INVESTMENT AGREEMENT
This Agreement is by and between NAL Financial Group Inc., a Delaware
corporation ("Company") and Conseco, Inc., an Indiana corporation or its assigns
("Conseco") to be effective as of this 21st day of August, 1997.
RECITALS
A. Conseco Private Capital Group, Inc. ("Lender") and Company's wholly
owned subsidiary, NAL Acceptance Corporation, a Florida corporation ("Borrower")
have entered into a First Amendment to Credit Agreement ("First Amendment") of
even date herewith.
B. Subject to the terms and conditions hereof, Conseco or its designee,
has agreed to purchase certain preferred stock of the Company.
C. As inducement for the Lender to advance funds under the First
Amendment and for Conseco to purchase the preferred stock, the Company has
agreed to amend the 9% Subordinated Convertible Debenture dated April 23, 1996,
issued to Beneficial Standard Life Insurance Company in the amount of $5,000,000
and the 9% Subordinated Convertible Debenture dated April 23, 1996, issued to
Great American Reserve Insurance Company in the amount of $5,000,000
(collectively, the "Conseco Debentures") to provide that the conversion price
therein is fixed at thirty-two (32(cent)) cents per share based upon eighty
percent (80%) of the closing bid price of the company's common stock on August
19, 1997, pursuant to the Second Amendment in the form attached hereto as
Exhibit "A" (the "Conseco Debenture Amendments").
D. As a condition of Lender's execution and delivery of the First
Amendment, the company shall amend certain other convertible debentures now held
by third parties, as listed on Exhibit "B" attached hereto ("Other Debentures")
to provide for a fixed conversion price of (i) thirty (30(cent)) cents per share
for all Other Debentures other than those now held Xxxxxxx Xxxxx World Income
Fund, Inc. and Xxxxxxx Xxxxx Convertible Fund, Inc. (the "Merrill Debentures")
and (ii) thirty-two (32(cent)) per share for the Merrill Debentures as to (i)
and (ii) when and as Conseco or any affiliate acquires such Other Debentures all
as hereinafter more specifically provided for herein.
E. As an inducement to the company to enter into this Agreement, Conseco
agrees to convert the Conseco Debentures and Other Debentures it acquires at the
Closing or as soon thereafter as possible.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, and to induce
the Lender to enter into the First Amendment, the parties hereby agree as
follows:
1. For purposes of this Agreement, the term "Closing" shall mean one
business day following the later of (i) the expiration of the waiting period
under the Xxxx-Xxxxx-Xxxxxx Act with respect to a filing made by Conseco
thereunder with respect to its proposed acquisition of control of the company
("HSR Filing") or (ii) the resolution of any objections or antitrust issues
raised by the government as a result of such filing. Conseco and the Company
agree to make the necessary filings under the Xxxx-Xxxxx-Xxxxxx Act by August
27, 1997.
2. At the Closing, Conseco shall cause the Conseco Debentures and Other
Debentures owned by Conseco to be converted to common stock of the company in
accordance with their amended conversion prices as provided herein to the extent
that the Company has sufficient authorized common shares, and will complete all
such remaining conversions after sufficient authorized shares are available.
3. Conseco or its designees will use its best efforts to acquire the Other
Debentures at or prior to Closing on the terms reflected in term sheets sent to
the holders of the Other Debentures. At the Closing, the Company shall execute
and deliver the Conseco Debenture Amendments reflecting the fixed conversion
price of thirty-two (32(cent)) cents per share and at the Closing upon receipt
of written notification from Conseco that Conseco, or one of its affiliates, has
acquired all or any part of the Other Debentures, the Company shall enter into
an amendment with such acquiring party providing for the amendment of the
conversion price of the Other Debentures so acquired to a fixed price of thirty
(30(cent)) cents per share except for the Merrill Debentures whose conversion
price shall be amended to a fixed price of thirty-two (32(cent)) cents per
share; such amendments being substantially in the same form as the Conseco
Debenture Amendments.
4. At the Closing, Conseco shall cause the Lender to extend the maturity
date of all monies (i.e., the Original Loan and the Working Capital Loan)
advanced to Borrower by Lender under its Credit Agreement with Borrower to April
1, 1998.
5. The Company shall immediately undertake to amend its Certificate of
Incorporation to increase its authorized shares of common stock in an amount
sufficient to issue common stock upon conversion of the Conseco Debentures and
Other Debentures (assuming the same are acquired and converted by Conseco or its
affiliates) at the amended conversion price. The Company certifies that its
Board of Directors has adopted a resolution proposing such an amendment to its
shareholders. Conseco shall cooperate with the Company in connection with such
amendment and vote in favor thereof. Prior to the Closing, the Company agrees
not to issue, offer or sell any shares of common stock or preferred stock or
securities convertible into common or preferred stock without consent of
Conseco.
6. The Company certifies that its Board of Directors has adopted
resolutions increasing the members of its Board of Directors by three (3)
positions to create three (3) vacancies effective as of Closing, and have
authorized such vacant positions to be filled by Conseco appointees at the
Closing.
7. At the Closing, Conseco or its designee shall contribute additional
equity in an amount equal to the difference between Ten Million Dollars
($10,000,000), and the amount of loan advances made by the Lender to the Company
under the Working Capital Loan as defined in the First Amendment as of the
Closing in exchange for preferred stock of the Company have terms acceptable to
Lender and consistent with the provisions of Exhibit "C" attached hereto.
8. Conseco's obligations to close shall be subject to the following
conditions: (i) no government agency has raised any objections or antitrust
issues with respect to the acquisition of the Other Debentures by Conseco or its
affiliates, (ii) the Borrower is not in material default of
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its obligations to Lender beyond applicable cure periods, (iii) the holders
of the Other Debentures shall have complied with their agreements to sell the
Other Debentures to Conseco or its affiliates (iv) the Company is not a party to
any insolvency, receivership or bankruptcy proceedings, (v) the Company has not
breached its obligations under this Agreement, or (vi) there has been no
material adverse change in the financial condition or business prospects of the
Company and its subsidiaries since the date hereof provided Lender provides the
advances required under the Credit Agreement with Borrower.
9. Conseco agrees that (i) from the date hereof, until Closing, neither
Conseco nor any of its Affiliates will initiate or cooperate in the initiation
of any reorganization or liquidation proceeding with respect to the Company
under the Bankruptcy Act, (ii) for a period of six (6) months following the
Closing, Conseco will not cause the Company to engage in a cash out merger with
Conseco or any Conseco affiliate or any other transaction in which minority
shareholders are forced to exchange their shares for cash or other consideration
unless the transaction is approved by a majority of the disinterested members of
the Board of the Company, (iii) for a period of there (3) months following the
Closing, Conseco will not cause the Company to engage in a cash out merger with
Conseco or any Conseco affiliate or other transaction in which minority
shareholders of the Company are forced to exchange their shares for cash or
other consideration unless the transaction is approved by a majority of such
minority shareholders. This paragraph does not prohibit purchase of Company
shares by Conseco or its affiliates on a voluntary basis.
10. This Agreement is for the benefit of the Lender, Conseco, and its
affiliates, and shall have no effect on any Other Debentures not transferred to
Conseco or its affiliates, not shall it benefit current holders of the Other
Debentures.
11. The Company agrees that upon Conseco's purchase of the Merrill
Debentures, the Company shall amend all those certain warrants issued September
12, 1996, to the holders of Merrill Debentures of shares of common stock of the
Company so as to provide a strike price being adjusted to one hundred percent
(100%) of the closing bid price of the Company's common stock, as reported on
the principal exchange or automated quotation system upon which the Company's
common stock trades on the day of the expiration of the waiting period for the
HSR filing made by Conseco with respect to its proposed acquisition of control
of the Company (said warrants being retained by such Xxxxxxx Xxxxx affiliate).
12. The Company represents that it has been duly authorized to enter into
and perform this Agreement and that the execution and performance of this
Agreement by the Company will not violate or cause a default under any orders,
agreements, indentures or laws to which the Company is a party or by which it is
bound.
13. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
14. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
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16. In the event any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provisions
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
17. This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein.
18. In any action or proceeding brought to enforce any provision of this
Agreement, or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonably attorneys' fees in
addition to any other available remedy. In addition, the Company shall pay the
reasonable attorney fees incurred by Conseco in connection with the transactions
contemplated by this Agreement and the preparation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the first above-mentioned date.
CONSECO, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx,
Executive Vice President
NAL FINANCIAL GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxxxx.
--------------------------------
Xxxxxx X. Xxxxxxxxx,
Chairman and
Chief Executive Officer
