Exhibit 2.1
================================================================================
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
MEETING STREET PARTNERS II INC.,
RADIAN GUARANTY, INC.
AND
MORTGAGE GUARANTY INSURANCE CORPORATION
As of June 15, 2005
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS ............................................................. 1
Section 1.1 Definitions ..................................................................... 1
Section 1.2 Interpretation; Headings ........................................................ 3
ARTICLE II PURCHASE TRANSACTION ............................................................ 4
Section 2.1 Purchase Transaction ............................................................ 4
Section 2.2 Closing ......................................................................... 4
Section 2.3 Conditions of the Obligations of Purchaser at the Closing ....................... 5
Section 2.4 Conditions of the Obligations of MGIC at the Closing ............................ 5
Section 2.5 Conditions of the Obligations of Radian at the Closing .......................... 6
Section 2.6 Supplemental Purchase Price ..................................................... 6
Section 2.7 Grant of Security Interest to Sellers ........................................... 6
Section 2.8 Rights and Obligations Regarding Collateral ..................................... 6
Section 2.9 Events of Default ............................................................... 7
Section 2.10 Remedies upon Default ........................................................... 7
Section 2.11 Termination of Security Interest ................................................ 7
ARTICLE III COVENANTS ....................................................................... 8
Section 3.1 Tax Matters ..................................................................... 8
Section 3.2 Governmental Approvals; Further Assurances ...................................... 8
Section 3.3 Confidentiality ................................................................. 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS ................................... 9
Section 4.1 Organization .................................................................... 9
Section 4.2 Equity Interests and Related Matters ............................................ 9
Section 4.3 Authorization ................................................................... 10
Section 4.4 Noncontravention ................................................................ 10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER ..................................... 10
Section 5.1 Organization .................................................................... 10
Section 5.2 Authorization ................................................................... 10
Section 5.3 Noncontravention ................................................................ 10
Section 5.4 Investment Representation ....................................................... 11
i
TABLE OF CONTENTS
(continued)
Section 5.5 No General Voting Rights ........................................................ 11
Section 5.6 Member's Equity ................................................................. 11
ARTICLE VI TERMINATION ..................................................................... 11
Section 6.1 Termination ..................................................................... 11
Section 6.2 Effect of Termination ........................................................... 11
ARTICLE VII MISCELLANEOUS ................................................................... 12
Section 7.1 Fees and Expenses ............................................................... 12
Section 7.2 Consent to Amendments ........................................................... 12
Section 7.3 Successors and Assigns .......................................................... 12
Section 7.4 Notices ......................................................................... 12
Section 7.5 Counterparts .................................................................... 13
Section 7.6 Entire Agreement ................................................................ 13
Section 7.7 No Third-Party Beneficiaries .................................................... 13
Section 7.8 Governing Law ................................................................... 13
Section 7.9 Resolutions of Disputes ......................................................... 13
Section 7.10 Waiver of Jury Trial ............................................................ 14
Section 7.11 No Strict Construction .......................................................... 15
ii
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of June 15, 2005, by and among Meeting Street Partners II, Inc.,
a Delaware corporation, ("MSII" or "Purchaser" ), Radian Guaranty, Inc., a
Pennsylvania corporation, and Mortgage Guaranty Insurance Corporation, a
Wisconsin corporation (each, a "Seller", and collectively, the "Sellers").
WHEREAS, the Sellers own Percentage Interests in Xxxxxxx Financial
Group, LLC, a Delaware limited liability company (the "Xxxxxxx Financial");
WHEREAS, Purchaser desires to purchase from the Sellers, and the
Sellers desire to sell to Purchaser, certain of Sellers' Percentage Interests in
Xxxxxxx Financial on the terms and conditions described herein;
WHEREAS, in accordance with the Xxxxxxx Financial LLC Agreement (as
defined below), the Transferred Interests (as defined below) shall not entitle
Purchaser to a position on Xxxxxxx Financial's Board of Managers and shall not
entitle Purchaser to any voting rights with respect to Xxxxxxx Financial other
than those set forth in Section 9.8(d) and Section 10.1(b) of the Xxxxxxx
Financial LLC Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and understandings contained herein and intending to be legally bound, the
Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings.
"Agreement" has the meaning set forth in the first paragraph.
"Applications" has the meaning set forth in Section 3.2(b).
"Business Day" means any day other than (a) Saturday or Sunday or
(b) a day on which commercial banks in New York, New York, are authorized or
required by applicable Law or executive order to close.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986.
"Collateral" has the meaning set forth in Section 2.7.
"Defaulting Party" has the meaning set forth in Section 2.9(b).
"Encumbrances" means any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions on title or
transfer of any nature whatsoever.
"Event of Default" has the meaning set forth in Section 2.9(b).
"Existing Operating Agreement" means Xxxxxxx Financial's Second
Amended and Restated Limited Liability Company Agreement dated March 12, 2001.
"GAAP" means U.S. generally accepted accounting principles, applied
consistently.
"Governmental Approvals" has the meaning set forth in Section
2.3(b).
"Governmental Entity" means (i) any foreign, federal, state or local
government and (ii) any agency or instrumentality thereof, with authority to
regulate any operations of Xxxxxxx Financial or any of its Subsidiaries,
including banking, lending and credit collection operations.
"Income Amount" has the meaning set forth in Section 3.1(b).
"Interest" has the meaning set forth in the Existing Operating
Agreement, as of the date hereof, and in the Xxxxxxx Financial LLC Agreement, as
of and after its effective time.
"Law" means any statute, law, ordinance, regulation, rule, code,
order, rule of common law or judgment enacted, promulgated, issued, enforced or
entered by any Governmental Entity.
"Losses" means any and all actual losses, liabilities, damages,
judgments, settlements and expenses (including interest and penalties recovered
by a third party with respect thereto and reasonable attorneys' fees and
expenses).
"Management Services Agreement" means that certain Management
Services Agreement, dated as June 15, 2005, between Xxxxxxx Financial and
Xxxxxxx Capital.
"Member" has the meaning set forth in the Xxxxxxx Financial LLC
Agreement, as of and after its effective time.
"MSII" has the meaning set forth in the introductory paragraph to
this Agreement.
"MSII Stockholders Agreement" means that certain Stockholders
Agreement of MSII, dated as of the date hereof.
"Party" or "Parties" means the Persons appearing on the signature
page of this Agreement.
"Percentage Interest" has the meaning set forth in the Existing
Operating Agreement, as of the date hereof, and in the Xxxxxxx Financial LLC
Agreement, as of and after its effective time.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a Governmental Entity.
"Preliminary Purchase Price" has the meaning set forth in Section
2.2(b).
"Purchaser" has the meaning set forth in the first paragraph of this
Agreement.
"Purchase Price" means the Preliminary Purchase Price plus the
Supplemental Purchase Price.
"Purchase Transaction" has the meaning set forth in Section 2.1.
"Representatives" means, with respect to any Person, such Person's
agents, representatives (including its employees, attorneys and consultants,
financial or otherwise) and affiliates.
"Seller" or "Sellers" has the meaning set forth in the first
paragraph of this Agreement.
"Xxxxxxx Capital" means Xxxxxxx Capital Markets LLC, a Delaware
limited liability company.
"Xxxxxxx Financial" has the meaning set forth in the first recital
to this Agreement.
"Xxxxxxx Financial LLC Agreement" means the Existing Operating
Agreement as amended on June 15, 2005.
"Subsidiary" of any Person (the "parent") means any other Person
whose (a) securities having ordinary voting power to elect a majority of its
board of directors or managing or general partners (or other persons having
similar functions) or (b) other ownership interests (including trust,
partnership and limited liability company interests) ordinarily constituting a
majority interest in the capital, profits or cash flow of such Person, are at
the time, directly or indirectly, owned or controlled by such parent, or by one
or more other Subsidiaries of such parent, or by such parent and one or more of
its other Subsidiaries.
"Supplemental Purchase Price" has the meaning set forth in Section
2.6.
"Transaction Documents" means this Agreement, the Xxxxxxx Financial
LLC Agreement and the Management Services Agreement.
"Transfer" has the meaning assigned to such term in the Xxxxxxx
Financial LLC Agreement.
"Transferred Interests" has the meaning set forth in Section 2.1.
"UCC" shall mean the Uniform Commercial Code in the State of New
York.
Section 1.2 Interpretation; Headings. As used in this Agreement, unless
the context otherwise requires, (a) "including" means "including, without
limitation" and (b) words in the singular include the plural and words in the
plural include the singular. A reference to any Party to this Agreement or any
other agreement or document shall include such Party's successors and permitted
assigns. A reference to any agreement or order shall include any amendment of
such agreement or order from time to time in accordance with the terms hereof
and thereof. A reference to any legislation, to any provision of any legislation
or to any regulation issued thereunder shall include any amendment to, and any
modification or re-enactment thereof, any legislative provision or regulation
substituted therefor and all regulations issued thereunder or pursuant thereto.
The headings contained in this Agreement are for convenience of reference only
and do not form a part of this Agreement. Section and Article references in this
Agreement refer to sections or articles of this Agreement unless otherwise
specified.
ARTICLE II
PURCHASE TRANSACTION
Section 2.1 Purchase Transaction. On the basis of the representations,
warranties, covenants and agreements set forth herein, Purchaser and each of the
Sellers agrees to and shall consummate at the Closing the following transaction
(the "Purchase Transaction"): each Seller shall sell to Purchaser a Percentage
Interest equal to 6.92% of the aggregate Interests in Xxxxxxx Financial
(collectively, the "Transferred Interests") free and clear of all Encumbrances,
except for any Encumbrance arising under the Securities Act of 1933, as amended,
or any applicable state securities laws or any Transaction Document upon payment
of the Preliminary Purchase Price in immediately available funds in the manner
set forth in Section 2.2 below; provided, however, that to the extent that there
exist any voting rights with respect to Xxxxxxx Financial inherent in the
Transferred Interests other than those set forth in Section 9.8(d) and Section
10.1(b) of the Xxxxxxx Financial LLC Agreement, such rights shall be retained by
the Sellers and shall not be transferred to Purchaser.
Section 2.2 Closing. The closing of the Purchase Transaction (the
"Closing") shall take place at the New York offices of Xxxxxx Xxxxxxxx Xxxxx &
Xxxxxxxx LLP, at 10:00 a.m., local time, on June 15, 2005, or, if the conditions
to Closing set forth in Sections 2.3, 2.4 and 2.5 have not been satisfied or
waived by the Party entitled to the benefit thereof on or prior to such date, on
the second Business Day following satisfaction or waiver of such condition, or
such other date and time as to which Purchaser and Sellers agree in writing. The
date and time of Closing is referred to herein as the "Closing Date." At the
Closing, the Parties shall consummate the transactions contemplated by this
Agreement in the following manner and in the following order:
(a) Each Seller shall deliver to Purchaser the Transaction Documents
(other than this Agreement) duly executed by such Seller or Xxxxxxx Financial,
as the case may be.
(b) Purchaser shall deliver to each Seller the preliminary purchase price
allocable to such Seller as set forth on Schedule 2.2 (the "Preliminary Purchase
Price") by wire transfer of immediately available funds to an account designated
by such Seller.
(c) Purchaser shall become a Member of the Company in accordance with the
terms of the Xxxxxxx Financial LLC Agreement and, subject to Section 2.1 and
Section 5.5 of this Agreement, shall be entitled to all of the rights, and
subject to all of the obligations, of a Member as provided therein.
(d) The Sellers shall cause Xxxxxxx Financial to record the transfer of
the Percentage Interests from each Seller to Purchaser pursuant to the Purchase
Transaction in the books and records of Xxxxxxx Financial.
Section 2.3 Conditions of the Obligations of Purchaser at the Closing. The
obligation of Purchaser to consummate the transactions contemplated hereby at
the Closing is subject to the satisfaction as of the Closing of the following
conditions:
(a) Representations and Warranties. The representations and warranties
contained in Article IV shall be true and correct in all material respects at
and as of the Closing with the same effect as if made at and as of such date.
(b) Governmental Approvals. All necessary prior regulatory approvals of
Governmental Entities with respect to the Purchase Transaction ("Governmental
Approvals") shall have been received and shall be in effect, and all conditions
or requirements prescribed by Law or by any such Governmental Approvals
(including all waiting periods) shall have been satisfied.
(c) Termination of Advisory Services Agreement. Sellers shall have caused
Xxxxxxx Financial to terminate the Advisory and Administrative Services
Agreement, dated as of January 1, 2005, between Xxxxxxx Financial and Xxxxxxx
Capital, with effect from the Closing Date.
Section 2.4 Conditions of the Obligations of MGIC at the Closing. The
obligation of MGIC to consummate the transactions contemplated hereby at the
Closing is subject to the satisfaction as of the Closing of the following
conditions:
(a) Representations and Warranties. The representations and warranties
contained in Article V shall be true and correct in all material respects at and
as of the Closing with the same effect as if made at and as of such date.
(b) Governmental Approvals. All Governmental Approvals shall have been
received and shall be in effect, and all conditions or requirements prescribed
by Law or by any such Governmental Approvals (including all waiting periods)
shall have been satisfied.
(c) MSII Stockholders Agreement. The MSII Stockholders Agreement shall
have been executed by the parties thereto and, as of the Closing, such agreement
shall be in full force and effect and shall not have been amended or modified,
and no material provision thereof shall have been waived.
(d) Employment Agreements. Each of the Chief Executive Officer and
Director of Portfolio Valuation of Xxxxxxx Capital shall have executed an
employment agreement with Xxxxxxx Capital on terms reasonably satisfactory to
MGIC and, as of the Closing, each such agreement shall be in full force and
effect.
Section 2.5 Conditions of the Obligations of Radian at the Closing. The
obligation of Radian to consummate the transactions contemplated hereby at the
Closing is subject to the satisfaction as of the Closing of the following
conditions:
(a) Representations and Warranties. The representations and warranties
contained in Article V shall be true and correct in all material respects at and
as of the Closing with the same effect as if made at and as of such date.
(b) Governmental Approvals. All Governmental Approvals shall have been
received and shall be in effect, and all conditions or requirements prescribed
by Law or by any such Governmental Approvals (including all waiting periods)
shall have been satisfied.
(c) MSII Stockholders Agreement. The MSII Stockholders Agreement shall
have been executed by the parties thereto and, as of the Closing, such agreement
shall be in full force and effect and shall not have been amended or modified,
and no material provision thereof shall have been waived.
(d) Employment Agreements. Each of the Chief Executive Officer and
Director of Portfolio Valuation of Xxxxxxx Capital shall have executed an
employment agreement with Xxxxxxx Capital on terms reasonably satisfactory to
Radian and, as of the Closing, each such agreement shall be in full force and
effect.
Section 2.6 Supplemental Purchase Price. Following completion of the
Closing, Purchaser shall deliver to each Seller on or prior to the seventh day
following the Closing Date (or the next succeeding Business Day if such day is
not a Business Day) the supplemental purchase price allocable to such Seller as
set forth on Schedule 2.6 (the "Supplemental Purchase Price") by wire transfer
of immediately available funds to an account designated by such Seller.
Section 2.7 Grant of Security Interest to Sellers. As security for the
timely performance of Purchaser's obligation to deliver the allocable share of
the Supplemental Purchase Price to each Seller, Purchaser grants to each Seller,
immediately upon Closing, a first priority security interest in all of
Purchaser's right, title and interest in, to and under the following (the
"Collateral"):
(a) Such Seller's allocable share of the Transferred Interests;
(b) all rights and privileges relating to the foregoing (including voting
rights); and
(c) all proceeds (as such term is defined in the UCC) of any and all of
the foregoing.
Section 2.8 Rights and Obligations Regarding Collateral. Unless and until
an Event of Default shall have occurred and be continuing, following Closing:
(a) Purchaser shall be entitled to exercise any and all voting rights
and/or other consensual rights and powers inuring to an owner of the Collateral
or any part thereof for any purpose consistent with the terms of this Agreement;
and
(b) Purchaser shall be entitled to receive and retain any and all
distributions made with respect to the Collateral; provided, however, that until
actually paid, all rights to such distributions shall remain subject to the
security interest of this Agreement.
Section 2.9 Covenants Relating to Collateral; Events of Default.
(a) Purchaser agrees as follows:
(i) it will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other lien on, the
Collateral, other than the security interest and lien granted under Section 2.7
and such other encumbrances or restrictions arising under the Xxxxxxx Financial
LLC Agreement and MSII Stockholders Agreement or Xxxxxxx Capital LLC Agreement;
(ii) its exact legal name is as shown on the signature page of this
Agreement, and its corporate structure and jurisdiction of organization are as
shown in Section 4.1 hereof and its chief executive office and primary place of
business are located at the address specified in Section 7.4; and
(iii) it will not change (i) its name, identity or corporate structure in
any manner (including by merger, consolidation, change in corporate form or
otherwise) or (ii) the location of its chief executive office, type of
organization or jurisdiction of organization or establish any trade names unless
it shall have given Sellers not less than 5 days' prior notice thereof in
writing and taken all actions necessary or advisable to maintain the continuous
validity, perfection and the same or better priority of Sellers' security
interests in the Collateral, intended to be granted and agreed to hereby.
(b) An "Event of Default" will exist with respect to a Party (such Party,
the "Defaulting Party") if:
(i) Purchaser fails to comply with or perform any agreement or obligation
set forth in Section 2.6 of this Agreement and such failure continues for 5 days
after notice of that failure is given to the Defaulting Party;
(ii) Purchaser shall be adjudged bankrupt or insolvent by a court of
competent jurisdiction, or an order shall be made by a court of competent
jurisdiction for the appointment of a receiver, liquidator, or trustee of
Purchaser, or of all or substantially all of its property by reason of the
foregoing, or approving any petition filed against Purchaser for reorganization,
and such adjudication or order shall remain in force or unstayed for a period of
5 days; or
(iii) Purchaser shall institute proceedings for voluntary bankruptcy or
shall file a petition seeking reorganization under the federal bankruptcy laws,
or for relief under any law for relief of debtors, or shall consent to the
appointment of a receiver for itself or for all or
substantially all of its property, or shall make a general assignment for the
benefit of its creditors, or shall admit in writing its inability to pay its
debts generally as they become due.
Section 2.10 Remedies upon Default.
(a) If any Event of Default shall have occurred and be continuing, subject
to the Xxxxxxx Financial LLC Agreement, each Seller shall each have all of the
rights and remedies with respect to the Collateral of a secured party under the
UCC (whether or not in effect in the jurisdiction where the rights and remedies
are asserted or sought to be exercised), and such additional rights and remedies
to which a secured party is entitled under the Laws in effect in any
jurisdiction where any rights and remedies hereunder may be asserted or sought
to be exercised. In addition, without being required to give any notice, except
as may be required by mandatory provisions of Law, subject to the Xxxxxxx
Financial LLC Agreement, upon the exercise of its rights and remedies hereunder,
each Seller shall have the right to hold the Collateral absolutely free from any
claim or right of whatsoever kind.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of Purchaser to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to Section 2.8(a) above shall
cease, and all such rights shall thereupon become vested in each Seller, which
shall have sole and exclusive right and authority to exercise such voting and
consensual rights and power; and
(ii) All rights of Purchaser to distributions or other payments pursuant
to Section 2.8(b) above shall cease, and all such rights shall thereupon become
vested in each Seller, which shall have the sole and exclusive right and
authority to receive and retain such distributions or other payments. All
distributions or other payments received by Purchaser contrary to the provisions
of this paragraph (b)(ii) shall be held in trust for the benefit of the Sellers,
shall be segregated from other property or funds of Purchaser and shall be
forthwith delivered to each Seller upon demand in the same form as so received
(with any necessary endorsement). Any and all money and other property paid over
to or received by a Seller pursuant to this paragraph (b)(ii) shall be retained
by such Seller as additional Collateral hereunder and applied in accordance with
the provisions hereof.
Section 2.11 Termination of Security Interest. This Agreement shall create
a continuing security interest in the Collateral and shall remain in full force
until the payment of the Supplemental Purchase Price as required herein.
ARTICLE III
COVENANTS
Section 3.1 Tax Matters.
(a) Following the Closing Date, the Parties will use their best efforts to
cause Xxxxxxx Financial to make an election under section 754 of the Code
effective for the taxable year ending December 31, 2005 (or any other taxable
year that includes the Closing Date).
(b) Unless and until there is a change in Law after the date hereof
requiring a different result, the Parties agree that in preparing and filing
federal income tax returns and state or local tax returns that follow federal
principles (including returns of Xxxxxxx Financial), and in any Internal Revenue
Service audit, they will treat the transfer of Transferred Interests under this
Agreement: (i) as a sale of the Transferred Interests by the Sellers to
Purchaser at a price equal to the Purchase Price that transfers ownership of the
Transferred Interests to Purchaser, and (ii) as if, on the Closing Date
immediately following such sale, (x) Purchaser contributed cash to Xxxxxxx
Financial equal to the excess of the fair market value of the Transferred
Interests on the Closing Date over the Purchase Price (the "Income Amount"),
increasing its capital account to fair market value, and (y) Xxxxxxx Financial
then made a cash payment to Purchaser equal to the Income Amount, representing a
guaranteed payment within the meaning of section 707(c) of the Code for services
rendered by Purchaser to Xxxxxxx Financial, that is ordinary income to Purchaser
and an ordinary deduction to Xxxxxxx Financial that is allocated fifty percent
(50%) each to the Sellers.
(c) Within thirty (30) days following the Closing Date, Purchaser shall
make a timely election under section 83(b) of the Code in respect of the
purchase of the Transferred Interests hereunder. Purchaser agrees to provide to
Xxxxxxx Financial on request evidence that Purchaser has included in its gross
income the amount described in Section 3.1(b) and that its stockholders have
included in their gross incomes their respective shares of such amount.
Purchaser shall indemnify, defend and hold harmless each Seller from and against
all Losses incurred by such Seller that arise out of Purchaser's failure to make
or maintain an election under section 83(b) in accordance with this Section
3.1(c) or to report gross income resulting from such election in its tax returns
as timely filed (with permitted extensions). Purchaser agrees to provide to each
Seller on request evidence that it has included in gross income amounts
resulting from such election in its tax returns as timely filed (with permitted
extensions).
(d) The fair market value of the Transferred Interests for purposes of
Section 3.1(b) shall be the value of Xxxxxxx Financial set forth in Schedule
3.1(d), multiplied by the Percentage Interest represented by the Transferred
Interests.
Section 3.2 Governmental Approvals; Further Assurances.
(a) From and after the date hereof and until the Closing, each of the
Parties hereto shall (i) cooperate with the others and use its reasonable best
efforts in good faith and in a timely manner to take or cause to be taken as
promptly as practicable all such steps as shall be necessary to obtain all
Governmental Approvals and (ii) do any and all acts and things reasonably deemed
by such Party in good faith to be necessary or appropriate in order to cause the
transactions contemplated by this Agreement to be consummated on the terms and
subject to the conditions provided herein and therein as promptly as
practicable.
(b) The Sellers agree to assist Purchaser and its shareholders in the
preparation and filing of all applications required to be submitted in order to
obtain the requisite Governmental Approvals ("Applications") to be filed by
Purchaser, including by furnishing Purchaser and its shareholders, to the extent
permitted by applicable Law, with all information as may be reasonably necessary
or advisable in connection with any Application.
Section 3.3 Confidentiality. The Parties hereto agree to keep this
Agreement strictly confidential, and no Party shall, and the Parties shall cause
Xxxxxxx Financial not to, without the prior written consent of the other
Parties, disclose this Agreement or any of its terms to any Person (other than
its Representatives), except to the extent a Party is advised by its counsel
(who may be internal counsel) that such disclosure is required by law (in which
case, the provisions of the following sentence shall apply). Notwithstanding
anything in this Agreement to the contrary, in the event that a Party hereto is
advised by its counsel that such disclosure is required by law, it is agreed
that such Party or its Representative, as the case may be, (i) shall notify the
other Parties of such requirement as promptly as practicable, (ii) may, without
liability hereunder, disclose this Agreement in the manner it is advised is
required by law and (iii) will exercise its best efforts to have confidential
treatment accorded to any provision of this Agreement that a Party hereto
reasonably requests to have accorded such treatment if such requesting Party
takes primary responsibility for preparing and, to the extent permissible by
law, processing such request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Purchaser to enter into this Agreement
and purchase the Percentage Interests hereunder, each Seller hereby represents
and warrants to Purchaser, solely with respect to itself and not with respect to
the other Seller, as follows:
Section 4.1 Organization. Such Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of its
incorporation.
Section 4.2 Equity Interests and Related Matters. Each of such Seller's
Percentage Interests has been duly authorized and validly issued and is fully
paid. There are no statutory or contractual preemptive rights or rights of first
refusal or Encumbrances or other similar restrictions with respect to the
purchase and sale of such Seller's Percentage Interests hereunder (other than
those contained in the Existing Operating Agreement or in the other Transaction
Documents or any of the foregoing which have been terminated or otherwise
cancelled as of the Closing). Except for the Existing Operating Agreement, there
are no agreements or understandings between such Seller and any other Persons
with respect to the voting or transfer of Xxxxxxx Financial's Interests or with
respect to any other aspect of Xxxxxxx Financial's governance.
Section 4.3 Authorization. The execution, delivery and performance of this
Agreement and all of the other Transaction Documents to which such Seller is a
party and the sale of the Percentage Interests hereunder by such Seller have
been duly authorized by such Seller. This Agreement and all other Transaction
Documents to which such Seller is a party, when executed and delivered by such
Seller in accordance with the terms thereof, shall each constitute a valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms.
Section 4.4 Noncontravention. The execution and delivery by such Seller of
this Agreement and all other Transaction Documents to which such Seller is a
party, the sale of the
Percentage Interests hereunder and the fulfillment of and compliance with the
respective terms hereof and thereof by such Seller, do not (i) conflict with or
result in a material breach of the terms, conditions or provisions of, (ii)
constitute a material default under (whether with or without the passage of
time, the giving of notice or both), (iii) result in the creation of any
Encumbrance upon such Seller's Percentage Interests pursuant to, (iv) give any
third party the right to modify, terminate or accelerate any material obligation
under or (v) require that such Seller obtain or make any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any third party or any Governmental Entity pursuant to, any Law to which
such Seller is subject, the organizational documents of such Seller or any
material agreement, instrument, order, judgment or decree to which such Seller
is subject except as has not had and would not have a material adverse effect on
such Seller's ability to consummate the Purchase Transaction or perform its
obligations under this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to the Sellers to enter into this Agreement
and consummate the transactions contemplated hereby Purchaser hereby represents
and warrants to the Sellers as follows:
Section 5.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
Section 5.2 Authorization. The execution, delivery and performance of this
Agreement and all of the other Transaction Documents to which Purchaser is a
party and the purchase of the Percentage Interests that will constitute
Transferred Interests by Purchaser have been duly authorized by Purchaser. This
Agreement and all other Transaction Documents to which Purchaser is a party,
when executed and delivered by Purchaser in accordance with the terms thereof,
shall each constitute a valid and binding obligation of Purchaser, enforceable
in accordance with its terms.
Section 5.3 Noncontravention. The execution and delivery by Purchaser of
this Agreement and all other Transaction Documents to which Purchaser is a
party, the purchase of the Percentage Interests hereunder, and the fulfillment
of and compliance with the respective terms hereof and thereof by Purchaser, do
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a material default under (whether with or without
the passage of time, the giving of notice or both), (iii) give any third party
the right to modify, terminate or accelerate any material obligation under or
(iv) require that Purchaser obtain or make any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
third party or any Governmental Entity pursuant to, any Law to which Purchaser
is subject, the organizational documents of Purchaser or any material agreement,
instrument, order, judgment or decree to which Purchaser is subject, except as
has not had and would not have a material adverse effect on Purchaser's ability
to consummate the Purchase Transaction or perform its obligations under this
Agreement.
Section 5.4 Investment Representation. Purchaser is purchasing the
Percentage Interests hereunder for its own account with the present intention of
holding the same for investment purposes and not with a view to or for sale in
connection with any public distribution thereof in violation of any federal or
state securities laws. Purchaser acknowledges that it is informed as to the
risks of the transactions contemplated hereby and of ownership of the Percentage
Interests. Purchaser acknowledges that the Transferred Interests have not been
registered under the Securities Act of 1933, as amended, or any state or foreign
securities laws and that the Transferred Interests may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of unless such
sale, transfer, offer, pledge, hypothecation or other disposition is (i)
pursuant to the terms of an effective registration statement under the
Securities Act of 1933, as amended, and the Transferred Interests are registered
under any applicable state or foreign securities laws or (ii) pursuant to an
exemption from registration under the Securities Act of 1933, as amended, and
any applicable state or foreign securities laws.
Section 5.5 No General Voting Rights. Purchaser acknowledges that its
ownership of the Transferred Interests shall not entitle Purchaser to
representation on Xxxxxxx Financial's Board of Managers and shall not entitle
Purchaser to vote on any matter relating to Xxxxxxx Financial except as provided
in Section 9.8(d) and Section 10.1(b) of the Xxxxxxx Financial LLC Agreement.
Section 5.6 Member's Equity. Xxxxxxx Financial's members equity, as
determined in accordance with GAAP, was as set forth on Schedule 5.6 as of April
30, 2005.
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated at any time
prior to the Closing by mutual written consent of the Sellers and Purchaser.
Section 6.2 Effect of Termination. In the event of termination of this
Agreement by the Parties as provided above, this Agreement shall forthwith
become void and of no further force and effect, except that Article VII shall
survive such termination indefinitely, and such termination shall be deemed to
release any Party from any liability for any breach by such Party of this
Agreement prior to such termination other than willful breaches.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the other Transaction Documents and the
consummation of the Closing shall be paid by the Party incurring such expenses,
except that the fees and expenses of Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP shall
be paid by Xxxxxxx Financial.
Section 7.2 Consent to Amendments. This Agreement may be amended, or any
provision of this Agreement may be waived; provided that any such amendment or
waiver shall
be binding upon the Parties only if set forth in a writing duly signed by or on
behalf of the Parties.
Section 7.3 Successors and Assigns. This Agreement and all of the
covenants and agreements contained herein and all of the rights, interests and
obligations hereunder, by or on behalf of any of the Parties hereto, shall bind
and inure to the benefit of the respective successors and assigns of the Parties
hereto whether so expressed or not. This Agreement shall not be assignable by
any Party without the consent of the other Parties, except that each of MGIC and
Radian may assign this Agreement in connection with a Transfer as permitted by
Section 9.1(c)(i) or (ii) of the Xxxxxxx Financial LLC Agreement.
Section 7.4 Notices. Notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when received if delivered by hand, facsimile transmission or by
first class mail (registered, return receipt requested), properly addressed and
postage prepaid:
If to Sellers:
Radian Guaranty, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: General Counsel
Telephone No.: (000) 000-0000, ext. 3388
Fax No.: (000) 000-0000]
and
Mortgage Guaranty Insurance Corporation
MGIC Plaza, P.O. Box 488
Milwaukee, Wisconsin 53201-0488
Attention: Chief Financial Officer
With a copy to: General Counsel
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000 (General Counsel) / (000) 000-0000 (CFO)
If to Purchaser:
Meeting Street Partners II, Inc.
0000 Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Secretary
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Section 7.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Section 7.6 Entire Agreement. This Agreement and the agreements and
documents referred to herein contain the entire agreement and understanding
between the Parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, whether written or oral, relating to such
subject matter in any way.
Section 7.7 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the Parties and nothing herein expressed or implied shall give or be
construed to give any Person, other than the Parties, any legal or equitable
rights hereunder.
Section 7.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
Section 7.9 Resolutions of Disputes.
(a) Generally. Unless prohibited by applicable Law, the Parties agree that
any dispute, controversy or claim arising out of or relating to this Agreement
or the performance by the Parties of its terms shall be settled by binding
arbitration held in the Borough of Manhattan, City of New York, State of New
York in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically otherwise
provided in this Section 7.9. Notwithstanding the foregoing, to the extent the
arbitrator(s) does not possess the power to subpoena witnesses necessary to the
resolution of a dispute, controversy or claim brought hereunder which a court of
competent jurisdiction would possess, such dispute, controversy or claim shall
not be subject to the terms of this Section 7.9 and shall instead be subject to
resolution in such court. If the Parties to the Xxxxxxx Financial LLC Agreement
are engaged in or submit a matter to arbitration with respect to or related to
the same subject matter as a matter which is to be submitted to arbitration
pursuant to this Agreement, such arbitrations shall be jointly conducted.
(b) Arbitrators. If the matter in controversy (exclusive of attorney fees
and expenses) shall appear, as at the time of the demand for arbitration, to
exceed $500,000, then the panel to be appointed shall consist of three neutral
arbitrators; otherwise, one neutral arbitrator. No arbitrator shall be a current
or former officer, manager, director or employee of MSII, MGIC, Radian, Meeting
Street Partners Inc., a Delaware corporation, Xxxxxxx Capital or any Member.
(c) Procedures: No Appeal. The arbitrator(s) shall allow such discovery as
the arbitrator(s) determines appropriate under the circumstances and shall
resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator(s). The
arbitrator(s) shall give the Parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to reconsider and
modify such decision if any Party so requests within 10 days after the decision.
Thereafter, the decision of the arbitrator(s) shall be final, binding, and
nonappealable with respect to all persons, including
(without limitation) persons who have failed or refused to participate in the
arbitration process, except to the extent such decision shall be premised upon
an erroneous application of or shall be contrary to applicable Law. In making
any decision, the arbitrator(s) is instructed to preserve, as nearly as
possible, to the extent compatible with applicable Law, the original business
and economic intent of the Parties embodied in this Agreement.
(d) Authority. The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
(e) Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. MSII, MGIC and Radian each hereby submit to the in personam
jurisdiction of the federal and state courts in the Southern District of New
York, and in the borough of Manhattan for the purpose of confirming any such
award and entering judgment thereon.
(f) Confidentiality. All proceedings under this Article VII, and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all Parties and by the arbitrators.
(g) Continued Performance. The fact that the dispute resolution procedures
specified in this Article VII shall have been or may be invoked shall not excuse
any Party from performing its obligations under this Agreement and during the
pendency of any such procedure all Parties shall continue to perform their
respective obligations in good faith.
(h) Tolling. All applicable statutes of limitation shall be tolled while
the procedures specified in this Article VII are pending. The Parties will take
such action, if any, required to effectuate such tolling.
Section 7.10 Waiver of Jury Trial. WITHOUT LIMITING SECTION 7.9, AND ONLY
TO THE EXTENT THAT ANY PROVISION OF SECTION 7.9 IS HELD BY A COURT OF COMPETENT
JURISDICTION NOT TO BE ENFORCEABLE, EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
AND FOR ANY COUNTERCLAIM THEREIN TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW.
Section 7.11 No Strict Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Securities
Purchase Agreement as of the date first written above.
RADIAN GUARANTY, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President and
Chief Financial Officer
MORTGAGE GUARANTY INSURANCE CORPORATION
By: /s/ J. Xxxxxxx Xxxxx
-----------------------------------------
Name: J. Xxxxxxx Xxxxx
Title: Executive Vice President and
Chief Executive Officer
MEETING STREET PARTNERS II, INC.
By: /s/ Xxx Xxxxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxxxx
Title: Authorized Representative
16
