EXHIBIT 2.2
AMENDMENT #3 TO REORGANIZATION AGREEMENT
BY AND BETWEEN HOMEGOLD FINANCIAL, INC. AND
HOMESENSE FINANCIAL CORP. AND ITS AFFILIATED COMPANIES
This AMENDMENT #3 to REORGANIZATION AGREEMENT ("Amendment #3") is
entered into as of this 9th day of May, 2000 by and among HomeGold Financial,
Inc., a South Carolina corporation ("HomeGold"), HomeGold, Inc., a South
Carolina corporation ("HGI"), HomeSense Financial Corp., a South Carolina
corporation ("HomeSense"), and each of the affiliated corporations of HomeSense
set forth on SCHEDULE 3.5 attached to the Reorganization Agreement (as defined
below) and attached to the Plan of Merger (as defined below) attached hereto
(collectively, with HomeSense, the "HomeSense Group").
WHEREAS, on February 29, 2000, HomeGold and the HomeSense Group entered
into that certain Reorganization Agreement, which was amended by Amendment #1 to
Reorganization Agreement dated March 10, 2000 and Amendment #2 to Reorganization
Agreement dated May 1, 2000 (collectively, the "Reorganization Agreement"),
providing for the acquisition of the HomeSense Group by HomeGold through the
merger of each member of the HomeSense Group with and into HomeGold;
WHEREAS, Section 2.1 of the Reorganization Agreement permits the
parties thereto to restructure the merger subject to the conditions stated in
such Section 2.1;
WHEREAS the parties hereto believe that it is in their best interests
to restructure the merger so that the members of the HomeSense Group are merged
with and into HGI rather than HomeGold;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, HomeGold, HGI and
each member of the HomeSense Group hereby agree as follows:
SECTION I. DEFINITIONS
1.1 All capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Reorganization Agreement.
1.2 The definition of "Articles of Merger" set forth in Section 1.2 of
the Reorganization Agreement is hereby deleted in its entirety and replaced with
the following:
"Articles of Merger" means articles of merger to be executed
by HomeGold, Inc. in a form appropriate for filing with the Secretary of State
of South Carolina, and including the Plan of Merger.
1.3 The definition of "Effective Time" set forth in Section 1.13 of the
Reorganization Agreement is hereby deleted in its entirety and replaced with the
following:
"Effective Time" shall mean the time and date at which the
Articles of Merger are filed with the South Carolina Secretary of State.
1
1.4 The definition of "Merger" set forth in the Reorganization
Agreement is deleted in its entirety and replaced with the following:
"Merger" means the merger of each member of the HomeSense
Group with and into HomeGold, Inc. as set forth in the Plan of Merger.
1.5 The definition of "Plan of Merger" set forth in the Reorganization
Agreement is deleted in its entirety and replaced with the following:
"Plan of Merger" means the plan of merger set forth in EXHIBIT
A hereto.
SECTION II. MERGER RESTRUCTURED
2.1 Section 2.1 of the Reorganization Agreement is hereby deleted in
its entirety and replaced with the following:
2.1 GENERAL PROVISIONS. Subject to the terms and conditions of
this Agreement, at the Effective Time, each member of the HomeSense
Group shall be merged with and into HomeGold, Inc. which shall be the
Surviving Corporation, pursuant to the Plan of Merger. At the Effective
Time, the separate corporate existence of each member of the HomeSense
Group shall cease. The parties hereto, by mutual agreement, may at any
time change the method of effecting the acquisition of the HomeSense
Group (including without limitation the provisions of this Article II)
if and to the extent they deem such change to be desirable; provided,
however, that no such change shall (i) alter the type of consideration
to be issued to the holders of stock of the members of the HomeSense
Group as provided for in this Agreement, (ii) reduce the value of such
consideration, (iii) adversely affect the intended tax-free treatment
to such stockholders as a result of receiving such consideration or
prevent the parties from obtaining the tax opinion of Wyche, Burgess,
Xxxxxxx & Xxxxxx, P.A. referred to herein, (iv) materially impair the
ability to receive any regulatory approvals for the transactions
contemplated in this Agreement required by applicable laws, or (v)
materially delay the Closing Date.
2.2 Immediately prior to the effectiveness of the Merger, HomeGold
shall transfer the merger consideration set forth in Section 2.3 of the
Reorganization Agreement (the "Merger Consideration") to HGI as a contribution
to capital. In the Merger, the HomeSense shareholders will receive the Merger
Consideration from HGI in exchange for all outstanding shares of HomeSense Stock
as provided in the Plan of Merger.
2.3 APPENDIX A attached hereto is hereby added to the Reorganization
Agreement as Appendix A thereto.
2.4 Appendix H to the Reorganization Agreement is hereby deleted in its
entirety and replaced with the new APPENDIX H attached hereto.
2.5 Appendix I to the Reorganization Agreement is hereby deleted in its
entirety and replaced with the new APPENDIX I attached hereto.
2
SECTION III. MISCELLANEOUS
3.1 NO FURTHER AMENDMENTS. Except as expressly set forth herein, the
Reorganization Agreement remains unamended and in full force and effect.
IN WITNESS WHEREOF, this Amendment #3 to Reorganization Agreement has
been duly entered into as of the date first written above.
Witnesses HOMEGOLD FINANCIAL, INC.
_________________________ By: ______________________________________
Xxxx X. Xxxxxxxx, Xx. , Chairman & CEO
_________________________
Witnesses HOMESENSE FINANCIAL CORP.
& EACH MEMBER OF THE
HOMESENSE GROUP PARTIES TO THE
REORGANIZATION AGREEMENT
_________________________ By: ___________________________________
Xxxxxx X. Xxxxxxxx, President
_________________________
3
APPENDIX A
PLAN OF MERGER
This PLAN OF MERGER (the "Plan of Merger") is entered into by and among
HomeGold, Inc., a South Carolina corporation ("HGI"), HomeSense Financial Corp.,
a South Carolina corporation, and each of the affiliated corporations of
HomeSense set forth on the attached SCHEDULE 3.5 to the Reorganization Agreement
(as defined below) (collectively, where the context permits, "HomeSense").
WHEREAS, on February 29, 2000, HomeGold Financial, Inc., a South
Carolina corporation ("HFI") and HomeSense entered into that certain
Reorganization Agreement, which was amended by Amendment #1 to Reorganization
Agreement dated March 10, 2000, Amendment #2 to Reorganization Agreement dated
May 1, 2000 and Amendment #3 to Reorganization Agreement adding HGI as a party
and dated May ___, 2000 (collectively, the "Reorganization Agreement") providing
for the acquisition of HomeSense and its affiliated corporations by HGI through
the merger of HomeSense and each of its affiliated corporations with and into
HGI (the "Merger");
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, HGI and HomeSense
hereby agree as follows:
SECTION I. DEFINITIONS
1.1 ARTICLES OF MERGER. The Articles of Merger to be executed by HGI in
a form appropriate for filing with the Secretary of State of South Carolina, and
including this Plan of Merger.
1.2 HFI COMMON STOCK. The Common Stock of HFI.
1.3 HFI PREFERRED STOCK. The Series A Non-convertible Preferred Stock
of HFI.
1.4 HOMESENSE STOCK. The capital stock of all of the members of the
HomeSense Group.
1.5 THE HOMESENSE GROUP. The HomeSense Group includes HomeSense
Financial Corp., a South Carolina corporation with headquarters in Columbia,
South Carolina, and each of the affiliated corporations set forth on SCHEDULE
3.5 to the Reorganization Agreement, a copy of which is attached hereto.
1.6 EFFECTIVE TIME. The date and time which the Merger becomes
effective, which shall be the time and date at which the Articles of Merger are
filed with the South Carolina Secretary of State.
1.7 SURVIVING CORPORATION. The surviving corporation after consummation
of the Merger, which shall be HGI.
4
SECTION II. PLAN OF MERGER
2.1 GENERAL PROVISIONS; SURVIVING CORPORATION. Subject to the terms and
conditions of the Reorganization Agreement, at the Effective Time, each member
of the HomeSense Group shall be merged with and into HGI, which shall be the
Surviving Corporation. At the Effective Time, the separate corporate existence
of each member of the HomeSense Group shall cease.
2.2 CONSIDERATION FOR THE MERGER. In the Merger, the HomeSense
shareholders will receive, in exchange for all outstanding shares of HomeSense
Stock, the following:
(a) Six Million Seven Hundred Eighty Thousand Nine Hundred
Forty Four (6,780,944) Shares of HFI Common Stock; and
(b) Ten Million (10,000,000) shares of HFI Preferred Stock.
2.3 TAX TREATMENT. HGI and HomeSense intend that the Merger shall
qualify as a tax-free reorganization under Section 368(a) of the U.S. Internal
Revenue Code of 1986, as amended.
2.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of HGI, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation after the Effective Time, until
thereafter changed or amended as provided therein or by applicable law.
2.5 BYLAWS. The Bylaws of HGI as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
2.6 BOARD OF DIRECTORS. The Board of Directors of HGI as constituted
immediately prior to the Effective Time shall be the Board of Directors of the
Surviving Corporation, until thereafter changed as permitted by its Articles of
Incorporation, Bylaws and applicable law.
SECTION III. ALLOCATION OF MERGER CONSIDERATION
3.1 SPECIAL DEFINITIONS. The following terms shall have the indicated
definitions.
"Wholly-owned Companies" shall mean each of HomeSense and its
affiliated companies that are parties hereto, except EMMCO and Doc-Write, Inc.
"EMMCO" shall mean EMMCO The Mortgage Service Station, Inc.
"Closing Price" shall mean the last sale price of the HFI Common Stock
as reported on Nasdaq prior to the date of the Effective Time.
3.2 ALLOCATION OF MERGER CONSIDERATION. The Merger Consideration set
forth in Section 2.3 of the Agreement shall be allocated among the shareholders
of HomeSense and each of the affiliated corporations as set forth below.
5
COMPANY CONSIDERATION
------- -------------
EMMCO All outstanding shares of EMMCO common stock shall,
in the aggregate, be converted into the right to
receive a number of shares of HFI Common Stock equal
to $1,722,222 divided by the Closing Price.
Doc-Write, Inc. Each shareholder of Doc-Write, Inc. shall receive one
share of HFI Common Stock.
Wholly-owned Companies Shareholders of the Wholly-owned Companies shall
receive all 10,000,000 shares of HFI Preferred Stock.
Such shares shall be allocated among the Wholly-owned
Companies in as nearly equal amounts as possible.
Shareholders of the Wholly-owned Companies shall
receive an aggregate amount of shares of HFI Common
Stock equal to 6,780,944 minus the number of shares
of HFI Common Stock issuable to EMMCO and Doc-Write,
Inc. as referenced immediately above. Such shares
shall be allocated among the Wholly-owned Companies
in as nearly equal amounts as possible.
6
SCHEDULE 3.5
TO THE REORGANIZATION AGREEMENT
HOMESENSE SUBSIDIARIES AND AFFILIATES
HomeSense Financial Corp.
EMMCO The Mortgage Service Station Inc.
Doc-Write, Inc.
Columbia Media Corp.
EMC Holding Corp.
EMC Training Corp.
EMC Underwriting Corp.
EMMCO The Mortgage Service Station of Alabama Inc.
EMMCO The Mortgage Service Station of Texas Inc.
Equitable Mortgage Corp. of Charleston
Equitable Mortgage Corp. of Charlotte
Equitable Mortgage Loan Center Corp.
Equitable Mortgage Management Corp.
HomeSense Financial Corp. of Alabama
HomeSense Financial Corp. of Baton Rouge
HomeSense Financial Corp. of Xxxxxxx
HomeSense Financial Corp. of Little Rock
HomeSense Financial Corp. of Memphis
HomeSense Financial Corp. of Orlando
HomeSense Financial Corp. of Savannah
Mortgage Avenue, Corp.
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APPENDIX H
NON-RECOURSE PROMISSORY NOTE
$5,700,000.00 May 9, 2000
For value received, Xxxxxx X. Xxxxxxxx ("Promisor") promises to pay to
the order of HomeGold, Inc., a South Carolina corporation (the "Company") the
aggregate principal sum of Five Million Seven Hundred Thousand Dollars
($5,700,000).
Interest shall accrue on a daily basis on the outstanding principal
amount of this Note at a rate equal to 7.5% per annum, compounded quarterly,
computed on the basis of a 360 day year and the actual number of days elapsed,
and shall be payable quarterly in arrears on the 15th day of each calendar
quarter after the date hereof until the entire principal amount hereof shall
have been paid in full.
All outstanding amounts of principal of, and accrued and unpaid
interest under, this Note shall be due and payable on the first (1st)
anniversary of the date hereof (the "Maturity Date").
Payments of principal of, and accrued and unpaid interest under, this
Note shall be due and payable upon Promisor's receipt of proceeds from the
transfer or redemption of any Pledged Shares (as defined in the Pledge Agreement
between Promisor and the Company of even date herewith) in the full amount of
such proceeds (net of costs of sale and any taxes attributable thereto) or such
lesser amount as is necessary to pay the full amount of outstanding principal of
and accrued interest under this Note and for Promisor to otherwise fully and
finally discharge its obligations under this Note. Promisor may, at his option,
pay all or any portion of the principal of, and accrued and unpaid interest
under, this Note at any time prior to the maturity hereof without penalty or
premium. Any payment hereunder shall be applied first to pay accrued and unpaid
interest under this Note and second to reduce the outstanding principal amount
of this Note.
The amounts due under this Note are secured by a pledge of the Pledged
Shares. All cash dividends declared and paid with respect to the Pledged Shares,
or the portion of such dividends equal to the accrued and unpaid interest due
under this Note if such portion is less than the entire amount of the dividends,
shall be paid to the holder of this Note. Any and all redemption proceeds from
the redemption of any Pledged Shares, shall be payable directly to the Company
and shall be applied first to pay accrued but unpaid interest under this Note
and second to reduce the outstanding principal amount of this Note. The Company
is also authorized to offset amounts payable under this Note against bonuses
payable to Xxxxxx X. Xxxxxxxx pursuant to Section 5.3 of his Employment
Agreement with HomeGold Financial, Inc. of even date herewith.
This is a non-recourse note. In no event shall the Promisor have any
personal liability whatsoever in respect of this Note. Notwithstanding anything
contained herein to the contrary, the Company or any subsequent holder of this
Note shall look solely to its rights and remedies under the Pledge Agreement
with respect to any and all amounts owed under this Note.
Promisor, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that
8
this Note, or any payment hereunder, may be extended from time to time and that
the holder hereof may accept security for this Note or release security for this
Note, all without in any way affecting the liability of Promisor hereunder.
Any failure by the Company to exercise any right hereunder shall not be
construed as a waiver of its right to exercise the same or any other right
hereunder at any other time.
This Note and all rights hereunder shall be governed by the internal
laws, and not the laws of conflicts, of the State of South Carolina.
IN WITNESS WHEREOF, this Promissory Note has been executed as of the
date first written above.
--------------------------
Xxxxxx X. Xxxxxxxx
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APPENDIX I
STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of May 9, 2000, between Xxxxxx X.
Xxxxxxxx ("Pledgor"), HomeGold Financial, Inc., a South Carolina corporation
("HomeGold," or the "Company") and HomeGold, Inc., a South Carolina corporation
("HGI").
This Pledge Agreement is entered into in connection with the closing of
the transactions contemplated in the Reorganization Agreement dated February 29,
2000, as amended (the "Reorganization Agreement"), by and between HomeGold, HGI,
HomeSense Financial Corp., a South Carolina corporation ("HomeSense"), and
HomeSense's affiliated companies, pursuant to which Pledgor obtained (i) Six
Million Seven Hundred Eighty Thousand Nine Hundred Forty Four (6,780,944) Shares
of HomeGold's Common Stock (the "Common Stock") and (ii) Ten Million
(10,000,000) shares of HomeGold's Series A Non-Convertible Preferred Stock,
$1.00 par value per share (the "Preferred Stock"). Pledgor has delivered to HGI
a promissory note of even date herewith in principal amount of Five Million
Seven Hundred Thousand Dollars ($5,700,000) (the "Note"), which is to be secured
by the pledge of (i) Four Million Five Hundred Sixty Thousand (4,560,000) shares
of the Common Stock (the "Pledged Common Shares") and (ii) Five Million Seven
Hundred Thousand (5,700,000) shares of the Preferred Stock (the "Pledged
Preferred Shares," and collectively with the Pledged Common Shares, the "Pledged
Shares"). This Pledge Agreement provides the terms and conditions upon which the
Note and that certain Mutual Indemnity Agreement of even date herewith (the
"Indemnity") by and between Pledgor and HomeGold are secured by a pledge to
HomeGold and HGI of the Pledged Shares.
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, Pledgor, HomeGold and HGI hereby agree as follows:
1. Pledge. Pledgor hereby pledges to HomeGold and HGI, and grants to
HomeGold and HGI a security interest in, the Pledged Shares as security for the
prompt and complete payment when due of the unpaid principal of and interest on
the Note and full payment and performance of the obligations and liabilities of
Pledgor under the Indemnity and hereunder.
2. Delivery of Pledged Shares. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to HomeGold and HGI the certificate(s)
representing the Pledged Shares, together with duly executed forms of assignment
sufficient to transfer title thereto to HomeGold and HGI.
3. Voting Rights. Notwithstanding anything to the contrary contained
herein, during the term of this Pledge Agreement, Pledgor shall be entitled to
all voting rights with respect to the Pledged Shares.
4. Cash Dividends. During the term of this Pledge Agreement, all cash
dividends declared and paid in respect of the Pledged Common Shares shall be
paid to Pledgor. During the term of this Pledge Agreement, all cash dividends
declared and paid in respect of the Pledged Preferred Shares, or the portion of
such cash dividends equal to the accrued and unpaid interest under the Note if
such portion is less than the entire amount of such dividends, shall be paid to
HGI and applied by HGI to the payment of accrued and unpaid interest under the
Note, and the remaining cash dividends, if any, shall be paid to Pledgor. Upon
the occurrence of and during the continuance of any Default, all cash dividends
with respect to the Pledged Preferred Shares shall be paid to HGI and applied by
HGI first to the payment of accrued and unpaid interest under the Note, and
second to the payment of the outstanding principal amount of the Note.
5. Stock Dividends; Distributions, etc. If, while this Pledge Agreement
is in effect, Pledgor becomes entitled to receive or receives any securities or
other property as an addition to, in substitution of, or
10
in exchange for any of the Pledged Shares (whether as a distribution in
connection with any recapitalization, reorganization or reclassification, a
stock dividend or otherwise), Pledgor shall accept such securities or other
property on behalf of and for the benefit of HomeGold and HGI as additional
security for Pledgor's obligations under the Note and shall promptly deliver
such additional security to HomeGold and HGI together with duly executed forms
of assignment, and such additional security shall be deemed to be part of the
Pledged Shares hereunder.
6. Default. Subject to the terms otherwise set forth herein, if Pledgor
defaults in the payment of the principal or interest under the Note when it
becomes due (whether upon demand, acceleration or otherwise) or any other event
of default under the Note, the Indemnity, or this Pledge Agreement occurs
(including without limitation the bankruptcy or insolvency of Pledgor) (each a
"Default"), then, at the option or HomeGold and HGI acting jointly but not
severally:
(a) HomeGold may redeem Pledged Preferred Shares at $1.00 per
share in an amount equal to the remaining unpaid principal of and
accrued and unpaid interest on the Note plus any other amounts owed to
HomeGold or HGI in connection with obligations of Pledgor secured by
the Pledged Shares (and exercise the remedy set forth in paragraph (b)
below to the extent the total value of the Preferred Pledged Shares is
insufficient to satisfy Pledgor's obligations to HomeGold and HGI
secured by the Pledged Shares); or
(b) HomeGold and HGI, acting jointly but not severally, may
exercise, subject to the terms otherwise set forth herein, any and all
the rights, powers and remedies of any owner of the Pledged Preferred
Shares (including the right to receive dividends and distributions with
respect to such Pledged Preferred Shares except as otherwise proved
herein) and shall have and may exercise without demand any and all the
rights and remedies granted to a secured party upon default under the
Uniform Commercial Code of the State of South Carolina or otherwise
available to HomeGold or HGI under applicable law. Without limiting the
foregoing, HomeGold and HGI are authorized to sell, assign and deliver
at its discretion, from time to time, all or any part of the Pledged
Preferred Shares at any private sale or public auction, on not less
than ten days written notice to Pledgor. Pledgor shall have no right to
redeem the Pledged Preferred Shares after any such sale or assignment.
Notwithstanding anything contained herein to the contrary, such sale or
assignment shall be at such price or prices and upon such terms as
HomeGold and HGI may deem advisable subject to the following
conditions:
(i) HomeGold and HGI shall not sell or assign any
Pledged Preferred Shares for consideration of less than $1.00
per share; and
(ii) HomeGold and HGI shall not sell or assign any
Common Pledged Shares until all Preferred Pledged Shares have
been disposed of in accordance with the terms set forth
herein.
In case of any such sale, the proceeds of such sale shall be applied to
the principal of and accrued interest on the Note and other obligations
of Pledgor to HomeGold and HGI secured by the Pledged Shares; provided
that after payment in full of the indebtedness evidenced by the Note
and the other obligations of Pledgor to HomeGold and HGI secured by the
Pledged Shares, the balance of the proceeds of sale then remaining
shall be paid to Pledgor and Pledgor shall be entitled to the return of
any of the Pledged Shares remaining in the hands of HomeGold and HGI.
Notwithstanding any other provision of this Pledge Agreement to the contrary,
Pledgor shall not be personally liable for any amount of the outstanding
principal and accrued interest on the Note or for any deficiency if the
remaining proceeds are insufficient to pay the indebtedness under the Note in
full.
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7. Payment of Indebtedness and Release of Pledged Shares. Upon payment
in full of the indebtedness evidenced by the Note and termination of the
Indemnity, HomeGold and HGI shall surrender the Pledged Shares and any
additional security to Pledgor together with all forms of assignment.
8. No Other Liens; No Sales or Transfers. Since the date of issuance,
Pledgor has not sold, transferred or assigned, nor granted any liens or
encumbrances on, the Pledged Shares other than the lien granted herein. Pledgor
hereby covenants that, until such time as all of the outstanding principal of
and interest on the Note has been repaid, Pledgor shall not (i) create, incur,
assume or suffer to exist any pledge, security interest, encumbrance, lien or
charge of any kind against the Pledged Shares or Pledgor's rights as a holder
thereof, other than pursuant to this Agreement, or (ii) sell or otherwise
transfer any Pledged Shares or any interest therein.
9. Further Assurances. Pledgor agrees that at any time and from time to
time upon the written request of HomeGold and HGI, Pledgor shall execute and
deliver such further documents (including UCC financing statements) and do such
further acts and things as HomeGold and HGI may reasonably request in order to
effect the purposes of this Pledge Agreement.
10. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. Neither HomeGold nor HGI shall by
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
HomeGold and HGI, and then only to the extent therein set forth. A waiver by
HomeGold and HGI of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which HomeGold or HGI would
otherwise have on any future occasion. No failure to exercise nor any delay in
exercising on the part of HomeGold or HGI, any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
are cumulative and may be exercised singly or concurrently, and are the
exclusive rights and remedies of HomeGold and HGI hereunder.
12. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of HomeGold and HGI hereunder, inure to the benefit of
HomeGold and HGI and their successors and assigns. This Pledge Agreement shall
be governed by, and be construed to interpreted in accordance with, the laws of
the State of South Carolina.
13. No Construction Against Either Party. In the event that there is
any dispute regarding the interpretation or construction of the provisions of
this Pledge Agreement, there shall be no presumption that any provision of this
Pledge Agreement is to be construed against either party hereto.
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IN WITNESS WHEREOF, this Pledge Agreement has been executed as
of the date first written above.
-------------------------------------
Xxxxxx X. Xxxxxxxx
HOMEGOLD FINANCIAL, INC.
By: _______________________________
Name: _______________________________
Title: _______________________________
HOMEGOLD, INC.
By: _______________________________
Name: _______________________________
Title: _______________________________
00
XXXXX XX XXXXX XXXXXXXX XXXXXXXXX XX XXXXX
ARTICLES OF MERGER OR SHARE EXCHANGE
Pursuant to Section 00-00-000 of the 1976 South Carolina Code, as
amended, the undersigned as the surviving corporation in a merger or the
acquiring corporation in a share exchange, as the case may be, hereby submits
the following information:
1. The name of the surviving corporation is HomeGold, Inc.
The names of the disappearing corporations are:
HomeSense Financial Corp.
EMMCO The Mortgage Service Station Inc.
Doc-Write, Inc.
Columbia Media Corp.
EMC Holding Corp.
EMC Training Corp.
EMC Underwriting Corp.
EMMCO The Mortgage Service Station of Alabama Inc.
EMMCO The Mortgage Service Station of Texas Inc.
Equitable Mortgage Corp. of Charleston
Equitable Mortgage Corp. of Charlotte
Equitable Mortgage Loan Center Corp.
Equitable Mortgage Management Corp.
HomeSense Financial Corp. of Alabama
HomeSense Financial Corp. of Baton Rouge
HomeSense Financial Corp. of Xxxxxxx
HomeSense Financial Corp. of Little Rock
HomeSense Financial Corp. of Memphis
HomeSense Financial Corp. of Orlando
HomeSense Financial Corp. of Savannah
Mortgage Avenue, Corp.
2. Attached hereto and made a part hereof is a copy of the Plan of Merger.
3. Complete the following information to the extent it is relevant with
respect to each corporation which is a party to the transaction:
(a) Name of the surviving corporation: HomeGold, Inc.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
1
(b) Name of the disappearing corporation: HomeSense Financial Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- ----------------------------
Common Stock 1000 1000 1000 1000 0 0
(c) Name of the disappearing corporation: EMMCO The Mortgage Service
Station Inc.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -------------------------------
Common Stock 10,000 10,000 10,000 10,000 0 0
(d) Name of the disappearing corporation: Doc-Write, Inc.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -------------------------------
Common Stock 1000 1000 1000 1000 0 0
2
(e) Name of the disappearing corporation: Columbia Media Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- ------------------------------
Common Stock 1000 1000 1000 1000 0 0
(f) Name of the disappearing corporation: EMC Holding Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -------------------------------
Common Stock 1000 1000 1000 1000 0 0
(g) Name of the disappearing corporation: EMC Training Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
3
(h) Name of the disappearing corporation: EMC Underwriting Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(i) Name of the disappearing corporation: EMMCO The Mortgage Service
Station of Alabama Inc.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1 1 1 1 0 0
(j) Name of the disappearing corporation: EMMCO The Mortgage Service
Station of Texas Inc.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1 1 1 1 0 0
4
(k) Name of the disappearing corporation: Equitable Mortgage Corp. of
Charleston.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(l) Name of the disappearing corporation: Equitable Mortgage Corp. of
Charlotte.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(m) Name of the disappearing corporation: Equitable Mortgage Loan Center
Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
5
(n) Name of the disappearing corporation: Equitable Mortgage Management
Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(o) Name of the disappearing corporation: HomeSense Financial Corp. of
Alabama.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(p) Name of the disappearing corporation: HomeSense Financial Corp. of
Baton Rouge.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
6
(q) Name of the disappearing corporation: HomeSense Financial Corp. of
Xxxxxxx.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(r) Name of the disappearing corporation: HomeSense Financial Corp. of
Little Rock.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(s) Name of the disappearing corporation: HomeSense Financial Corp. of
Memphis.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock
exchange was not required (See Sections
33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
7
(t) Name of the disappearing corporation: HomeSense Financial Corp. of
Orlando.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock exchange
was not required (See Sections 33-11-103(h),
33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the corporation as
follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(u) Name of the disappearing corporation: HomeSense Financial Corp. of
Savannah.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock exchange
was not required (See Sections 33-11-103(h),
33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly
approved by shareholders of the
corporation as follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1000 1000 1000 1000 0 0
(v) Name of the disappearing corporation: Mortgage Avenue, Corp.
Complete either (1) or (2), whichever is applicable:
(1) [ ] Shareholder approval of the merger or stock exchange was not required
(See Sections 33-11-103(h), 33-11-104(a), and 33-11-108(a)).
(2) [x] The Plan of Merger or Share Exchange was duly approved by shareholders of the
corporation as follows:
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented at Shares Voted
Group Shares to be Cast the Meeting For Against Abstain
------ -------- -------------- --------------- -----------------------------
Common Stock 1 1 1 1 0 0
4. Unless a delayed date is specified, the effective date of this document
shall be the date it is accepted for filing by the Secretary of State
(See Section 33-1-230(b)).
Date: May ___, 2000 HomeGold, Inc.
------------------------------------------------
(Name of the Surviving or Acquiring Corporation)
By:
--------------------------------------------
Xxxx X. Xxxxxxxx, Xx., Chairman
8
PLAN OF MERGER
This PLAN OF MERGER (the "Plan of Merger") is entered into by and among
HomeGold, Inc., a South Carolina corporation ("HGI"), HomeSense Financial Corp.,
a South Carolina corporation, and each of the affiliated corporations of
HomeSense set forth on the attached SCHEDULE 3.5 to the Reorganization Agreement
(as defined below) (collectively, where the context permits, "HomeSense").
WHEREAS, on February 29, 2000, HomeGold Financial, Inc., a South
Carolina corporation ("HFI") and HomeSense entered into that certain
Reorganization Agreement, which was amended by Amendment #1 to Reorganization
Agreement dated March 10, 2000, Amendment #2 to Reorganization Agreement dated
May 1, 2000 and Amendment #3 to Reorganization Agreement adding HGI as a party
and dated May ___, 2000 (collectively, the "Reorganization Agreement") providing
for the acquisition of HomeSense and its affiliated corporations by HGI through
the merger of HomeSense and each of its affiliated corporations with and into
HGI (the "Merger");
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, HGI and HomeSense
hereby agree as follows:
SECTION I. DEFINITIONS
1.1 ARTICLES OF MERGER. The Articles of Merger to be executed by HGI in
a form appropriate for filing with the Secretary of State of South Carolina, and
including this Plan of Merger.
1.2 HFI COMMON STOCK. The Common Stock of HFI.
1.3 HFI PREFERRED STOCK. The Series A Non-convertible Preferred Stock
of HFI.
1.4 HOMESENSE STOCK. The capital stock of all of the members of the
HomeSense Group.
1.5 THE HOMESENSE GROUP. The HomeSense Group includes HomeSense
Financial Corp., a South Carolina corporation with headquarters in Columbia,
South Carolina, and each of the affiliated corporations set forth on SCHEDULE
3.5 to the Reorganization Agreement, a copy of which is attached hereto.
1.6 EFFECTIVE TIME. The date and time which the Merger becomes
effective, which shall be the time and date at which the Articles of Merger are
filed with the South Carolina Secretary of State.
1.7 SURVIVING CORPORATION. The surviving corporation after consummation
of the Merger, which shall be HGI.
SECTION II. PLAN OF MERGER
2.1 GENERAL PROVISIONS; SURVIVING CORPORATION. Subject to the terms and
conditions of the
9
Reorganization Agreement, at the Effective Time, each member of the HomeSense
Group shall be merged with and into HGI, which shall be the Surviving
Corporation. At the Effective Time, the separate corporate existence of each
member of the HomeSense Group shall cease.
2.2 CONSIDERATION FOR THE MERGER. In the Merger, the HomeSense
shareholders will receive, in exchange for all outstanding shares of HomeSense
Stock, the following:
(a) Six Million Seven Hundred Eighty Thousand Nine Hundred
Forty Four (6,780,944) Shares of HFI Common Stock; and
(b) Ten Million (10,000,000) shares of HFI Preferred Stock.
2.3 TAX TREATMENT. HGI and HomeSense intend that the Merger shall
qualify as a tax-free reorganization under Section 368(a) of the U.S. Internal
Revenue Code of 1986, as amended.
2.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of HGI, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation after the Effective Time, until
thereafter changed or amended as provided therein or by applicable law.
2.5 BYLAWS. The Bylaws of HGI as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
2.6 BOARD OF DIRECTORS. The Board of Directors of HGI as constituted
immediately prior to the Effective Time shall be the Board of Directors of the
Surviving Corporation, until thereafter changed as permitted by its Articles of
Incorporation, Bylaws and applicable law.
SECTION III. ALLOCATION OF MERGER CONSIDERATION
3.1 SPECIAL DEFINITIONS. The following terms shall have the indicated
definitions.
"Wholly-owned Companies" shall mean each of HomeSense and its
affiliated companies that are parties hereto, except EMMCO and Doc-Write, Inc.
"EMMCO" shall mean EMMCO The Mortgage Service Station, Inc.
"Closing Price" shall mean the last sale price of the HFI Common Stock
as reported on Nasdaq prior to the date of the Effective Time.
3.2 ALLOCATION OF MERGER CONSIDERATION. The Merger Consideration set
forth in Section 2.3 of the Agreement shall be allocated among the shareholders
of HomeSense and each of the affiliated corporations as set forth below.
10
COMPANY CONSIDERATION
------- -------------
EMMCO All outstanding shares of EMMCO common stock shall,
in the aggregate, be converted into the right to
receive a number of shares of HFI Common Stock equal
to $1,722,222 divided by the Closing Price.
Doc-Write, Inc. Each shareholder of Doc-Write, Inc. shall receive one
share of HFI Common Stock.
Wholly-owned Companies Shareholders of the Wholly-owned Companies shall
receive all 10,000,000 shares of HFI Preferred Stock.
Such shares shall be allocated among the Wholly-owned
Companies in as nearly equal amounts as possible.
Shareholders of the Wholly-owned Companies shall
receive an aggregate amount of shares of HFI Common
Stock equal to 6,780,944 minus the number of shares
of HFI Common Stock issuable to EMMCO and Doc-Write,
Inc. as referenced immediately above. Such shares
shall be allocated among the Wholly-owned Companies
in as nearly equal amounts as possible.
11
SCHEDULE 3.5
TO THE REORGANIZATION AGREEMENT
HOMESENSE SUBSIDIARIES AND AFFILIATES
HomeSense Financial Corp.
EMMCO The Mortgage Service Station Inc.
Doc-Write, Inc.
Columbia Media Corp.
EMC Holding Corp.
EMC Training Corp.
EMC Underwriting Corp.
EMMCO The Mortgage Service Station of Alabama Inc.
EMMCO The Mortgage Service Station of Texas Inc.
Equitable Mortgage Corp. of Charleston
Equitable Mortgage Corp. of Charlotte
Equitable Mortgage Loan Center Corp.
Equitable Mortgage Management Corp.
HomeSense Financial Corp. of Alabama
HomeSense Financial Corp. of Baton Rouge
HomeSense Financial Corp. of Xxxxxxx
HomeSense Financial Corp. of Little Rock
HomeSense Financial Corp. of Memphis
HomeSense Financial Corp. of Orlando
HomeSense Financial Corp. of Savannah
Mortgage Avenue, Corp.
12
