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EXHIBIT 10.4
EXCHANGE AGREEMENT
BY AND AMONG
ALTIVA FINANCIAL CORPORATION
AND
HOLDERS OF THE OUTSTANDING
12 1/2% SUBORDINATED NOTES DUE 2001 OF
ALTIVA FINANCIAL CORPORATION
MARCH 17, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................................................1
Section 1.1 Definitions................................................1
ARTICLE II EXCHANGE OF NOTES................................................7
Section 2.1 Exchange of Notes..........................................7
Section 2.2 Expiration Date............................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................8
Section 3.1 Representations and Warranties of the Company..............8
ARTICLE IV CONDITIONS PRECEDENT TO THE CLOSING.............................18
Section 4.1 Conditions to Obligations of the Parties..................18
Section 4.2 Conditions to the Obligations of the Holders..............19
Section 4.3 Conditions to the Obligations of the Company..............20
ARTICLE V COVENANTS........................................................21
Section 5.1 Rule 144 and Rule 144A Reporting..........................21
Section 5.2 Stay, Extension and Usury Laws............................21
ARTICLE VI MISCELLANEOUS...................................................21
Section 6.1 Survival of Provisions....................................21
Section 6.2 Termination...............................................21
Section 6.3 Waiver; Amendments........................................22
Section 6.4 Communications............................................22
Section 6.5 Costs, Expenses and Taxes.................................23
Section 6.6 Execution in Counterparts; FAX Execution..................23
Section 6.7 Binding Effect; Assignment................................24
Section 6.8 Governing Law.............................................24
Section 6.9. Usury.....................................................24
Section 6.10 Severability of Provisions................................25
Section 6.11 Construction..............................................25
Section 6.12 Integration...............................................25
Section 6.13 No Third Party Beneficiaries..............................25
Section 6.14 Representation by Counsel.................................26
Section 6.15 Waiver of Claims..........................................26
Section 6.16 Power of Attorney.........................................26
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ARTICLE VII INDEMNIFICATION; SET OFF.........................................26
Section 7.1 Indemnification.............................................26
Section 7.2 Set-Off.....................................................27
Exhibit A Name and Address of the Holders
Exhibit B Form of New Exchange Notes
Exhibit C Form of QIB Pledge and Security Agreement
Exhibit D Form of non-QIB Pledge and Security Agreement
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Intercreditor and Collateral Sharing
Agreement
Exhibit G Matters to be covered by Opinion of Counsel to the
Company
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EXCHANGE AGREEMENT
Exchange Agreement, dated as of March 17, 2000 (the "Agreement"), by
and among Altiva Financial Corporation (the "Company"), a Delaware corporation,
and the Holders of the outstanding 12 1/2% Subordinated Notes due 2001 of the
Company.
WITNESSETH:
WHEREAS, the Company is seeking to refinance certain existing
indebtedness evidenced by its outstanding 12 1/2% Subordinated Notes due 2001
(the "Old Notes");
WHEREAS, certain holders of the such outstanding Old Notes have agreed
to exchange such notes for new 12% Secured Senior Notes due 2006 in the
principal amount and on the terms described in this Agreement; and
WHEREAS, the parties deem it in their best interest to set forth their
mutual agreements herein;
NOW, THEREFORE, in consideration of any extension of credit and/or
other financial accommodation at any time made by the Holders to or for the
benefit of the Company, and of the promises set forth herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:
"Agreement" means this Exchange Agreement, as amended, supplemented or
modified from time to time.
"Applicable Law" is defined in Section 6.9 hereof.
"Business Day" means any day except a Saturday, Sunday or other day on
which banking institutions in the city of Atlanta, Georgia are authorized by
law to close.
"Capital Stock" of any Person means any and all shares or other equity
interest of such Person.
"Claims" is defined in Section 6.15 hereof.
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"Closing" means the closing of the Exchange.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute in effect from time to time), and the rules and regulations
promulgated thereunder.
"Commission" means the Securities and Exchange Commission and any
successor thereto.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
"Company" means Altiva Financial Corporation, a Delaware corporation,
together with its successors.
"Company Financial Statements" has the meaning set forth in Section
3.1(i)(i) hereof.
"Convertible Value Note Agreement" means that certain Amended and
Restated Secured Convertible Senior Note Purchase Agreement, dated for
reference purposes only as of February 29, 2000, by and among the Company and
Value Partners.
"Corporate Trust Office" means with respect to the Trustee: 0000 Xxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx, or such other office as the Trustee or
successor shall designate from time to time.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including without
limitation potential liability for investigating costs, cleanup costs,
governmental response costs, natural resource damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment of any Materials of Environmental
Concern.
"Environmental Laws" means any law, statute, rule or regulation of any
governmental, judicial, legislative, executive, administrative or regulatory
authority of the United States, or of any state, local or foreign government or
any subdivision thereof or of any governmental body or other regulatory or
administrative agency or commission, domestic or foreign (a "Law"), relating to
pollution or protection of the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata), including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, and other Laws relating to (i) emissions, discharges or releases of
pollutants, contaminants, chemicals, or industrial toxic or hazardous
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substances or wastes (collectively known as "Polluting Substances") or (ii) the
handling, storage, disposal, reclamation, recycling or transportation of
Polluting Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or any successor statute in effect from time to time).
"Exchange" shall mean the exchange by the Holders of the Old Notes for
a maximum aggregate of $19,382,000 of New Exchange Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
and in effect from time to time (or any successor statute in effect from time
to time), and the rules and regulations of the Commission promulgated
thereunder.
"Expiration Date" is defined in Section 2.2 hereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Agreement, consistently
applied.
"Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"Holders" means the holders of the outstanding Old Notes who have
executed the Agreement.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (or any successor statute in effect from time to time), and
the rules and regulations of the Federal Trade Commission promulgated
thereunder.
"Indenture" means the Indenture entered into by the Company and U.S.
Trust Company of Texas, N.A., as trustee for the holders of the New Exchange
Notes, as amended, supplemented or otherwise modified from time to time.
"Indebtedness Instrument" mean any note, mortgage, indenture, chattel
mortgage, deed of trust, loan agreement, hypothecation agreement, pledge
agreement, security agreement, financing statement or other document,
instrument or agreement evidencing or securing the payment of or otherwise
relating to the borrowing of monies. Indebtedness Instruments shall include,
but not
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be limited to, the Old Notes which are not part of the Exchange, the New
Exchange Notes and the Value Notes.
"Intercreditor Agreement" means that certain Intercreditor and
Collateral Agency Agreement by and between Value Partners and U.S. Trust
Company of Texas, N.A., as collateral agent for the holders of the Exchange
Notes, substantially in the form of Exhibit F hereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in respect of such asset.
"Loans" is defined in Section 3.1(s)(i) hereof.
"Material Adverse Effect" means any effect that (i) is material and
adverse to the financial condition, results of operations, business or
prospects of the Company and its Subsidiaries taken as a whole or (ii)
materially impairs the ability of the Company to perform its obligations under
this Agreement, any Related Agreement, the Value Notes or the Value Related
Agreements.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"MCI" means The Money Centre, Inc., a North Carolina corporation,
together with its successors.
"NASD" means National Association of Securities Dealers, Inc.
"New Exchange Notes" means (i) up to $6,428,000 principal amount of
notes being issued pursuant to the Indenture which shall initially consist of
the QIB Convertible Global Note and the Non-QIB Convertible Global Note and
(ii) up to $12,800,000 principal amount of notes being issued pursuant to the
Indenture which shall consist of the QIB Permanent Global Note and the Non-QIB
Permanent Global Note. The New Exchange Notes shall have substantially the same
terms as the Value Notes (except for the provisions regarding convertibility
into shares of Common Stock) and shall be secured as set forth in the Security
Agreements and the Intercreditor Agreement.
"Non-QIB Convertible Global Note" shall have the meaning given in the
Indenture.
"Non-QIB Permanent Global Note" shall have the meaning given in the
Indenture.
"Non-QIB Security Agreement" means that certain Pledge Agreement by
and among the Company and the Trustee for the benefit of the Holders who do not
qualify as QIBs, substantially
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in the form of Exhibit D hereto, as amended, supplemented or otherwise modified
from time to time.
"Old Notes" has the meaning set forth of the Recitals to this
Agreement.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or a political subdivision or an agency or instrumentality thereof.
"Preferred Stock" means the Preferred Stock, par value $.01 per share,
of the Company.
"Previously Disclosed" means disclosed in a letter dated the date
hereof delivered from the Company to the Trustee, specifically referring to the
appropriate section of this Agreement and describing in reasonable detail the
matters contained therein.
"QIB" means a qualified institutional buyer as such term is defined in
the Securities Act.
"QIB Convertible Global Note" shall have the meaning given in the
Indenture.
"QIB Permanent Global Note" shall have the meaning given in the
Indenture.
"QIB Security Agreement" means the Pledge and Security Agreement by
and among the Company and the Trustee for the benefit of the Holders who do not
qualify as QIBs, substantially in the form of Exhibit D hereto, as amended,
supplemented or otherwise modified from time to time.
"Real Estate Owned" means the consolidated properties of the Company
acquired by foreclosure on a loan or deed-in-lieu thereof or otherwise included
in the Company's real estate owned for purposes of reporting asset quality of
the Company in its reports filed with the Commission under the Exchange Act.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Trustee on behalf of the Holders,
substantially in the form of Exhibit F hereto, as amended, supplemented or
otherwise modified from time to time.
"Related Agreements" means the Indenture, the New Exchange Notes, the
Security Agreements, the Registration Rights Agreement and the Intercreditor
Agreement.
"Securities" means (i) the New Exchange Notes and (ii) the Common
Stock issuable upon conversion of the New Exchange Notes.
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"Securities Act" means the Securities Act of 1933, as amended (or any
successor statute thereto as in effect from time to time), and the rules and
regulations of the Commission promulgated thereunder.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules
and regulations of the Commission promulgated thereunder.
"Security Agreements" means the QIB Security Agreement and the Non-QIB
Security Agreement.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"Stock Equivalents" means, with respect to any Person, options,
warrants, calls, contracts or other rights entered into or issued by such
Person which confer upon the holder thereof the right (whether or not
contingent) to acquire any Capital Stock, voting securities or securities
convertible into or exchangeable for Capital Stock or voting securities of such
Person.
"Stock Option Plan" means the 1999 Stock Incentive Plan of the Company.
"Subsidiary" means with respect to any Person, (i) any corporation,
association, limited liability company or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more Subsidiaries of such
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such Person or one or
more Subsidiaries of such Person (or any combination thereof).
"Taxes" means all taxes, charges, fees, levies or other governmental
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, property or other taxes, customs, dues, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority
(domestic or foreign).
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"Tax Returns" means all foreign, federal, State and local returns
relating to Taxes.
"Trustee" shall mean the Trustee under the Indenture.
"Value Notes" means the 12% Secured Convertible Senior Notes due 2006
of the Company in the original principal amount of $14,000,000 being issued and
sold by the Company and purchased by Value Partners, as amended, supplemented
or otherwise modified from time to time.
"Value Partners" means Value Partners, Ltd., a Texas limited
partnership.
"Value Related Documents" means the Value Notes, the Amended and
Restated Pledge and Security Agreement by and among the Company and Value
Partners, the amended and restated registration rights agreement to which Value
Partners and the Company are party, the Convertible Value Note Agreement and
the Intercreditor Agreement.
ARTICLE II
EXCHANGE OF NOTES
SECTION 2.1 EXCHANGE OF NOTES. Subject to the terms and
conditions herein set forth, on the Expiration Date (as hereinafter defined),
each Holder who has executed this Agreement shall exchange, the outstanding Old
Notes held by such Holder for New Exchange Notes, which the Company agrees to
issue in consideration for the tendering of the Old Notes owned by such Holder,
in a principal amount equal to the product of (i) the outstanding principal,
interest and other amount of the Old Notes being tendered by such Holder;
multiplied by (ii) 0.4. If the tendering Holder is a QIB, then the principal
amount of the New Exchange Notes issued to such tendering Holder shall consist
of an interest in the QIB Permanent Global Note. If the tendering Holder is not
a QIB, then the principal amount of the New Exchange Notes issued to such
tendering Holder shall consist of an interest in the Non-QIB Permanent Global
Note. In addition, each Holder who has executed this Agreement shall receive in
partial exchange for the outstanding Old Notes held by such Holder for New
Exchange Notes, Common Stock which the Company agrees to issue in partial
consideration for the tendering of the Old Notes owned by such Holder, in a
principal amount equal to the product of (i) 6,428,000, multiplied by (ii) the
quotient of (X) the outstanding principal, interest and other amount of the Old
Notes being tendered by such Holder; divided by (Y) $32,385,000.
SECTION 2.2 EXPIRATION DATE. The Expiration Date shall be 5:00
p.m. New York City Time on March 17, 2000 (the "Expiration Date"). In the event
of such an extension, the "Expiration Date" shall refer to such extended date.
The Company may, in its discretion, accept
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tenders of Old Notes after the Expiration Date or the Closing Date provided
that the Closing has occurred.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as Previously Disclosed, the Company represents and warrants to each of
the Holders as follows:
(a) Capital Structure. The authorized Capital Stock of the
Company consists of 400,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock. As of March 7, 2000, there are (i) 4,026,123 shares of Common
Stock issued and outstanding and no shares of Common Stock are held as treasury
shares and (ii) 56,905 shares of Series A Convertible Preferred Stock are
issued and outstanding and no shares of Preferred Stock are held as treasury
shares. All outstanding shares of Capital Stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and none of
the outstanding shares of Capital Stock of the Company has been issued in
violation of the preemptive rights of any Person. Except as contemplated by
this Agreement or as Previously Disclosed, there are no Stock Equivalents
authorized, issued or outstanding with respect to the Capital Stock of the
Company as of the date hereof. The Company has Previously Disclosed each option
to purchase Common Stock which is outstanding as of the date hereof, including
the exercise price and term thereof, as well as the relevant terms of any other
Stock Equivalents which are outstanding as of the date hereof.
(b) Organization, Standing and Authority of the Company. The
Company is a corporation duly organized and validly existing under the laws of
Delaware with full corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of
its business requires such licensing or qualification and where the failure to
be so licensed, qualified or in good standing would have a Material Adverse
Effect.
(c) Ownership of Subsidiaries. The Company does not own or have
the right to acquire, directly or indirectly, any outstanding Capital Stock or
other voting securities or ownership interests of any corporation, bank,
savings association, partnership, joint venture or other organization, except
as set forth in Schedule 3.1(c). The outstanding shares of Capital Stock of
each Subsidiary of the Company have been duly authorized and validly issued,
are fully paid and nonassessable, and are directly owned by the Company free
and clear of all Liens. No Stock Equivalents are authorized, issued or
outstanding with respect to the Capital Stock of any Subsidiary of the Company
and there are no agreements, understandings or commitments relating to the
right of the Company to vote or to dispose of such Capital Stock.
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(d) Organization, Standing and Authority of Subsidiaries. Each
Subsidiary of the Company (i) is duly organized and validly existing under the
laws of the jurisdiction in which it is organized, (ii) has full corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted and (iii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect. The Company has heretofore
delivered true and complete copies of the articles of incorporation and bylaws
or equivalent documents of each Subsidiary of the Company as in effect as of
the date hereof to each Holders which has requested the same.
(e) Authority; Due Execution. The Company has full corporate
power and authority to perform its respective obligations under this Agreement
and each of the Related Agreements, and the execution, delivery and performance
by the Company of this Agreement and each Related Agreement have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes,
and each of the Related Agreements, when duly executed and delivered by the
Company, will constitute, a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) rights
to indemnity and contribution under the Registration Rights Agreement may be
limited by applicable law, (ii) enforceability may be limited by bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally
and (iii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.
(f) No Conflict. Neither the execution and delivery of this
Agreement and each of the Related Agreements, nor consummation of the
transactions contemplated hereby and thereby, nor compliance by the Company
with any of the provisions hereof or thereof, (i) does or will conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of the Company or the equivalent documents of any Subsidiary of the
Company, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any Lien upon any property or asset of the Company
or a Subsidiary of the Company pursuant to, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or a Subsidiary of the Company is a party, or
by which any of their respective properties or assets may be bound or affected,
or (iii) subject to the compliance referred to in clauses (i) and (ii) of the
succeeding sentence, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or a Subsidiary of the Company. Except
for (i) compliance with applicable federal and State securities laws in
connection with this Agreement and the performance by the Company of its
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obligations under the Registration Rights Agreement and (ii) any required
compliance by the Company with applicable federal and State securities laws
and/or the HSR Act in connection with the issuance of shares of Common Stock
upon conversion of the New Exchange Notes in accordance with their terms, no
consent, approval, order or other authorization of any Governmental Entity or
of any third party is required by or on behalf of the Company or a Subsidiary
of the Company in connection with the execution, delivery and performance of
this Agreement and each of the Related Agreements. The representations and
warranties contained in this Section 3.1(f), insofar as they relate to federal
and State securities laws requirements, are made in reliance on the Investor
Representation Letters received by the Company.
(g) Status of Securities. The Securities have been authorized by
all necessary corporate action on the part of the Company. When delivered to
the Holders at the Closing against the exchange therefor as provided herein,
the Securities will be duly authorized and validly issued and will not be
issued in violation of the preemptive rights of any Person. Subject to the
approvals and compliance referred to in the second sentence of Section 3.1(f)
hereof, shares of Common Stock issued by the Company upon conversion of the New
Exchange Notes in accordance with their terms will be duly authorized, validly
issued and non-assessable at the time of issuance and will not be issued in
violation of the preemptive rights of any Person.
(h) Securities Reports. The Company has filed all Securities
Documents required to be filed by it under the Securities Laws on a timely
basis or has received a valid extension of such time of filing, and all such
Securities Documents complied in all material respects with the requirements of
the Securities Laws and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, at the time and in light of the
circumstances under which they were made, not misleading.
(i) Financial Statements.
(i) The Company has previously delivered to
representatives of the Holders (i) statements of financial condition of the
Company as of August 31, 1999 and 1998 and statements of operations, changes in
stockholders' equity and cash flows of the Company for each of the years ended
August 31, 1999, 1998 and 1997, accompanied by the related audit report of
Deloitte & Touche LLP, (ii) an unaudited statement of financial condition as of
November 30, 1999 and unaudited statements of operations, changes in
stockholders' equity and cash flows of the Company for the three months ended
November 30, 1999 and 1998 and (iii) an unaudited statement of financial
condition as of December 31, 1999 and an unaudited statement of operations for
the three months ended December 31, 1999. The foregoing financial statements,
as well as the financial statements of the Company to be delivered to the
holders of New Exchange Notes after the Closing pursuant to the terms of the
New Exchange Notes (collectively the "Company Financial Statements"), fairly
present or will fairly present, as the case may be, in
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all material respects the consolidated financial condition of the Company as of
the respective dates set forth therein, and the consolidated results of
operations, changes in shareholders' equity and cash flows of the Company for
the respective periods or as of the respective dates set forth therein in
accordance with GAAP.
(ii) Each of the Company Financial Statements has been or
will be, as the case may be, prepared in accordance with GAAP consistently
applied during the periods involved, except as stated therein. The books and
records of the Company and its Subsidiaries are being maintained in material
compliance with applicable legal and accounting requirements, and such books
and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of the
Company and its Subsidiaries.
(iii) Except to the extent (x) reflected, disclosed or
provided for in the Securities Documents filed by the Company prior to the date
hereof and (y) of liabilities incurred since August 31, 1999 in the ordinary
course of business, neither the Company nor any Subsidiary of the Company has
any liabilities, whether absolute, accrued, contingent or otherwise, which has
had or could reasonably be expected to have a Material Adverse Effect.
(j) Material Adverse Change. Since August 31, 1999, (i) the
Company and the Subsidiaries of the Company have conducted their respective
businesses in the ordinary and usual course (excluding the incurrence of
expenses in connection with this Agreement and the Subordinated Note Agreement
and the transactions contemplated hereby and thereby) and (ii) no event has
occurred or circumstance arisen that, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.
(k) Environmental Matters.
(i) The Company is in compliance with all Environmental
Laws, except for any violations of any Environmental Law which, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company has not received any communication
alleging that the Company or any Company Subsidiary is not in such compliance
and, to the knowledge of the Company, there are no present circumstances that
would prevent or interfere with the continuation of such compliance.
(ii) None of the properties owned, leased or operated by
the Company or the any Company Subsidiary has been or is in violation of or
liable under any Environmental Law, except for any such violations or
liabilities which, individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect.
(iii) To the knowledge of the Company, there are no past
or present actions, activities, circumstances, conditions, events or incidents
that could reasonably form the basis of
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any Environmental Claim or other claim or action or governmental investigation
that could result in the imposition of any liability arising under any
Environmental Law against the Company or any of its Subsidiaries or against any
Person whose liability for any Environmental Claim the Company or any
Subsidiary of the Company has or may have retained or assumed either
contractually or by operation of law, except such as, individually or in the
aggregate, have not had and could not reasonably be expected to have a Material
Adverse Effect.
(l) Tax Matters.
(i) The Company and its Subsidiaries have timely filed
all Tax Returns required by applicable law to be filed by them (including,
without limitation, estimated tax returns, income tax returns, information
returns and withholding and employment tax returns) and have paid, or where
payment is not required to have been made, have set up an adequate reserve or
accrual for the payment of, all Taxes required to be paid in respect of the
periods covered by such Tax Returns, except in all cases where the failure to
do so, individually or in the aggregate, has not had and could not reasonably
be expected to have a Material Adverse Effect. As of the date hereof, there is
no audit examination, assessed deficiency, deficiency litigation or refund
litigation with respect to any Taxes of the Company or any Subsidiary of the
Company. All Taxes due with respect to completed and settled examinations or
concluded litigation relating to the Company have been paid in full or adequate
provision has been made for any such Taxes on the Company's consolidated
statement of financial condition in accordance with GAAP. The Company has not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any Tax that is currently in effect.
(ii) Neither the Company nor any Subsidiary of the
Company (i) is a party to any agreement providing for the allocation or sharing
of taxes, (ii) is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by the Company or a Subsidiary of the Company (nor does the Company
have any knowledge that the Internal Revenue Service has proposed any such
adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(iii) There has been no "ownership change," as defined
under Section 382 of the Code and regulations thereunder, of the Company since
August 31, 1998, and consummation of the Exchange (including a later conversion
of a portion of the New Exchange Notes into Common Stock) will not result in
such an ownership change of the Company.
(m) ERISA. The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; to the knowledge of the
Company, no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for which the Company would have
any material liability; the Company has not incurred and does
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not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
(whether or not waived) or 4971 of the Code; and each "pension plan" for which
the Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and to the
knowledge of the Company nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification.
(n) Litigation. There are no actions, suits, investigations or
legal proceedings instituted, pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary of the Company or against any
asset, interest or right of the Company or any Subsidiary of the Company, or
against any director, officer or employee of any of them that in any such case,
if decided adversely, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Neither the Company nor any
Subsidiary of the Company is a party to any order, judgment or decree which has
had or could reasonably be expected to have a Material Adverse Effect.
(o) Compliance with Laws. The Company and each of its
Subsidiaries has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with,
federal, State, local and foreign governmental or regulatory bodies that are
necessary in order to permit it to carry on its business as it is presently
being conducted and the absence of which could reasonably be expected to have a
Material Adverse Effect; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect; and to the best knowledge of
the Company, no suspension or cancellation of any of the same is threatened.
(p) No Default or Violation. Neither the Company nor any
Subsidiaries of the Company currently is in violation of its Certificate of
Incorporation or Bylaws or equivalent documents, or of any applicable federal,
State or local law or ordinance or any order, rule or regulation of any
Governmental Entity (including, without limitation, all securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and
hour laws, ordinances, orders, rules and regulations), or in default with
respect to any order, writ, injunction or decree of any court, or in default
under any order, license, regulation or demand of any Governmental Entity, any
of which violations or defaults could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Subsidiary of the Company has received any notice or
communication from any Governmental Entity asserting that the Company or any
Subsidiary of the Company is in violation of any of the foregoing which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary of the Company is subject to any regulatory or supervisory
cease and desist order, agreement, written directive, memorandum of
understanding or written commitment, and none of them has received any written
communication requesting that they enter into any of the foregoing.
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(q) Certain Fees. No fees or commissions will be payable by the
Company to brokers, finders, investment bankers or banks pursuant to any
agreement entered into by the Company with respect to the exchange, offer and
sale of the New Exchange Notes, the Value Notes or any of the other
transactions contemplated hereby, by any Related Agreement.
(r) Patents, Trademarks, Etc. The Company and each of its
Subsidiaries owns or possesses all legal rights to use all proprietary rights,
including without limitation all trademarks, trade names, service marks and
copyrights, that are material to the conduct of their existing businesses.
Neither the Company nor any of its Subsidiaries is bound by or a party to any
options, licenses or agreements of any kind with respect to any trademarks,
service marks or trade names which it claims to own. Neither the Company nor
any of its Subsidiaries has received any communications alleging that any of
them has violated or would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other Person.
(s) Loan Matters
(i) Each loan agreement, note or borrowing arrangement,
including without limitation portions of outstanding lines of credit and loan
commitments on the books and records of the Company and its Subsidiaries
(collectively, "Loans") that was made by the Company and to the knowledge of
the Company that was made by any third party was made, and has been serviced in
all material respects in accordance with, the Company's underwriting standards
and the relevant Loan documentation in the ordinary course of business, is
evidenced in all material respects by appropriate and sufficient documentation
and, to the best knowledge of the Company, constitutes the legal, valid and
binding obligation of the obligor named therein, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditor's rights and to general equity principles.
(ii) None of the agreements pursuant to which the Company
or any Subsidiary has sold Loans or pools of Loans or participations in Loans
or pools of Loans contain any obligation to repurchase such Loans or interests
therein on account of a payment default by the obligor on any such Loans.
Neither the Company nor any of its Subsidiaries is in default under any such
agreement or has received any notice alleging default.
(iii) To the knowledge of the Company, all brokers and
other third parties who originate or have originated Loans have all required
licenses and approvals from all jurisdictions requiring licenses and approvals
and have complied with and are not in violation of any applicable law,
regulation, order, rule, policy or guidelines of any Governmental Entity.
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(iv) The practices of the Company and its Subsidiaries
with respect to compensation paid to mortgage brokers comply with the policy
statement issued by the Department of Housing and Urban Development in March
1999.
(t) Certain Assets. The Company has Previously Disclosed a true
and correct listing of the following assets of the Company and its Subsidiaries
as of November 30, 1999: (i) all non-performing Loans, securities or other
assets (i.e., all assets on which the Company has ceased recognizing interest
under GAAP or as to which any payments of principal or interest are past due 90
or more days as of such date), (ii) all Loans, securities or other assets as to
which any payments of principal or interest are past due 60 or more days, (iii)
all Loans, securities or other assets not included in the foregoing which have
been classified special mention, substandard, doubtful or loss, or otherwise
classified adversely, by management of the Company or regulatory examiners, and
(iv) each parcel of Real Estate Owned (excepting such parcels as may have been
disposed of in the ordinary course of business subsequent to such date),
including an identification of the amount of reserves which have been
established with respect to each such parcel and its net carrying value.
(u) Year 2000 Compliance. All computer hardware and software
owned, used or licensed by the Company or any of its Subsidiaries, including
but not limited to system and application programs, files, databases and
computer services, the failure or disfunctionality of which would individually
or in the aggregate have a Material Adverse Effect is Year 2000 Complaint.
"Year 2000 Complaint" means that such hardware and software will (i) correctly
process date data from at least January 1, 1900 through December 31, 2000
without error or interruption due to date, (ii) maintain functionality with
respect to the input, storing, processing or output of records or data
containing dates falling on or after January 1, 2000, and (iii) be
interoperable with other Year 2000 compliant hardware or software owned, used
or licensed by the Company or any of its Subsidiaries which may deliver records
to, receive records from or otherwise interact with such hardware or software
in the course of processing records or data.
(v) Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or is bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of a
proceeding naming the Company or any Subsidiary as a defendant asserting that
the Company or any such Subsidiary has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel
the Company or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other material
labor dispute or disputes involving it or any of its Subsidiaries pending, or
to the Company's knowledge, threatened, nor the Company aware of any activity
involving its or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.
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(w) Insurance. The Company believes that it and each Subsidiary
of the Company is insured, and during each of the past three calendar years has
been insured, for reasonable amounts with financially sound and reputable
insurance companies against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured and has maintained all insurance required by applicable laws and
regulations. All of the policies and bonds maintained by the Company and its
Subsidiaries are in full force and effect and all claims thereunder have been
filed in a due and timely manner and, to the Company's knowledge, no such claim
has been denied.
(x) Properties. All real and personal property owned by the
Company or a Subsidiary of the Company or presently used by any of them in its
respective business is in an adequate condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with its past practices. The Company has good and
marketable title free and clear of all Liens (other than equities of redemption
under applicable foreclosure laws) to all of the material properties and
assets, real and personal, reflected on the consolidated statement of financial
condition of the Company as of August 31, 1999 included in the Company
Financial Statements or acquired after such date, other than properties sold by
the Company in the ordinary course of business, except (i) Liens for current
taxes not yet due or payable, (ii) pledges to secure deposits and other liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Company as of May 31, 1999 included in
the Company Financial Statements. All real and personal property which is
material to the Company's business and leased or licensed by the Company or a
Subsidiary of the Company is held pursuant to leases or licenses which are
valid and enforceable in accordance with their respective terms.
(y) Investment Company Act of 1940. The Company is not, and will
not become upon consummation of the transactions contemplated hereby and by the
Related Agreements, an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(z) Private Offering. Neither the Company nor any Person acting
on its behalf has taken or will take any action which might subject the
offering, issuance and exchange of the New Exchange Notes to the registration
requirements of the Securities Act or comparable provisions of any applicable
State securities laws.
(aa) Indebtedness Defaults. As of the date hereof and the Closing
Date, the Company is not in default under any Indebtedness Instrument (which
has not been waived).
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(bb) Solvency. The Company (i) is now generally paying its debts
as they mature, (ii) owns property which, at a fair valuation, is greater than
the sum of its indebtedness and (iii) has capital sufficient to carry on its
business in the ordinary course consistent with past practice.
(cc) Value Notes and Value Related Agreements.
(i) The Company has full corporate power and authority to perform
its obligations under the Value Related Agreements and the execution, delivery
and performance by the Company of the Value Related Documents have been duly
authorized by all necessary corporate action on the part of the Company, except
for the approval of the shareholders of the Company of the issuance of Common
Stock upon conversion of the Value Notes pursuant to the requirements of the
NASD. The Value Related Agreements have been duly executed and delivered by the
Company and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, except (i) rights
to indemnity and contribution under the registration rights agreement for the
Value Note may be limited by applicable law, (ii) enforceability may be limited
by bankruptcy, insolvency, moratorium and similar laws affecting creditors'
rights generally and (iii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(ii) Neither the execution and delivery of any of the Value
Related Agreements, nor the consummation of the transactions contemplated
thereby, nor compliance by the Company with any of the provisions thereof, (a)
does or will conflict with or result in a breach of any provisions of the
Certificate of Incorporation or Bylaws of the Company or the equivalent
documents of any Subsidiary of the Company, (b) violate, conflict with or
result in a breach of any term, condition or provision of, or constitute a
default (or any event which, with notice or lapse of time, or both, would
constitute a default) under or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
Lien upon any property or asset of the Company or a Subsidiary of the Company
pursuant to, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the
Company or a Subsidiary of the Company is a party, or by which any of their
respective properties or assets may be bound or affected, or (c) subject to the
compliance referred to in the succeeding sentence, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or a
Subsidiary of the Company. Except for the approval of the shareholders of the
Company of the issuance of Common Stock upon conversion of the Value Notes
pursuant to the requirements of the NASD and actions by the Commission in
connection with the performance by the Company of its obligations under the
registration rights agreement for the Value Notes related to such shares of
Common Stock, no consent, approval, order or other authorization of any
Governmental Entity or of any third party is required by or on behalf of the
Company or a Subsidiary of the Company in connection with the execution,
delivery and performance of the Value Related Agreements.
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(iii) The securities being issued to Value Partners have been
authorized by all necessary corporate action on the part of the Company. When
issued pursuant to the terms of the Convertible Value Purchase Agreement, the
securities being issued to Value Partners will be duly authorized and validly
issued and will not be issued in violation of the preemptive rights of any
Person. The Value Notes and shares of Common Stock issued by the Company upon
conversion of the Value Notes, will be duly authorized, validly issued and
non-assessable at the time of issuance and will not be issued in violation of
the preemptive rights of any Person.
(dd) Disclosure. None of the representations and warranties of the
Company or any of the information or documents which have been Previously
Disclosed to the Holders pursuant hereto are false or misleading in any
material respect or contain any untrue statement of a material fact, or omit to
state any material fact required to be stated or necessary to make any such
information or document, at the time and in light of the circumstances, not
misleading. Copies of all documents referred to in this Section 3.1 are true,
correct and complete copies thereof and include all amendments, supplements and
modifications thereto and all waivers thereunder.
ARTICLE IV
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 4.1 CONDITIONS TO OBLIGATIONS OF THE PARTIES. The
respective obligations of each of the parties hereto to fulfill their
obligations under Section 2.1 hereof at the Closing shall be subject to the
satisfaction or waiver prior to the Closing of the following conditions:
(a) All requirements prescribed by law which are necessary to the
consummation of the transactions contemplated by this Agreement shall have been
satisfied, including the entry of an effectiveness order by the Commission with
respect to the Form T-3 filed by the Company as to the issuance of the New
Exchange Notes.
(b) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(c) No statute, rule or regulation shall have been enacted,
entered, promulgated, interpreted, applied or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of any of the
transactions contemplated by this Agreement.
(d) The Company shall have consummated the sale of $14,000,000
principal amount of Value Notes to Value Partners.
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(e) The holders of not less than 92% principal amount of the Old
Notes shall have been entered into this Agreement.
SECTION 4.2 CONDITIONS TO THE OBLIGATIONS OF THE HOLDERS. The
obligations of the Holders to fulfill its obligations under Section 2.1 hereof
shall be subject to the satisfaction or waiver prior to the Closing of the
following conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as if made on the
Closing Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); the Company shall have
performed, in all material respects, each of its covenants and agreements
contained in this Agreement to be performed prior to the Closing; and the
Holders shall have received a certificate signed by the Chief Executive Officer
and the Chief Financial Officer of the Company, dated the Closing Date, to the
foregoing effect.
(b) The Company and the Trustee shall have executed the
Indenture.
(c) The Company shall have delivered to the Trustee for the
benefit of the Holders, opinions, addressed to the Holders and dated the
Closing Date, of King & Spalding and Xxxxxxx & Xxxxxxx special counsel to the
Company, with respect to the indicated matters set forth in Exhibit G hereto.
(e) No party to this Agreement (other than the Holders) shall be
in material breach of this Agreement unless such breach shall have been waived
in writing by each of the other parties to this Agreement.
(f) The Company shall have obtained in writing all consents of
third parties necessary to permit the consummation of the transactions
contemplated by this Agreement and the Related Agreements, as Previously
Disclosed pursuant to Section 3.1(f) hereof, and no such consent shall contain
any term or condition that the Holders reasonably deems to be materially
disadvantageous to the Company or the Holders.
(g) Each of City National Bank of West Virginia and Sovereign
Bancorp, Inc. shall have waived any adjustments to the terms of the stock
options issued to them pursuant to the Stock Option Agreement, dated May 29,
1998, between the Company and each such entity, that may be required pursuant
to Section 7 of such Stock Option Agreements as a result of (i) the issuance of
the New Exchange Notes or the conversion of a portion thereof to shares of
Common Stock in accordance with their terms and (ii) consummation of the
Exchange pursuant to this Agreement, in each case in form and substance
reasonably satisfactory to the Holders, and
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Sovereign Bank shall have waived the same pursuant to the Participation
Agreement, dated June 29, 1998, between it and the Company.
(i) The Company, the Trustee (in its capacity as Collateral Agent
for the Notes and the Convertible Notes) and the holders of the Value Notes
shall have entered into the Intercreditor Agreement.
SECTION 4.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to fulfill its obligations under Section 2.1 hereof
shall be subject to the satisfaction or waiver prior to the Closing of the
following conditions:
(a) The Company shall have received from each Holder a Letter of
Representations.
(b) The Holders shall have delivered to the Old Notes to the
Exchange Agent.
(c) The Company shall have received (i) a counterpart to this
Agreement, duly executed and delivered by each Holders, and (ii) a counterpart
of each Related Agreement (other than the New Exchange Notes), substantially in
the form attached hereto as an exhibit, which shall have been duly executed and
delivered by the Holders.
(d) No party to this Agreement (other than the Company) shall be
in material breach of this Agreement unless such breach shall have been waived
in writing by each of the other parties to this Agreement.
(e) The Company shall have obtained in writing all consents of
third parties necessary to permit the consummation of the transactions
contemplated by this Agreement and the Related Agreements (other than the
consents referred to in Section 4.2(g) hereof) and no such consent shall
contain any term or condition that the Company reasonably deems to be
materially disadvantageous to the Company.
(f) The Company shall have received such other certificates,
opinions, documents and instruments related to the transactions contemplated
hereby as may have been reasonably required by the Company and are customary
for transactions of this type, and all corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, shall be reasonably satisfactory
in form and substance to the Company and its counsel.
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ARTICLE V
COVENANTS
SECTION 5.1 RULE 144 AND RULE 144A REPORTING. With a view to
making available to holders of Securities the benefits of certain rules and
regulations of the Commission which may permit the sale of the Securities to
the public without registration, the Company agrees at all times to:
(a) make and keep public information available, as those terms
are understood and defined in Rules 144 and 144A under the Securities Act (or
any successors thereto); and
(b) use its reasonable best efforts to file with the Commission
in a timely manner all Securities Documents required to be filed by the Company
under the Securities Laws.
SECTION 5.2 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest on the New Exchange Notes,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of its obligations under the New Exchange
Notes, and the Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantages of any such law.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 SURVIVAL OF PROVISIONS. The representations,
warranties, covenants and agreements of the Company and the Holders made herein
shall remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Holders or the Company, as the case
may be, (ii) acceptance of any of the Securities and payment by the Holders
therefor and retirement thereof, (iii) the transfer of any Securities or
interest therein by the Holders or (iv) any termination of this Agreement.
SECTION 6.2 TERMINATION. This Agreement may be terminated:
(a) by mutual agreement of the Company and the Holders;
(b) by the Company by written notice to the Holders if any of the
conditions specified in Sections 4.1 and 4.3 of this Agreement has not been met
or waived by it pursuant to the terms
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of this Agreement by 5:00 p.m., Eastern Time, on the Expiration Date, provided,
however, that the right to terminate this Agreement pursuant to this Section
6.2(b) shall not be available to the Company to the extent that any action by
the Company or failure by the Company to fulfill any obligation under this
Agreement has been a cause of, or resulted in, the failure of any one or more
of the conditions specified in Sections 4.1 and 4.3 of this Agreement not being
fulfilled by such date; or
(c) by the Trustee as agent for the Holders by written notice to
the Company if any of the conditions specified in Sections 4.1 and 4.2 of this
Agreement has not been met or waived by the Trustee pursuant to the terms of
this Agreement by the Expiration Date, provided, however, that the right to
terminate this Agreement pursuant to this Section 6.2(c) shall not be available
to the extent that any action by the Holders or failure by such Holders to
fulfill any obligation under this Agreement has been a cause of, or resulted
in, the failure of any one or more of the conditions specified in Sections 4.1
and 4.2 of this Agreement not being fulfilled by such date.
SECTION 6.3 WAIVER; AMENDMENTS.
No failure or delay on the part of the Company or the Holders in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Holders at law or in equity. No waiver of or consent to any departure by
the Company or the Holders from any provision of this Agreement shall be
effective unless signed in writing by the party entitled to the benefit
thereof. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of the Company and the Holders. Any amendment,
supplement or modification of or to any of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on
any party hereto in any case shall entitle another party hereto to any other or
further notice or demand in similar or other circumstances.
SECTION 6.4 COMMUNICATIONS. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to the Holders, by delivery in care of the
Trustee , Compliance Officer, Office of the General Counsel, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 Facsimile No. (212)
852-1306; and
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(ii) if to the Company, initially at 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention: Chief Financial
Officer; and thereafter at such other address notice of which is given
in accordance with this Section 6.4.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being sent by certified mail, return receipt requested, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
SECTION 6.5 COSTS, EXPENSES AND TAXES. The Company agrees to pay
(i) all costs and expenses incurred by it in connection with the negotiation,
preparation, typing, reproduction, execution, delivery and performance of this
Agreement and the Related Agreements and any amendment or supplement or
modification hereof or thereof (except to the extent otherwise provided in the
Registration Rights Agreement), including without limitation, attorneys fees
and expenses and all reasonable costs and expenses incurred by it in connection
with the Company's administration of this Agreement and any Related Agreement,
and (ii) the expenses of the Holders incurred in connection with the
transactions provided for herein, including reasonable fees and expenses
payable to counsel to the Holders in connection with the negotiation,
preparation, typing, reproduction, execution and delivery of this Agreement and
the Related Agreements, provided that such fees and expenses of counsel in this
clause (ii) shall not exceed $40,000. The Company shall pay all reasonable
costs and expenses (including, without limitation, attorneys' fees and
expenses), if any, incurred by the Holders in connection with any waiver,
amendment or modification of any provision of this Agreement or any Related
Agreement with respect to an obligation of, or requested by, the Company. In
addition, the Company shall pay any and all stamp, transfer and other similar
taxes payable in connection with the execution and delivery of this Agreement
or the original issuance of any of the Securities, and shall save and hold the
Holders harmless from and against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes.
SECTION 6.6 EXECUTION IN COUNTERPARTS; FAX EXECUTION.
(a) This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
(b) For purposes of negotiating and finalizing this Agreement or
any Related Agreement (including any subsequent amendments thereto), any signed
document transmitted by facsimile machine ("FAX") shall be treated in all
manner and respects as an original document.
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The signature of any party by FAX shall be considered for these purposes as an
original signature. Any such FAX document shall be considered to have the same
binding legal effect as an original document. Each of the undersigned parties
hereby agrees that it will not raise the use of the FAX or the fact that any
signature or document was transmitted or communicated through the use of a FAX
as a defense to the formation of this Agreement or any Related Agreement.
SECTION 6.7 BINDING EFFECT; ASSIGNMENT. Prior to the Closing,
the rights and obligations of any Holders under this Agreement may not be
assigned to any other Person except with the prior written consent of the
Company, and after the Closing the rights and obligations of the Holders may be
assigned by such Holders to any Person purchasing Securities from the Holders
contemporaneously with such assignment (provided the rights so assigned shall
apply to the Securities so purchased). Any subsequent purchaser of New Exchange
Notes from a Holder shall be required to complete an Investor Representation
Letter stating that such purchaser is qualified to hold the New Exchange Notes
purchased. The rights and obligations of the Company under this Agreement may
not be assigned by the Company without the consent of the Holders. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to
this Agreement, and their respective successors and permitted assigns. This
Agreement shall be binding upon the Company and the Holders and their
respective permitted successors and assigns.
SECTION 6.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
SECTION 6.9 USURY.
All agreements between the Company and the holders of the New Exchange
Notes, whether now existing or hereafter arising and whether written or oral,
are hereby limited so that in no contingency, whether by reason of acceleration
of the maturity of the New Exchange Notes or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to the Holders
exceed the maximum amount permissible under the laws of the State of Minnesota
(hereinafter the "Applicable Law"). If, from any circumstance whatsoever,
interest would otherwise be payable to the holders of the New Exchange Notes in
excess of the maximum amount permissible under the Applicable Law, the interest
payable to the holders of the New Exchange Notes shall be reduced to the
maximum amount permissible under the Applicable Law, and if from any
circumstance the holders of the New Exchange Notes shall ever receive anything
of value deemed interest by the Applicable Law in excess of the maximum amount
permissible under the Applicable Law, an amount equal to the excessive interest
shall be applied to the reduction of the principal of the New Exchange Notes
and not to the payment of interest, or if such excessive amount of interest
exceeds the unpaid principal amount of the New Exchange Notes, such excess
shall be refunded to the Company. All interest paid or agreed to be
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paid to the holders of the New Exchange Notes shall, to the extent permitted by
the Applicable Law, be amortized, prorated, allocated and spread throughout the
full term of the New Exchange Notes (including any renewal or extension) until
payment in full of the principal so that the interest on the New Exchange Notes
for such full term shall not exceed the maximum amount permissible under the
Applicable Law. The Holders expressly disavows any intent to contract for,
charge or receive interest in an amount which exceeds the maximum amount
permissible under the Applicable Law. This paragraph as well as similar
paragraphs set forth in the New Exchange Notes and the Related Agreements shall
control all agreements between the Company and the holders of the New Exchange
Notes.
SECTION 6.10 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability only without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 6.11 CONSTRUCTION. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement. Section
and other references in this Agreement are to this Agreement unless otherwise
specified. In this Agreement, (i) the phrase "to the knowledge of the Company"
or words of such import shall mean all knowledge, including actual knowledge
and knowledge of matters which a reasonable person in such position knew or
should have known, of the respective directors and officers of the Company;
(ii) use of a particular gender shall be considered to represent the masculine,
feminine or neuter gender as appropriate; and (iii) the terms "hereof,"
"herein," "hereunder" and similar terms refer to this Agreement as a whole and
not to any particular provision. The Company represents and warrants to the
Holders that the WHEREAS recitals to this Agreement are true and accurate and
agrees that such recitals constitute an integral part of this Agreement.
SECTION 6.12 INTEGRATION. This Agreement (including documents
delivered pursuant hereto) and the Related Agreements constitute the entire
agreement among the parties with respect to the subject matter thereof and
supersede all prior agreements between the parties with respect to such subject
matter and there are no promises or undertakings with respect thereto not
expressly set forth or referred to herein or therein.
SECTION 6.13. NO THIRD PARTY BENEFICIARIES. This Agreement is
solely for the benefit of the Holders and its successors and assigns and any
subsequent registered holder of a New Exchange Note and nothing contained
herein shall be deemed to confer upon any other Person any right to insist on
or to enforce the performance or observance of any of the obligations contained
herein. All conditions to the obligations of the Holders to purchase New
Exchange Notes hereunder are imposed solely and exclusively for the benefit of
the Holders and its
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successors and assigns and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions.
SECTION 6.14. REPRESENTATION BY COUNSEL. The Company hereby
represents that it has been represented by competent counsel of its choice in
the negotiation and execution of this Agreement and the Related Agreements;
that it has read and fully understands the terms hereof and thereof; that the
Company and its counsel have been afforded an opportunity to review, negotiate
and modify the terms of this Agreement and the Related Agreements and that it
intends to be bound by the terms hereof and thereof.
SECTION 6.15. WAIVER OF CLAIMS. The Company hereby acknowledges,
agrees and affirms that it possesses no claims, defenses, offsets, recoupment
or counterclaims of any kind or nature against or with respect to the
enforcement of this Agreement or any Related Agreement (collectively, the
"Claims"), nor does the Company now have knowledge of any facts that would or
might give rise to any Claims. If facts now exist which would or could give
rise to any Claim against or with respect to the enforcement of this Agreement
or any Related Agreement, the Company hereby unconditionally, irrevocably and
unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.
SECTION 6.16 POWER OF ATTORNEY. Each Holder executing this
Agreement hereby appoints the Trustee as the Holder's attorney-in-fact for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument which the Trustee may deem necessary or advisable
to accomplish the purposes hereof now or in the future, including, but not
limited to, the Registration Rights Agreement, the Intercreditor Agreement, the
QIB Security Agreement or Non-QIB Security Agreement (as applicable) and
financing statements related to the collateral pledges under the Security
Agreements and any amendments, supplements or other related actions to any of
the foregoing which is consistent with the terms of this Agreement, which
appointment is irrevocable and coupled with an interest.
ARTICLE VII
INDEMNIFICATION; SET OFF
SECTION 7.1. INDEMNIFICATION. The Company hereby agrees to
reimburse and indemnify each holder of a New Exchange Note and its respective
agents, employees and assigns (collectively, the "Indemnified Parties") from
and against any and all losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements of
any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnified Party in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnified Party shall be
30
designated a party thereto) that may at any time be imposed on, asserted
against or incurred by such Indemnified Party as a result of, or arising out
of, or in any way related to or by reason of, this Agreement or any Related
Agreement, any transaction from time to time contemplated hereby or thereby, or
any transaction financed in whole or in part or directly or indirectly with the
proceeds of any New Exchange Note (and without in any way limiting the
generality of the foregoing, including any exercise by a holder of a Note of
any of its rights or remedies under this Agreement or any Related Agreement),
but excluding any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
resulting solely from the gross negligence or willful misconduct of such
Indemnified Party, as finally determined by a court of competent jurisdiction.
If and to the extent that the foregoing obligations of the Company under this
Section 7.1, or any other indemnification obligation of the Company hereunder
or under any Related Agreement, are unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.
SECTION 7.2. SET-OFF. The Company hereby agrees that if any
obligation or liability of the Company under this Agreement or any Related
Agreement shall be due and payable (by acceleration or otherwise) after the
occurrence of an Event of Default and during the continuation thereof, a holder
of a New Exchange Note shall have the right, without notice to the Company, to
set-off against and to appropriate and apply to such obligation or liability of
the Company any obligation of any nature owing to the Company, including but
not limited to all deposits (whether time or demand, general or special,
provisionally credited or finally credited, whether or not evidenced by a
certificate of deposit) now or hereafter maintained by the Company with a
Holders. Such right shall be absolute and unconditional in all circumstances
and, without limitation, shall exist whether or not a holder of New Exchange
Note or any other Person shall have given notice or made any demand to the
Company or any other Person, whether such obligation owed to the Company is
contingent, absolute, matured or unmatured (it being agreed that a holder of a
New Exchange Note may deem such obligation to be then due and payable at the
time of such setoff), and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to a
Holders or any other Person. The rights provided by this Section 7.2 are in
addition to any other rights of set-off and all other rights and remedies which
a holder of a Note may otherwise have under this Agreement, any Related
Agreement, at law or in equity or otherwise, and nothing in this Agreement or
any Related Agreement shall be deemed a waiver or prohibition of or restriction
on the rights of set-off or any other rights of any such Person.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
ALTIVA FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive Officer
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HOLDERS (BY UNITED STATES TRUST COMPANY OF NEW YORK AS ATTORNEY-IN-FACT)
Signature: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------------------
Name (Print): Xxxxx X. Xxxxxxxx
Title: Vice President
