF CLAIMS AND INTERESTS
Claims and Interests shall be treated in the manner set forth in this
ARTICLE 4.
4.1 Class 1 (Allowed Other Priority Claims). Class l Claims are
unimpaired. Each holder of a Class 1 Claim shall be paid in full in Cash on the
Distribution Date or, at the option of Reorganized NAB, in the ordinary course
of business as such Claim matures, unless such holder agrees to less favorable
treatment of such Claim (including, without limitation, any treatment that may
be provided for in any documentation, statute or regulation governing such
Claim).
4.2 Class 2 (Allowed Miscellaneous Secured Claims). Class 2 Claims are
unimpaired. Unless the holder thereof agrees to less favorable treatment of such
Claim, each
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holder of a Class 2 Claim shall receive one of the following alternative
treatments, at the election of the Debtor made prior to the Closing Date:
(a) The legal, equitable and contractual rights to which such
Claim entitles the holder thereof shall be unaltered by the Plan;
(b) Such Claim shall receive the treatment described in
section 1124(2) of the Bankruptcy Code; or
(c) All collateral securing such Claim shall be transferred
and surrendered to such holder, without representation or warranty by, or
recourse against, the Debtor or Reorganized NAB.
With respect to any Class 2 Claim that receives any treatment described
above, the Debtor's or Reorganized NAB's failure to object to such Claim in the
Reorganization Case shall be without prejudice to Reorganized NAB's right to
contest or otherwise defend against such Claim in any forum when and if such
Claim is sought to be enforced by the holder thereof after the Closing Date.
4.3 Class 3 (Allowed Unsecured Claims). Class 3 Claims are unimpaired.
Unless the holder thereof agrees to less favorable treatment of such Claim, each
holder of a Class 3 Claim shall receive one of the following alternative
treatments, at the election of the Debtor made prior to the Closing Date:
(a) The legal, equitable and contractual rights to which such
Claim entitles the holder thereof shall he unaltered by the Plan; or
(b) Such Claim shall receive the treatment described in
section 1124(2) of the Bankruptcy Code.
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With respect to any Class 3 Claim that receives either treatment
described above, the Debtor's or Reorganized NAB's failure to object to such
Claim in the Reorganization Case shall be without prejudice to Reorganized NAB's
right to contest or otherwise defend against such Claim in any forum when and if
such Claim is sought to be enforced by the holder thereof after the Closing
Date.
4.4 Class 4 (Common Stock Interests).
(a) Class 4 Common Stock Interests are impaired. Subject to
SECTIONS 7.7 and 11.24 of the Plan and except as provided in subsection (b)
immediately below, each holder of a Class 4 Interest other than the Principal
Shareholders as of the Record Date for distribution shall receive in Cash on the
Distribution Date their respective share of the Closing Payment.
(b) In lieu of the treatment specified in subsection (a)
above, the Principal Shareholders, by voting to accept the Plan, agree to less
favorable treatment of their Class 4 Interests by retaining their Common Stock.
ARTICLE V
IMPAIRMENT OF CLAIMS AND INTERESTS: VOTING
5.1 Impaired and Unimpaired Claims and Interests. Because Class 4 is
impaired, each holder of record as of the Record Date for voting of a Class 4
Common Stock Interest is entitled to vote to accept or reject the Plan. By
voting to accept the Plan, a holder of a Claim or Interest expressly waives any
right it or its successors or assigns may have to change or withdraw its
acceptance after the Voting Deadline unless the Bankruptcy Court determines that
(a) the disclosure received by such holder was not adequate as required by
section 1126(b) of the Bankruptcy Code or (b) the Plan has been modified in a
manner which materially and adversely
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changes the treatment of the holder's Claim or Interest. Holders of Allowed
Claims in Classes 1, 2 and 3 are unimpaired under the Plan and, therefore, are
conclusively presumed to have accepted the Plan pursuant to section 1126(f) of
the Bankruptcy Code. Consequently, their votes on the Plan have not been and
will not be solicited.
ARTICLE VI
CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE
6.1 Conditions to Confirmation. It shall be a condition to Confirmation
of the Plan that the Stock Purchase Agreement shall be in full force and effect.
6.2 Conditions to Occurrence of Closing Date. Notwithstanding anything
to the contrary contained in any other section of the Plan, it shall he a
condition to the occurrence of the Closing Date that all conditions to closing
the transactions contemplated by the Stock Purchase Agreement as set forth in
ARTICLE 7 therein shall have been satisfied or waived. Any such waiver may be
effected at any time, without notice, without leave or order of the Bankruptcy
Court and without any formal action other than proceeding to consummate the
Plan. In addition, the Closing Date shall not occur before the first (1st)
Business Day after the first (1st) Court Day that is at least ten (10) days
after the Confirmation Date (or such earlier date as is agreed to in writing by
the parties to the Stock Purchase Agreement).
6.3 Notice to Bankruptcy Court. Promptly after the Closing Date,
Reorganized NAB shall file with the Clerk of the Bankruptcy Court a notice that
the Plan has become effective; provided, however, that failure to file such
notice shall not affect the effectiveness of the Plan or the rights and
obligations of any entity hereunder, under the Stock Purchase Agreement or any
of the documents, instruments, securities or agreements issued or to
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be issued, or executed or to be executed, to effectuate the transactions
contemplated by the Plan or the Stock Purchase Agreement.
ARTICLE VII
MEANS OF IMPLEMENTING THE PLAN
7.1 Closing Under Stock Purchase Agreement. On the Closing Date, NAB
shall consummate the Stock Acquisition in consideration of payments by Centex or
on behalf of Centex on the Closing Date as follows: Centex (i) shall pay to the
Disbursing Agent the Purchase Payment, (ii) shall take all action on its part
required to cause the Xxxxxxx Money Escrow Agent to deliver the Xxxxxxx Money
Deposit to the Disbursing Agent, and (iii) shall pay to NAB the Capitalization
Payment.
7.2 Corporate Action. On the Closing Date, all actions contemplated by
the Plan shall be authorized and approved in all respects (subject to the
provisions of the Plan). All matters provided for in the Plan involving the
corporate structure of the Debtor or Reorganized NAB in connection with the
Plan, and any corporate action required by the Debtor or Reorganized NAB in
connection with the Plan, shall be deemed to have occurred and shall be in
effect, without any requirement of further action by security holders or
directors of the Debtor or Reorganized NAB. On the Closing Date, the appropriate
officers of Reorganized NAB and members of the Reorganized Board are authorized
and directed to issue, execute and deliver the agreements, documents, securities
and instruments contemplated by the Plan and the Stock Purchase Agreement in the
name of and on behalf of Reorganized NAB.
7.3 Effectiveness of Securities, Instruments and Agreements. On the
Closing Date, all instruments, documents and agreements authorized, issued or
entered into pursuant to
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the Plan or the Stock Purchase Agreement and, to the extent not already
effective in accordance with its terms, each of the other exhibits to the Stock
Purchase Agreement, shall become effective, legally binding and enforceable on
the parties thereto in accordance with their respective terms and conditions
without the requirement of any further action by security holders or directors
of the Debtor or Reorganized NAB, and shall be deemed to become effective
simultaneously.
7.4 Management of Reorganized NAB. On and after the Closing Date, the
management, control and operation of Reorganized NAB shall become the
responsibility of its Reorganized Board. The initial officers and directors of
Reorganized NAB shall consist of those individuals identified in the Disclosure
Statement or otherwise disclosed to the Bankruptcy Court (with the written
approval of Centex) at or prior to the Confirmation Hearing. All such directors
and officers shall be deemed elected as of the Closing Date pursuant to the
Confirmation Order. Those officers and directors not continuing in office shall
be deemed removed therefrom as of the Closing Date pursuant to the Confirmation
Order.
7.5 Cash Distribution. Payments to the Disbursing Agent pursuant to
SECTION 7.1 of the Plan shall constitute distributions under the Plan. All
payments of Cash to be made under the Plan to holders of Class 4 Interests shall
be made by the Disbursing Agent, which shall make the distributions on account
of holders of Class 4 Interests as provided for herein. Reorganized NAB shall
pay the Disbursing Agent's reasonable fees and expenses (including attorneys'
fees and expenses) for services performed in accordance with the Plan. The
Disbursing Agent may, with the consent of the Debtor (before the Closing Date)
or Reorganized NAB (on or after the Closing Date), employ or contract with other
entities to assist in or perform the distribution of property to be distributed.
The Disbursing Agent shall serve without bond. All
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other Cash distributions to be made under the Plan shall be made by Reorganized
NAB or its designee. Any payment of Cash may be made either by check or by wire
transfer, at the option of Reorganized NAB or the Disbursing Agent, as the case
may be.
7.6 Setoff. Except as otherwise provided for herein, or in the Stock
Purchase Agreement, Reorganized NAB may, but shall not be required to, set off
against any Claim or Interest, and against the distributions to be made by it
pursuant to the Plan in respect of such Claim or Interest, any claims of any
nature whatsoever that the Debtor may have against the holder of such Claim or
Interest, but neither the failure to do so nor the allowance of any Claim or
Interest hereunder shall constitute a waiver or release of any such claim the
Debtor may have against such holder.
7.7 Surrender of Common Stock.
(a) No distribution shall be made to or on behalf of a holder
of a Class 4 Interest other than the Principal Shareholders under the Plan
(other than to the Disbursing Agent) unless and until such holder shall
surrender its Common Stock certificate to the Disbursing Agent for cancellation
pursuant to written instructions to such holders from NAB or Reorganized NAB.
Any holder of a Class 4 Interest other than the Principal Shareholders whose
Common Stock certificate has been lost, stolen, mutilated or destroyed shall, in
lieu of surrendering such certificate, deliver to the Disbursing Agent (i)
evidence satisfactory to Reorganized NAB and the Disbursing Agent of the loss,
theft, mutilation or destruction of such certificate and (ii) such security or
indemnity as may reasonably be required by Reorganized NAB and the Disbursing
Agent to hold Reorganized NAB and the Disbursing Agent harmless with respect
thereto.
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(b) Any holder of a Class 4 Interest other than the Principal
Shareholders that has not satisfied the requirement of subsection (a)
immediately above within two (2) years after the Closing Date shall receive no
distribution on account of its Class 4 Interest and shall be forever barred from
asserting any claim, right or interest based thereon. As soon as practicable
after the second (2nd) anniversary of the Closing Date, the Disbursing Agent
shall pay any Cash distribution to which such holder would have been entitled to
the holders of Class 4 Interests who did satisfy the requirements of subsection
(a) immediately above within two (2) years after the Closing Date, in proportion
to the amount of Common Stock surrendered by such holders.
7.8 Releases.
(a) On the Closing Date, Reorganized NAB, on its own behalf
and as representative of the Debtor's estate, releases unconditionally, and is
hereby deemed to release unconditionally, each of the Released Parties from the
Released Matters; provided, however, that the foregoing release shall not apply
(i) to performance or nonperformance under the Plan or the Stock Purchase
Agreement or related instruments, securities, agreements or documents, or (ii)
to any action or omission that constitutes actual fraud or criminal behavior.
(b) On the Closing Date, each holder of an Interest that is
entitled to vote on the Plan shall be deemed to have unconditionally released
the Released Parties from the Released Matters; provided, however, that the
foregoing release shall not apply (i) to performance or nonperformance under the
Plan or the Stock Purchase Agreement or related instruments, securities,
agreements or documents or (ii) to any such action or omission that constitutes
actual fraud or criminal behavior; provided, further, that a holder may elect,
by checking the box provided on the Ballot, not to grant such release.
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(c) The Confirmation Order shall contain a permanent
injunction to effectuate the releases granted in this SECTION 7.8.
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
8.1 Assumption and Rejection of Executory Contracts and Unexpired
Leases. On and effective as of the Closing Date, all executory contracts and
unexpired leases of the Debtor (including any amendments, revisions or
modifications thereto) will be assumed, excluding (a) any and all executory
contracts and unexpired leases which are listed on any "Schedule of Rejected
Executory Contracts" filed by the Debtor before the conclusion of the
Confirmation Hearing, all of which contracts and leases shall be rejected on the
Closing Date, (b) any and all such contracts and leases rejected by order of the
Bankruptcy Court by the Closing Date and (c) any and all such contracts and
leases which are the subject of any motion to reject pending on the Confirmation
Date that is ultimately granted by Final Order. The Debtor shall obtain the
approval of Centex before filing any "Schedule of Rejected Executory Contracts"
or any motion to reject an executory contract or unexpired lease, which approval
may be withheld if, in the reasonable judgment of Centex, the effect of such
Schedule or motion is or would likely be unfavorable to Centex or Reorganized
NAB. Entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such assumptions and rejections pursuant to sections 365(a) and 1123
of the Bankruptcy Code. Without limiting the foregoing, the Stock Purchase
Agreement shall be assumed under the Plan on the Closing Date. Executory
contracts and leases entered into after the Petition Date will be performed by
the Debtor or Reorganized NAB in the ordinary course of business.
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8.2 Employee Compensation and Benefit Programs. All employee
compensation and benefit plans, policies and programs of the Debtor, including
those benefits that are provided to individuals actually providing services for
the Debtor or a Subsidiary under the lease-employee management contracts with
Administaff Companies, Inc., as described in the Disclosure Statement and in
effect on the Petition Date shall continue in full force and effect, without
prejudice to Reorganized NAB's rights under applicable nonbankruptcy law to
modify, amend or terminate any of the foregoing plans, policies and programs.
8.3 Rejection Claims. Any Claims arising out of the rejection of an
executory contract or unexpired lease must be filed with the Bankruptcy Court no
later than thirty (30) days after the later of the Closing Date and the date of
any Final Order approving the Debtor's rejection of such contract or lease or be
forever barred from assertion against the Debtor, Reorganized NAB, or their
properties or Estates. Each Claim resulting from such rejection shall constitute
a Class 2 Claim if it is an Allowed Secured Claim or, otherwise a Class 3 Claim.
8.4 Assumption Claims. All cure and compensation payments which may be
required by section 365(b) of the Bankruptcy Code under any executory contracts
or unexpired leases which are assumed shall constitute Administrative Claims;
provided, however, in the event of a dispute regarding the amount of any such
payments, the cure of any other defaults, the ability of Reorganized NAB to
provide adequate assurance of future performance or any other matter pertaining
to assumption, Reorganized NAB shall make such payments and cure such other
defaults and provide adequate assurance of future performance only following the
entry of a Final Order resolving such dispute. The Debtor (with the consent of
Centex) prior to the Closing Date, and Reorganized NAB after the Closing Date,
may (but is not required to) provide notice in writing to a party to an
executory contract or unexpired lease to be assumed hereunder
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setting forth the amount of any cure or compensation payments it intends to pay
and any adequate assurance of future performance it intends to provide. If a
party to such executory contract or unexpired lease has not filed an appropriate
pleading with the Bankruptcy Court on or before the tenth (10th) day after
mailing of such notice disputing the terms for assumption set forth in the
Debtor's notice and requesting a hearing thereon, then such party shall be
deemed to have accepted such terms for assumption and waived its right to
dispute such matters.
ARTICLE IX
EFFECTUATION OF OVERBID TRANSACTION
9.1 Automatic Effectuation of Overbid Transaction. If NAB terminates
the Stock Purchase Agreement or a New Purchase Agreement pursuant to SECTION
9.01 (or similar provision) of the Stock Purchase Agreement, or if the Stock
Purchase Agreement or a New Purchase Agreement is amended in response to an
overbid proposal as contemplated by SECTION 6.02 (or similar provision) of the
Stock Purchase Agreement, then the Plan shall automatically effectuate the last
such agreement entered into by NAB with respect to the Overbid Transaction or
such amended Stock Purchase Agreement. Subject to the provisions of ARTICLE 5 of
the Plan, each holder of a Claim or Interest that has accepted or rejected the
Plan prior to such automatic effectuation shall be deemed to have accepted or
rejected the Plan as so effectuated, and shall not be permitted to change or
withdraw its acceptance or rejection based on the changes to the Plan necessary
to so effectuate. In such event:
(a) if the purchaser under a New Purchase Agreement is not
Centex, each reference to "Centex" in the Plan, other than in this ARTICLE 9 and
in the definition of "Xxxxxxx Money Escrow Agreement," shall refer to the New
Purchaser under the New Purchase Agreement; and
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(b) each reference to the "Stock Purchase Agreement" in the
Plan, other than in SECTION 11.11 of the Plan and in this ARTICLE 9, shall refer
to (i) in the case of a termination pursuant to SECTION 9.01 of the Stock
Purchase Agreement or similar provision of a New Purchase Agreement, the Stock
Purchase Agreement between the New Purchaser and NAB, which shall in form and
substance (other than the amount of the purchase price) be substantially similar
to the Stock Purchase Agreement, or (ii) in the case of an amendment of the
Stock Purchase Agreement or New Purchase Agreement in response to an overbid
proposal as contemplated by SECTION 6.02 (or similar provision) thereof, the
Stock Purchase Agreement or New Purchase Agreement as so amended.
ARTICLE X
EFFECTS OF PLAN CONFIRMATION
10.1 Discharge and Injunction. The rights afforded in the Plan and the
treatment of all Claims and Interests herein shall be in exchange for and in
complete satisfaction, discharge and release of all Claims and Interests of any
nature whatsoever, against the Debtor or Reorganized NAB or any of their assets
or properties. Except as otherwise expressly provided in the Plan, the
confirmation of the Plan shall, provided that the Closing Date shall have
occurred, discharge all Claims and terminate all Interests to the fullest extent
authorized or provided for by the Bankruptcy Code, including, without
limitation, to the extent authorized or provided for by sections 524 and 1141
thereof. Therefore, on and after the Closing Date, except to the extent of the
distributions to be made, and other treatment provided, under the Plan, all
holders of Claims and Interests shall be precluded from asserting against the
Debtor, Reorganized NAB, any of their successors, and any of their respective
assets or properties, any Claims or Interests based on any act or omission,
transaction or other activity of any kind or nature that occurred prior to the
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Closing Date, and the Confirmation Order shall permanently enjoin said holders
of Claims and Interests, and their successors and assigns, from enforcing or
seeking to enforce any such Claims or Interests against the Debtor, Reorganized
NAB, any of their successors, or any of their respective assets or properties.
All Common Stock held by a holder other than a Principal Shareholder shall be
cancelled on the Closing Date and shall not be outstanding for any purpose other
than the right to receive, in exchange for their certificates, the Cash to which
such holders are entitled pursuant to SECTION 7.7 of the Plan.
10.2 Revesting. On the Closing Date, except as otherwise expressly
provided in the Plan or the Confirmation Order, Reorganized NAB shall be vested
with all of the property of its Estate free and clear of all Claims, liens,
encumbrances, charges, Interests and other interests of any kind or nature of
claimants, equity security holders or any other entities arising on or before
the Closing Date, and Reorganized NAB may operate its business free of any
restrictions imposed by the Bankruptcy Code or by the Bankruptcy Court.
10.3 Distributions to Disbursing Agent. On and after the Closing Date,
all property distributed to the Disbursing Agent under the Plan shall be free
and clear of all Claims, liens, encumbrances, charges, Interests and other
interests of any kind or nature of claimants, equity security holders, the
Debtor, Reorganized NAB, the Estate, Centex or any other entities, except the
rights with respect thereto created pursuant to, provided for or recognized in
the Plan or the Confirmation Order.
10.4 Retention and Enforcement of Causes of Action. Except as provided
in the Plan or the Confirmation Order, any and all claims, rights or causes of
action that constitute property of the Estate or of the Debtor, whether arising
under the Bankruptcy Code or under
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nonbankruptcy law, including, without limitation, all avoiding power actions
under sections 544, 545, 547, 548, 549 and 550 of the Bankruptcy Code or under
applicable nonbankruptcy law as applied through section 544(b) of the Bankruptcy
Code, (a) are expressly retained and may be enforced by the Debtor and any
successors in interest, including Reorganized NAB, and (b) may be pursued, as
appropriate, in accordance with the best interests of the Debtor, Reorganized
NAB, or their successors.
10.5 Cancellation and Release of Liens. On the Closing Date, all
evidences of Claims or Interests against the Debtor that are impaired under the
Plan, including, without limitation, the Common Stock (and any liens,
securities, instruments, documents or agreements created or entered into in
connection therewith) held by holders other than the Principal Shareholders, and
any other liens, securities, instruments, documents and agreements, shall be
deemed released, cancelled and terminated, and the obligations of the Debtor
relating to, arising under, in respect of or in connection with such liens,
securities, instruments, documents or agreements shall be cancelled,
extinguished and discharged; provided, however, that notes and other evidences
of such Claims or Interests shall, effective on the Closing Date, represent the
right to participate in distributions provided for by the Plan.
10.6 Retention of Jurisdiction.
(a) Prior to the Closing Date and notwithstanding entry of the
Confirmation Order, the Bankruptcy Court shall exercise all jurisdiction as if
Confirmation had not occurred, and the Confirmation Order shall so provide.
Unless otherwise provided, all injunctions or stays provided for in the
Reorganization Case pursuant to sections 105 or 362 of the Bankruptcy Code or
otherwise, and in effect on the Confirmation Date, shall remain in full force
and effect at least until the Closing Date.
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(b) On and after the Closing Date, the Bankruptcy Court will
retain exclusive jurisdiction over the Reorganization Case for the following
purposes: (i) to determine requests for payment of Claims entitled to priority
under section 507(a)(1) of the Bankruptcy Code and applications for allowance of
compensation and reimbursement of expenses of the Professionals and any other
fees and expenses authorized to be paid or reimbursed under the Bankruptcy Code
or the Plan, except that, with respect to Excepted Claims, the jurisdiction of
the Bankruptcy Court shall be non-exclusive, (ii) to determine all
controversies, suits and disputes regarding interpretation and implementation of
the Plan, except that, with respect to Excepted Claims, the jurisdiction of the
Bankruptcy Court shall be non-exclusive, (iii) to enter orders in aid of
execution of the Plan, including orders as authorized by section 1142 of the
Bankruptcy Code, (iv) to consider any modifications of the Plan, to cure any
defect or omission in the Plan, and to reconcile any inconsistency in any order
of the Bankruptcy Court or between any such order and the Plan, (v) to determine
applications, adversary proceedings and contested matters pending on the Closing
Date or commenced after the Closing Date as contemplated in the Plan, except
that, with respect to Excepted Claims, the jurisdiction of the Bankruptcy Court
shall be non-exclusive, (vi) to allow, disallow, estimate, liquidate or
determine any Claim or Interest, and to enter or enforce any order requiring the
filing of any such Claim before a particular date, except that, with respect to
Excepted Claims, the jurisdiction of the Bankruptcy Court shall be
non-exclusive, (vii) to determine pending applications for the rejection of
executory contracts or unexpired leases, or for the assumption or assignment of
executory contracts or unexpired leases, and to hear and determine, and if need
be liquidate, any and all Claims arising from rejection, assumption or
assignment of any executory contract or unexpired lease, (viii) to determine any
actions or controversies described in SECTION 10.4 of the Plan, except that with
respect to
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Excepted Claims, the jurisdiction of the Bankruptcy Court shall be
non-exclusive, (ix) to ensure that distributions to holders of Claims and
Interests are accomplished as provided for herein, (x) to determine such other
matters as may be set forth in the Confirmation Order or as may arise in
connection with the Plan or Confirmation Order, and (xi) to enter a final decree
closing the Reorganization Case.
10.7 Failure of Bankruptcy Court to Exercise Jurisdiction. If the
Bankruptcy Court abstains from exercising or declines to exercise jurisdiction,
or is otherwise without jurisdiction over any matter arising under, arising in
or related to the Reorganization Case, nothing herein shall prohibit or limit
the exercise of jurisdiction by any other tribunal having competent jurisdiction
with respect to such matter.
10.8 Official Committees. The appointment of each official statutory
committee, if any has been appointed in the Reorganization Case, shall terminate
on the Closing Date.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Payment of Statutory Fees. All fees payable pursuant to 28 U.S.C.
Section 1930 shall be paid on or before the Closing Date.
11.2 Procedure for Determining Certain Claims.
(a) Bar Date for Administrative Claims. All applications for
payment of Administrative Claims incurred prior to the Closing Date (except for
Trade Debt and other Excepted Claims) shall be filed as ordered by the
Bankruptcy Court, but in no event later than
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thirty (30) days after the Closing Date. Any such claim which is not filed
within this time deadline shall be forever barred.
(b) Disputed Claims. Except with respect to Excepted Claims
and those Claims the holders of which have and preserve the right to liquidation
of such Claims before a court other than the Bankruptcy Court pursuant to 28
U.S.C. Section 157(b)(5), all Disputed Claims shall be liquidated and
determined, and allowed or disallowed, by the Bankruptcy Court. The Bankruptcy
Court may, on or prior to the Confirmation Date or such date or dates thereafter
as the Bankruptcy Court may set, fix or liquidate the amount of any contingent
or unliquidated Claim or Interest pursuant to section 502(c) of the Bankruptcy
Code, in which event the amount so set, fixed or liquidated shall be deemed to
be the amount of such contingent or unliquidated Claim or Interest pursuant to
section 502(c) of the Bankruptcy Code for purposes of voting and distribution
under the Plan. The Debtor (before the Closing Date) and Reorganized NAB (after
the Closing Date) may file objections to Claims. Neither the Debtor nor
Reorganized NAB shall be required to create or maintain any reserves for the
payment of Disputed Claims.
11.3 Cramdown. The Debtor reserves the right to request that the
Bankruptcy Court confirm the Plan under section 1129(b) of the Bankruptcy Code.
11.4 Modification of the Plan.
(a) The Debtor reserves the right, in accordance with and
subject to section 1127 of the Bankruptcy Code, and with the approval of Centex
in accordance with SECTION 5.03 of the Stock Purchase Agreement (as long as it
remains in effect), to amend or modify the Plan pursuant to section 1127(a), (c)
and (d) of the Bankruptcy Code prior to the entry of the Confirmation Order. In
accordance with Bankruptcy Rule 3019, any modification that does not materially
and adversely change the treatment of any Claim or Interest, the holder
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of which as of the Record Date for voting voted to accept the Plan, may be
approved by the Bankruptcy Court at the Confirmation Hearing without the
necessity of resoliciting votes. After Confirmation, the Debtor, with Centex's
approval, may seek to amend or modify the Plan in accordance with section
1127(b), (c) and (d) of the Bankruptcy Code.
(b) Prior to the Closing Date, the parties to the Stock
Purchase Agreement may make technical adjustments and modifications to the Stock
Purchase Agreement without Bankruptcy Court approval; provided, however, that
such adjustments and modifications do not adversely affect the treatment of any
Class of Claims or Interests under the Plan.
11.5 Withdrawal of Plan. Subject to the Stock Purchase Agreement, the
Debtor reserves the right, at any time prior to entry of the Confirmation Order,
to revoke and withdraw the Plan. If the Debtor revokes or withdraws the Plan
under this SECTION 11.5, or if entry of the Confirmation Order does not occur,
then the Plan shall be deemed null and void. In that event, nothing contained in
the Plan shall be deemed to constitute a waiver or release of any claims by or
against the Debtor or any other entity, or to prejudice in any manner the rights
of the Debtor or any other entity in any further proceedings involving the
Debtor or any other entity.
11.6 Substantial Consummation of Plan. The Plan shall be deemed to be
substantially consummated on the Closing Date.
11.7 Reservation of Rights. Except as expressly set forth herein, the
Plan shall have no force or effect unless the Bankruptcy Court enters the
Confirmation Order. Neither the filing of the Plan, any statement or provision
contained herein, nor the taking of any action by the Debtor with respect to the
Plan shall be or shall be deemed to be an admission or waiver of any rights of
the Debtor with respect to holders of Claims or Interests prior to the Closing
Date;
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provided, however, that nothing contained in this SECTION 11.7 shall affect any
rights of the Debtor or Centex under the Stock Purchase Agreement.
11.8 Section 1145 Exemption. Any securities issued pursuant to the
Plan, other than securities purchased by Centex in connection with the Stock
Purchase Agreement, will be issued pursuant to the exemption from securities
registration set forth in section 1145 of the Bankruptcy Code.
11.9 Section 1146 Exemption. Pursuant to section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of any security under the
Plan, or the making or delivery of an instrument of transfer under the Plan may
not be taxed under any law imposing a stamp tax or similar tax.
11.10 Unclaimed Property. Subject to SECTION 7.7 of the Plan with
respect to holders of Class 4 Interests, in the event that any distribution of
property remains unclaimed for a period of two (2) years after it has been
delivered (or delivery has been attempted) or has otherwise been made available,
such unclaimed property shall be forfeited by such holder, and the unclaimed
property and the right to receive it shall revert to and vest in Reorganized NAB
free and clear of the interest of the holder of the Claim or interest. Mailing
by regular mail. postage prepaid, to the address specified in SECTION 11.14 of
the Plan shall constitute delivery when mailed.
11.11 Limitation of Liability. Notwithstanding any other provision of
the Plan, the Exonerated Parties shall not be liable other than for willful
misconduct to any holder of a Claim or Interest or any Person, with respect to
any action, omission, forbearance from action, decision or exercise of
discretion taken at any time prior to the Closing Date in connection with,
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but not limited to: (a) the management or operation of the Debtor or Reorganized
NAB, or the discharge of their duties under the Bankruptcy Code or applicable
nonbankruptcy law, (b) the filing of the petition for relief, (c) the
implementation of any of the transactions provided for, or contemplated in, the
Plan or the Collateral Documents, (d) any action taken in connection with either
the enforcement of the Debtor's rights against any Person or the defense of
Claims asserted against the Debtor with regard to the Reorganization Case, (e)
any action taken in the negotiation, formulation, development, proposal,
disclosure, Confirmation or implementation of the Plan, including but not
limited to the Stock Purchase Agreement, any Overbid Transaction or the New
Agreement, or (f) the administration of the Plan or the assets and property to
be distributed pursuant to the Plan; provided, however, that nothing in this
SECTION 11.11 shall excuse performance or nonperformance under the Stock
Purchase Agreement or any of the documents, instruments, securities or
agreements issued or executed to effectuate the transactions contemplated by the
Plan or the Stock Purchase Agreement; and provided, further, that the liability
of any person that solicits acceptance or rejection of the Plan, or that
participates in the offer, issuance, sale or purchase of a security offered or
sold under the Plan, on account of such solicitation or participation, or
violation of any applicable law, rule or regulation governing solicitation of
acceptance or rejection of the plan or the offer, issuance, sale or purchase of
securities, shall be limited as set forth in section 1125(e) of the Bankruptcy
Code. Exonerated Parties may rely reasonably upon the opinions of their
respective counsel, accountants and other experts or professionals, and such
reliance, if reasonable, shall conclusively establish good faith and the absence
of willful misconduct; provided, however, that a determination that such
reliance is unreasonable shall not, by itself, constitute a determination or
finding of willful misconduct. In any action, suit or proceeding by any holder
of a Claim or Interest or any other Entity
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contesting any action by, or non-action of, the Debtor, Reorganized NAB or of
their respective stockholders, directors, officers, agents, employees, members,
attorneys, accountants, financial advisors and representatives, the reasonable
attorneys' fees and costs of the prevailing party shall be paid by the losing
party and as a condition to going forward with such action, suit or proceeding
at the outset thereof, all parties thereto shall be required to provide
appropriate proof and assurances of their capacity to make such payments of
reasonable attorneys' fees and costs in the event they fail to prevail. The
provisions of this SECTION 11.11 are not intended to limit, and shall not limit,
any defenses to liability otherwise available to any party in interest in this
Reorganization Case.
11.12 Final Order. A requirement in the Plan for a Final Order may be
waived by the Debtor with the express written consent of Centex (before the
Closing Date) or Reorganized NAB (after the Closing Date); provided, however,
that waiver shall not prejudice the right of any party in interest with standing
to seek a stay pending appeal with respect to such order.
11.13 Record Date for Distribution. As of the close of business on the
Record Date for distribution, the transfer ledgers for the Common Stock shall be
closed, there shall be no registration of or other changes in the holders of any
of the Common Stock on the books of the Debtor (or any trustee, transfer agent
or registrar), and none of the Debtor, Reorganized NAB, the Disbursing Agent,
the transfer agent with respect to the Common Stock, and any other trustee,
transfer agent or registrar shall have any obligation to recognize any transfer
of Common Stock occurring thereafter (but shall instead be entitled to recognize
and deal with, for all purposes under the Plan except as otherwise provided for
herein, only those holders reflected on its books as of the close of business on
the Record Date for distribution). Until the certificates
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which evidence the Common Stock are surrendered pursuant to SECTION 7.7 of the
Plan (or if SECTION 7.7, as applicable, is otherwise complied with), the holders
of record of the Common Stock (and their successors or assigns) other than the
Principal Shareholders shall have no rights (and the certificates shall evidence
no rights) except the right to receive, in exchange for their certificates, the
Cash to which such holders are entitled pursuant to SECTION 7.7 of the Plan.
11.14 Notices and Distributions.
(a) All notices and requests to the Debtor or Reorganized NAB
(after the Closing Date) with respect to the Plan shall be in writing and sent
to:
if to the Debtor:
NAB Asset Corporation
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
with copies to (which shall not constitute notice to the Debtor):
Xxxxxxxx Xxxxxxxx & Xxxxxx PC
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: C. Xxxx Xxxxxxx
if to Reorganized NAB:
Centex Financial Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
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with copies to (which shall not constitute notice to Reorganized NAB):
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
(b) On and after the Closing Date, and except with respect to
Class 4 Interests or as set forth in the Stock Purchase Agreement, all notices,
requests and distributions with respect to the Plan to a holder of a Claim or an
Interest shall be in writing and sent to (i) the last known address of such
entity set forth in a proof of Claim or Interest or request for payment of
Administrative Claim filed by or on behalf of such entity in the Reorganization
Case or to the last known address of such entity's attorney of record in the
Reorganization Case, or (ii) if there is no such evidence of a last known
address, to the last known address of such entity according to the books and
records of the Debtor. Any entity may designate in writing another address for
the purposes of this SECTION 11.14 by written notice to the Debtor (before the
Closing Date) or Reorganized NAB (after the Closing Date), which designation
will be effective on receipt.
11.15 Saturday, Sunday or Legal holiday. If any payment or act under
the Plan or the Confirmation Order is required to be made or performed on a date
that is not a Business Day, then the making of such payment or the performance
of such act may be completed on the next succeeding Business Day, but shall be
deemed to have been completed as of the required date.
11.16 Time. Unless otherwise specified herein, in computing a period of
time prescribed or allowed by the Plan, the day of the act or event from which
the designated period begins to run shall not be included. The last day of the
period so computed shall be included, unless it is not a Business Day in which
event the period runs until the end of the next succeeding day which is a
Business Day.
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11.17 Severability of Provisions. If, prior to Confirmation, any term
or provision of the Plan that does not prescribe the treatment of Claims or
Interests or the conditions to the Closing Date is held by the Bankruptcy Court
to be invalid, void or unenforceable, the Bankruptcy Court shall have the power
to alter and interpret such term or provision to make it valid or enforceable to
the maximum extent practicable, consistent with the original purpose of the term
or provision held to be invalid, void or unenforceable, so long as such
alterations or interpretations do not modify or otherwise affect any express
right or obligation of Centex under the Stock Purchase Agreement in any manner
which, in the good faith judgment of Centex, is unfavorable to Centex in any
significant respect. Without limiting the generality of the foregoing, if and to
the extent that the Bankruptcy Court concludes that the Plan cannot be confirmed
with any portion of the releases provided in SECTION 7.8 of the Plan or the
limitation of liability provided in SECTION 11.11 of the Plan, then the Plan may
be confirmed with that portion modified or excised without the consent of the
entity that would otherwise receive the release or benefit from the limitation
of liability so as to give effect as much as possible to such releases or
limitation of liability without precluding confirmation of the Plan.
Notwithstanding any such holding, alteration or interpretation, the remainder of
the terms and provisions of the Plan will remain in full force and effect and
will in no way be affected, impaired or invalidated by such holding, alteration
or interpretation. The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision of the Plan, as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.
11.18 Headings. Headings are used in the Plan for convenience and
reference only, and shall not constitute a part of the Plan for any other
purpose.
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11.19 Binding Effect. The Plan shall be binding on and inure to the
benefit of Reorganized NAB, and all holders of Claims or Interests (whether or
not they have accepted the Plan) and their respective heirs, personal
representatives, successors and assigns.
11.20 Governing Law. Unless a rule of law or procedure is supplied by
federal law, the laws of the State of Texas shall govern the construction and
implementation of the Plan and any agreements, documents and instruments
executed in connection with the Plan.
11.21 Interpretation of Plan and Related Documents. The Plan, the Stock
Purchase Agreement and each Collateral Document shall be construed, to the
maximum extent possible, to give effect to every provision contained herein and
therein and to avoid any inconsistency between the provisions hereof and
thereof. Notwithstanding the foregoing, in the event that any provision of the
Plan or any Collateral Document is found to be inconsistent with the provisions
of the Stock Purchase Agreement, such inconsistency shall not be resolved in any
manner that modifies or otherwise affects any express right or obligation of
Centex under the Stock Purchase Agreement in a manner which, in the good faith
judgment of Centex, is unfavorable to Centex in any significant respect.
11.22 Filing of Additional Documents. On or before the Closing Date,
the Debtor may file with the Bankruptcy Court such agreements and other
documents as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of the Plan.
11.23 Further Assurances. The Debtor, Reorganized NAB, Centex, all
holders of Claims and Interests receiving distributions under the Plan and all
other parties in interest shall, from time to time, prepare, execute and deliver
any agreements or documents and take any
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other actions as may be necessary or advisable to effectuate the provisions and
intent of the Plan, the Stock Purchase Agreement and the Collateral Documents.
11.24 Withholding and Reporting Requirements. In connection with the
Plan and all distributions hereunder, Reorganized NAB and the Disbursing Agent
(with respect to the distributions made by it) shall comply with all withholding
and reporting requirements imposed by any federal, state, local or foreign
taxing authority and all distributions hereunder shall be subject to any such
withholding and reporting requirements. Entities entitled to receive
distributions hereunder shall, as a condition to receiving such distributions,
provide such information and take such steps as Reorganized NAB or the
Disbursing Agent (as the case may be) may reasonably require to ensure
compliance with such withholding and reporting requirements, and to enable
Reorganized NAB or the Disbursing Agent to obtain the certifications and
information as may be necessary or appropriate to satisfy the provisions of any
tax law.
Dated: __________, 2001
NAB ASSET CORPORATION
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
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EXHIBIT B
FORM OF OPINION
OF
XXXXXXXX XXXXXXXX & XXXXXX P.C.
TO BE DELIVERED
ON THE CLOSING DATE
The opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. to be delivered
on the Closing Date pursuant to Section 7.01(i)(A) of the Stock Purchase
Agreement, dated as of March 16, 2001 (the "Agreement"), among the Company, SFS
and the Purchaser. Capitalized terms used herein without definition have the
respective meanings set forth in the Agreement.
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Texas and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as described in its Annual Report on Form 10K (the
"Annual Report") (promulgated under the Securities Exchange Act of 1934, as
amended) for the fiscal year of the Company ended __________, 200_, filed with
the Securities and Exchange Commission.
2. The Company has all requisite corporate power and authority
to enter into and perform its obligations under the Agreement and to consummate
the transactions contemplated thereby. The execution, delivery and performance
by the Company of the Agreement have been duly authorized by all necessary
corporate action on the part of the Company, and no other corporate proceedings
or shareholder actions on the part of or with respect to the Company are
necessary to authorize the execution and delivery of the Agreement, the
performance by the Company of its obligations thereunder or the consummation by
it of the transactions contemplated thereby. The Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with the terms
thereof.
3. The execution and delivery by the Company of the Agreement,
the performance by the Company of its obligations thereunder and the
consummation by the Company of the transactions contemplated thereby will not
(i) conflict with, or result in any violation or breach of, any provision of the
Charter or Bylaws of the Company or any Subsidiary, (ii) except as set forth on
Schedule 1 to the opinion of such counsel, conflict with, result in any
violation or breach of, constitute a default under, give rise to any right of
termination or acceleration (with or without notice or the lapse of time or
both) pursuant to, or result in being declared void, voidable or without further
120
effect, any term or provision of any note, bond, mortgage, indenture, lease,
franchise, permit, license, Contract or other instrument or document listed on
Schedule 2.16(a) attached to the Agreement, (iii) assuming that the filings
referred to in Section 2.04 of the Agreement have been duly made and the
Consents referred to in Section 2.04 have been obtained, conflict with, or
result in any violation of, any law, ordinance, statute, rule or regulation
which is applicable to the Company or any Subsidiary or their respective
properties or assets, (iv) conflict with, or result in any violation of, any
order, writ, injunction, judgment or decree of any court, arbitrator or
Governmental Authority known to such counsel to which the Company or any
Subsidiary or their respective properties or assets are subject or (v) result in
the creation of, or impose on the Company or any Subsidiary the obligation to
create, any Lien upon the properties or assets of the Company or any Subsidiary
pursuant to any note, bond, mortgage, indenture, lease, franchise, permit,
license, Contract or other instrument or document listed on Schedule 2.16
attached to the Agreement, except any of the matters referred to in clause
(iii), (iv) or (v) above which (A) could not reasonably be expected to have a
Material Adverse Effect and (B) could not reasonably be expected to prevent,
impede or otherwise affect in any material respect the transactions contemplated
by the Agreement.
4. There is no requirement applicable to the Company or any
Subsidiary to obtain any Consent of, or to make or effect any declaration,
filing or registration with, any Governmental Authority for the valid execution
and delivery by the Company of the Agreement, the due performance by it of its
obligations thereunder or the lawful consummation by it of the transactions
contemplated thereby, except for any Consent or filing which has been made or
obtained prior to the date hereof .
5. The authorized capital stock of the Company consists of (i)
20,000,000 shares of Common Stock, and (ii) 10,000,000 shares of Preferred
Stock. None of the issued and outstanding shares of capital stock of the Company
have been issued in violation of, or subject to, any preemptive rights or rights
of subscription arising under applicable law or the Charter or Bylaws of the
Company or any agreement known to such counsel to which the Company is a party.
To the knowledge of such counsel, there are, except for the transactions
contemplated by the Agreement and except as set forth in the Agreement and
schedules thereto, no outstanding options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character pursuant to which
the Company will be obligated to issue or sell any issued or unissued shares of
its capital stock or other equity securities or to purchase or redeem any shares
of its capital stock or other equity securities or make any other payments in
respect thereof, and there are no shares of its capital stock or other equity
securities reserved for issuance for any purpose.
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6. Each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as such business is
described in the Annual Report.
7. All of the issued and outstanding shares of capital stock
of each Subsidiary have been duly authorized and are validly issued, fully paid
and nonassessable and, to the knowledge of such counsel and except as set forth
on Schedule 2.06(c) attached to the Agreement, are owned by the Company,
directly or indirectly, free and clear of all Liens. None of the issued and
outstanding shares of capital stock of any Subsidiary have been issued in
violation of, or subject to, any preemptive rights or rights of subscription
arising under applicable law or the Charter or Bylaws of any Subsidiary or any
agreement known to such counsel to which the Company or any Subsidiary is a
party. To the knowledge of such counsel, there are no outstanding options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character pursuant to which the Company or any Subsidiary
will be obligated to issue or sell any issued or unissued shares of capital
stock or other equity securities of any Subsidiary or to purchase or redeem any
shares of capital stock or other equity securities of any Subsidiary or make any
other payments in respect thereof, and, to the knowledge of such counsel, there
are no shares of capital stock or other equity securities of any Subsidiary
reserved for issuance for any purpose.
8. To the knowledge of such counsel, there is no action, suit,
inquiry, investigation or other proceeding pending or threatened against or
affecting the Company or any Subsidiary or any of their respective properties or
assets in any court or before any arbitrator or any foreign or United States
federal, state or local Governmental Authority which (i) could reasonably be
expected to have a Material Adverse Effect or (ii) which questions or seeks to
enjoin or prevent or which could otherwise reasonably be expected to affect in
any material respect the transactions contemplated by the Agreement.
In rendering the opinions set forth above, such counsel shall
be entitled to state that said opinions are subject the following assumptions,
qualifications, limitations and exceptions:
A. The opinion set forth in the last sentence of paragraph 2
is subject to the effect of (i) bankruptcy, insolvency, reorganization,
moratorium, receivership, liquidation, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and (ii) general principles
of equity (whether considered in a proceeding at law or in equity).
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B. Insofar as the opinion set forth in paragraph 2 is
dependent on such matters, such counsel has assumed that (i) the Purchaser and
SFS have all requisite power and authority to enter into and perform their
respective obligations under the Agreement, (ii) the execution and delivery by
the Purchaser and SFS of the Agreement, the performance by them of their
obligations thereunder and the consummation by them of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser and SFS, (iii) the Agreement has
been duly executed and delivered by the Purchaser and SFS and (iv) the Agreement
constitutes a legal, valid, and binding obligation of each of the Purchaser and
SFS, enforceable against them in accordance with the terms thereof.
C. Such counsel renders no opinion with respect to the
legality, validity, binding effect or enforceability of the provisions of
Section 5.01(a) of the Agreement pertaining to the ability of the Company's
Board of Directors to withdraw or modify its recommendation to the Shareholders
that they give their acceptance to the Reorganization Plan or the effect such
illegality, invalidity, nonbinding effect or unenforceability may have on the
Agreement.
In addition, such counsel shall be entitled to state that no
opinion is expressed as to matters governed by any law other than the laws of
the State of Texas, the General Corporation Law of the State of Delaware and the
federal laws of the United States of America.
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EXHIBIT C
FORM OF OPINION
OF
XXXXX X. XXXXXX
TO BE DELIVERED
ON THE CLOSING DATE
The opinion of Xxxxx X. Xxxxxx to be delivered on the Closing
Date pursuant to Section 7.01(i)(B) of the Stock Purchase Agreement, dated as of
March 16, 2001 (the "Agreement"), among the Company, SFS and the Purchaser.
Capitalized terms used herein without definition have the respective meanings
set forth in the Agreement.
1. SFS is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Rhode Island and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as presently conducted.
2. SFS has all requisite corporate power and authority to
enter into and perform its obligations under the Agreement and the Centex Note
and to consummate the transactions contemplated thereby. The execution and
delivery by SFS of the Agreement and the Centex Note have been duly authorized
by all necessary corporate action on the part of SFS, and no other corporate
proceedings or shareholder actions on the part of or with respect to SFS are
necessary to authorize the Agreement and the Centex Note, the performance by SFS
of its obligations thereunder or the consummation by it of the transactions
contemplated thereby. The Agreement and the Centex Note have been duly executed
and delivered by SFS and constitute legal, valid and binding obligations of SFS,
enforceable against it in accordance with the respective terms thereof.
3. The execution and delivery by SFS of the Agreement and the
Centex Note, the performance by SFS of its obligations thereunder and the
consummation by SFS of the transactions contemplated thereby will not conflict
with, or result in any violation or breach of, any provision of the Articles of
Incorporation or Bylaws of SFS.
In rendering the opinions set forth above, such counsel shall
be entitled to state that said opinions are subject the following assumptions,
qualifications, limitations and exceptions:
124
A. The opinion set forth in the last sentence of paragraph 2
is subject to the effect (about which no opinion is expressed) of (i)
bankruptcy, insolvency, reorganization, moratorium, receivership, liquidation,
fraudulent conveyance and similar laws relating to or affecting creditors'
rights generally, (ii) general principles of equity (whether considered in a
proceeding at law or in equity), (iii) (A) the pending litigation against SFS
and others which is described in Schedule 2.17 to the Agreement and (B) other
litigation against SFS in which substantially similar claims are asserted and
(iv) any applicable laws relating to usury.
B. Insofar as the opinion set forth in paragraph 2 is
dependent on such matters, such counsel has assumed that (i) the Company and the
Purchaser have all requisite power and authority to enter into and perform their
respective obligations under the Agreement, (ii) the execution and delivery by
the Company and the Purchaser of the Agreement, the performance by them of their
respective obligations thereunder and the consummation by them of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and the Purchaser,
respectively, (iii) the Agreement has been duly executed and delivered by the
Company and the Purchaser and (iv) the Agreement constitutes a legal, valid, and
binding obligation of the Company and the Purchaser, enforceable against the
Company and the Purchaser in accordance with the terms thereof.
In addition, such counsel shall be entitled to (i) state that
no opinion is expressed as to matters governed by any law other than the laws of
the State of Connecticut (the Bar of which he is a member and in which SFS's
principal place of business is located), the general corporation law of the
State of Rhode Island and the federal laws of the United States of America and
(ii) assume, for purposes of the opinion, that the laws of the State of Texas
and all other applicable states are substantially similar to the laws referred
to in preceding item (i).
125
EXHIBIT D
FORM OF OPINION
OF
XXXXXXX X. XXXXXX
TO BE DELIVERED
ON THE CLOSING DATE
The opinion of Xxxxxxx X. Xxxxxx to be delivered on the
Closing Date pursuant to Section 7.02(g) of the Stock Purchase Agreement, dated
as of March 16, 2001 (the "Agreement"), among the Company, SFS and the
Purchaser. Capitalized terms used herein without definition have the respective
meanings set forth in the Agreement.
1. The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as presently conducted.
2. The Purchaser has all requisite corporate power and
authority to enter into and perform its obligations under the Agreement and to
consummate the transactions contemplated thereby. The execution and delivery by
the Purchaser of the Agreement has been duly authorized by all necessary
corporate action on the part of the Purchaser, and no other corporate
proceedings or shareholder actions on the part of or with respect to the
Purchaser are necessary to authorize the Agreement, the performance by the
Purchaser of its obligations thereunder or the consummation by it of the
transactions contemplated thereby. The Agreement has been duly executed and
delivered by the Purchaser and constitutes a legal, valid and binding obligation
of the Purchaser, enforceable against it in accordance with the terms thereof.
3. The execution and delivery by the Purchaser of the
Agreement, the performance by the Purchaser of its obligations thereunder and
the consummation by the Purchaser of the transactions contemplated thereby will
not conflict with, or result in any violation or breach of, any provision of the
Charter or Bylaws of the Purchaser.
4. To the knowledge of such counsel, there is no action, suit,
inquiry, investigation or other proceeding pending or threatened against or
affecting the Purchaser or any of its properties or assets in any court or
before any arbitrator or any foreign or United States federal, state or local
Governmental Authority that questions or seeks to enjoin or prevent or which
could otherwise reasonably be expected to affect in any material respect the
transactions contemplated by the Agreement.
126
In rendering the opinions set forth above, such counsel shall
be entitled to state that said opinions are subject the following assumptions,
qualifications, limitations and exceptions:
A. The opinion set forth in the last sentence of paragraph 2
is subject to the effect of (i) bankruptcy, insolvency, reorganization,
moratorium, receivership, liquidation, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and (ii) general principles
of equity (whether considered in a proceeding at law or in equity).
B. Insofar as the opinion set forth in paragraph 2 is
dependent on such matters, such counsel has assumed that (i) the Company and SFS
have all requisite power and authority to enter into and perform their
respective obligations under the Agreement, (ii) the execution and delivery by
the Company and SFS of the Agreement, the performance by them of their
respective obligations thereunder and the consummation by them of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and SFS, respectively,
(iii) the Agreement has been duly executed and delivered by the Company and SFS
and (iv) the Agreement constitutes a legal, valid, and binding obligation of the
Company and SFS, enforceable against the Company and SFS in accordance with the
terms thereof.
In addition, such counsel shall be entitled to sate that no
opinion is expressed as to matters governed by any law other than the laws of
the State of Texas, the General Corporation Law of the State of Nevada and the
federal laws of the United States of America.
