MORTGAGEIT, INC.
FIRST AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
THIS FIRST AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (this
"AGREEMENT")
is made and entered into as of August 23, 2005, by and among
MORTGAGEIT, INC., a
New York corporation (the "COMPANY"), and each of those persons and
entities,
severally and not jointly, whose names are set forth on the
Schedule of
Purchasers attached hereto as SCHEDULE I (which entities and any
successors
thereto are hereinafter collectively referred to as the
"PURCHASERS" and each
individually as a "Purchaser").
RECITALS
WHEREAS, the Company sought financing and the Purchasers provided
such
financing and purchased from the Company senior secured promissory
notes, for an
aggregate purchase price of Fifteen Million Dollars ($15,000,000),
pursuant to
the terms and conditions of that certain Note Purchase Agreement
among the
Company and the Purchasers dated as of March 29, 2004 (the
"EXISTING NOTE
PURCHASE AGREEMENT"); and
WHEREAS, the Company and the Purchasers desire to amend certain
terms and
conditions of the Existing Note Purchase Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and the
mutual
promises hereinafter set forth, the receipt and sufficiency of
which are hereby
acknowledged, the parties hereto agree as follows:
1.
DEFINITIONS.
When used in this Agreement, the following terms have the meaning
set forth
the below (such meanings being equally applicable to both the
singular and
plural forms of the terms defined):
"AFFILIATE", as applied to any Person, means any other Person
directly or
indirectly controlling, controlled by, or under common control
with, that
Person. For the purposes of this definition, "control" (including,
with
correlative meanings, the terms "controlling", "controlled by" and
"under common
control with"), as applied to any Person, means the possession,
directly or
indirectly, of the power to direct or cause the direction of the
management and
policies of that Person, whether through the ownership of voting
securities or
by contract or otherwise. For purposes of this definition, (a) a
Person shall be
deemed to be "controlled by" a Person if such Person possesses,
directly or
indirectly, power to vote 10% or more of the securities having
ordinary voting
power for the election of directors of such Person, provided that
in no event
shall the Company be deemed to be controlled by TICC, (b) members
of the
immediate family of a Person shall be deemed to be Affiliates of
such Person and
(c) members of the board of directors or board of managers or
similar body of
the Parent and of the Company shall be deemed to be Affiliates of
the Company.
"BALANCE SHEET" has the meaning assigned thereto in Section
3.11(a).
"BALANCE SHEET CASH" means, as of any date of determination, (x)
the sum of
(i) Cash and Cash Equivalents and (ii) the par value of mortgage
loans held for
sale, minus (y) the aggregate principal amount of Warehouse Lines
outstanding as
of such date. All the foregoing categories shall be determined in
accordance
with GAAP applied on a consistent basis.
"BENEFIT ARRANGEMENT" shall have the meaning assigned thereto in
Section
3.19.
"BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day
on which commercial banks in New York, New York are authorized or
required to
close.
"CAPITAL EXPENDITURES" means, for any period, additions to property
and
equipment and other capital expenditures of the Company which, in
conformity
with GAAP, are included as "additions to property, plant or
equipment" or
similar items which would be reflected in the consolidated
statement of cash
flow of the Company, including without limitation, property and
equipment which
are the subject of Capital Leases.
"CAPITAL LEASE" means any lease (or other agreement conveying the
right to
use property) the obligations of which are required to be
capitalized on the
balance sheet of a Person in accordance with GAAP.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation,
any and all shares, interests, participations or other equivalents
(however
designated and whether voting or nonvoting) of corporate stock,
including each
class of common stock and preferred stock of such Person and (ii)
with respect
to any Person that is not a corporation, any and all general
partnership,
limited partnership, membership or other equity interests of such
Person.
"CASH" means money, currency or a credit balance in any demand or
deposit
account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable
securities (a) issued or directly and unconditionally guaranteed as
to interest
and principal by the government of the United States of America or
(b) issued by
any agency of the United States of America the obligations of which
are backed
by the full faith and credit of the United States of America, in
each case
maturing within one year after such date; (ii) marketable direct
obligations
issued by any state of the United States of America or any
political subdivision
of any such state or any public instrumentality thereof, in each
case maturing
within one year after such date and having, at the time of the
acquisition
thereof, a rating of at least A-2 from S&P or at least P-2 from
Moody's; (iii)
commercial paper maturing no more than one year from the date of
creation
thereof and having, at the time of the acquisition thereof, a
rating of at least
A-2 from S&P or at least P-2 from Moody's; and (iv)
certificates of deposit or
bankers' acceptances maturing within one year after such date and
issued or
accepted by any Purchaser or by any commercial bank organized under
the laws of
the United States of America or any state thereof or the District
of Columbia
that (a) is at least "adequately capitalized" (as defined in the
regulations of
its primary Federal banking regulator) and (b) has Tier 1 capital
(as defined in
such regulations) of not less than $100,000,000.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation,
and Liability Act (42 U.S.C. 9601 et seq.), as amended from time to
time, and
any successor statute thereto.
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"CHANGE OF CONTROL" means, at any time, (i) any Person or any
Persons
acting together that would constitute a "group" for purposes of
Section 13(d)
under the Exchange Act, or any successor provision thereto, shall
acquire
beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act,
or any successor provision thereto) in a single transaction or a
series of
related transactions, of more than 35% of the aggregate voting
power of the
Company; or (ii) the Company merges into or consolidates with any
other Person,
or any Person merges into or consolidates with the Company, except
in each case
any merger or consolidation permitted under this Agreement; or
(iii) or the
Company sells or transfers its assets, as an entirety or
substantially as an
entirety, to another Person; or (iv) any "change of control" or
similar event
under any loan agreement, mortgage, indenture or other agreement
relating to any
Indebtedness shall occur; or (v) during any period of two
consecutive years,
individuals who at the beginning of such period constituted the
Board of
Directors (or similar governing body) of the Company (together with
any new
directors whose election by the shareholders of the Company was
proposed by a
vote of the majority of directors of the Company then still in
office who were
either directors at the beginning of such period or whose election
or nomination
for election was previously so approved) cease for any reason to
constitute a
majority of the Board of Directors of the Company then in office;
provided,
however, that the Merger shall not constitute a Change of Control.
"CLOSING" shall have the meaning assigned thereto in Section 2.3.
"CLOSING DATE" shall have the meaning assigned thereto in Section
2.3.
"COLLATERAL AGENT" means the Person, initially TICC, serving as
Collateral
Agent pursuant to Section 11.8.
"COMPANY" has the meaning assigned thereto in the preamble.
"COMPANY INTELLECTUAL PROPERTY" has the meaning assigned thereto in
Section
3.20(a).
"CONTROL AGREEMENT" means a Deposit Account Control Agreement as
such term
is defined in Section 4.2 of the Security Agreement.
"CSFB MASTER REPURCHASE AGREEMENT" means that certain Master
Repurchase
Agreement dated March 11, 2005 by and among Credit Suisse First
Boston Mortgage
Capital LLC, the Company and the Parent (as may be amended,
supplemented or
modified from time to time in accordance with the terms therein).
"DEFAULT" means an Event of Default or an event that with notice or
lapse
of time or both would, unless cured or waived, become an Event of
Default.
"DISCLOSURE SCHEDULE" has the meaning assigned thereto in the
second
sentence of Section 3.
"DISQUALIFIED STOCK" means any Capital Stock or other security of
any
nature which by its terms (or by the terms of any security into
which it is
convertible or for which it is exchangeable at the option of the
holder
thereof), or upon the happening of any event matures (excluding any
maturity as
the result of an optional redemption by the issuer thereof) or is
mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable
at
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the sole option of the holder thereof, at any time prior to the
payment in full
in cash by the Obligors.
"ENVIRONMENTAL LAW" shall mean the Resource Conservation and
Recovery Act
("RCRA"), CERCLA, the Superfund Amendments and Reauthorization Act
of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic
Substances Control Act, or any state or local statute, regulation,
ordinance,
order or decree relating to health, safety or the environment.
"EVENT OF DEFAULT" has the meaning assigned thereto in Section 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXISTING NOTE PURCHASE AGREEMENT" has the meaning assigned thereto
in the
recitals to this Agreement.
"FINANCIAL STATEMENTS" has the meaning assigned thereto in Section
3.11(d).
"GAAP" means those generally accepted accounting principles in the
United
States of America, as in effect from time to time; provided,
however, for
purposes of computing financial covenants GAAP means generally
accepted
accounting principles in the United States of America applied in
the preparation
of the Parent's audited balance sheet, statement of income and
statement of cash
flow for the fiscal year December 31, 2004, as reflected in such
audited
financial statements. If any changes in accounting principles from
those in
effect on the date hereof are hereafter occasioned by promulgation
of rules,
regulations, pronouncements or opinions by or are otherwise
required by the
Financial Accounting Standards Board or the American Institute of
Certified
Public Accountants (or successors thereto or agencies with similar
functions),
and any of such changes results in a change in the method of
calculation of, or
affects the results of such calculation of, any of the financial
covenants,
standards or terms found herein, then the parties hereto agree to
enter into and
diligently pursue negotiations in order to amend such financial
covenants,
standards or terms so as to equitably reflect such changes, with
the desired
result that the parties shall be in substantially the same position
from an
economic standpoint with respect to the matters covered thereby
after the
adoption or implementation of such change as before the
implementation or
adoption of such change.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal,
foreign or
other government, governmental department, commission, board,
bureau, agency or
instrumentality, or any private or public court or tribunal.
"GREENWICH MASTER LOAN AGREEMENT" means that certain Master Loan
and
Security Agreement, dated as of February 15, 2005, by and among the
Company,
Parent and Greenwich Capital Financial Products, Inc. (as may be
amended,
supplemented or modified from time to time in accordance with the
terms
therein).
"GUARANTEE" as applied to any Person, shall mean any direct or
indirect
liability, contingent or otherwise, of that Person: (i) with
respect to any
underlying Indebtedness, lease, dividend or other obligation of
another Person
if the primary purpose or intent of the Person incurring such
liability, or the
primary effect thereof, is to provide assurance to the obligee of
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such liability that the underlying Indebtedness, lease, dividend or
other
obligation will be paid or discharged, or that any agreements
relating thereto
will be complied with, or that the holders of such liability will
be protected
(in whole or in part) against loss with respect thereto; (ii) with
respect to
any letter of credit issued for the account of that Person or as to
which that
Person is otherwise liable for reimbursement of drawings; or (iii)
under any
foreign exchange contract, currency swap agreement, interest rate
swap agreement
or other similar agreement or arrangement designed to alter the
risks of that
Person arising from fluctuations in currency values or interest
rates.
Guarantees shall include (a) the direct or indirect guaranty,
endorsement (other
than for collection or deposit in the ordinary course of business),
co-making,
discounting with recourse or sale with recourse by such Person of
the obligation
of another, (b) the obligation to make take-or-pay or similar
payments if
required regardless of nonperformance by any other party or parties
to an
agreement, or to maintain working capital or equity capital of such
other Person
or otherwise to maintain the net worth or solvency of such other
Person, (c) any
liability of such Person for the obligations of another through any
agreement to
purchase, repurchase or otherwise acquire such obligation or any
property
constituting security therefor, to provide funds for the payment or
discharge of
such obligation or to maintain the solvency, financial condition or
any balance
sheet item or level of income of another, and (d) otherwise to
assure or hold
harmless the owner of such obligation against loss in respect
thereof. The
amount of any Guarantee shall be equal to the amount of the
obligation so
guaranteed or otherwise supported or, if not a fixed and determined
amount, the
maximum amount so guaranteed.
"GUARANTOR" means Parent and each Subsidiary of the Company (other
than
MortgageIT Capital Trust I, MortgageIT Capital Trust II and
MortgageIT
Securities Corp.).
"GUARANTY AGREEMENT" means the Guaranty Agreement, dated as of
March 29,
2004, by the Guarantors in favor of the Collateral Agent for the
benefit of the
Purchasers, as amended, supplemented, restated or otherwise
modified from time
to time.
"HAZARDOUS MATERIALS" shall mean (i) any "hazardous substance," as
defined
by CERCLA, (ii) any "hazardous waste," as defined by RCRA, (iii)
any petroleum
product, or (iv) any pollutant or contaminant or hazardous,
dangerous or toxic
chemical, material or substance regulated by any Environmental
Laws.
"HEDGING AGREEMENT" means any interest rate swap, collar, cap,
floor or
forward rate agreement or other agreement regarding the hedging of
interest rate
risk exposure executed in connection with hedging the interest rate
exposure of
any Person and any confirming letter executed pursuant to such
agreement, all as
amended, supplemented, restated or otherwise modified from time to
time.
"INCENTIVE PLAN" has the meaning assigned thereto in Section 3.2.
"INDEBTEDNESS" means, without duplication, as to any Person or
Persons (a)
indebtedness for borrowed money; (b) indebtedness for the deferred
purchase
price of property or services; (c) indebtedness evidenced by bonds,
debentures,
notes or other similar instruments; (d) obligations and liabilities
secured by a
Lien, other than a Permitted Lien, upon property owned by such
Person, whether
or not owing by such Person and even though such Person has not
assumed or
become liable for the payment thereof; (e) obligations and
liabilities directly
or indirectly
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Guaranteed by such Person; (f) obligations or liabilities created
or arising
under any conditional sales contract or other title retention
agreement with
respect to property used and/or acquired by such Person; (g)
obligations of such
Person as lessee under Capital Leases; (h) net liabilities of such
Person under
Hedging Agreements and foreign currency exchange agreements, as
calculated on a
basis satisfactory to the Majority Purchasers and in accordance
with accepted
practice; (i) all obligations of such Person in respect of bankers'
acceptances
and (j) all obligations, contingent or otherwise of such Person as
an account
party or applicant in respect of letters of credit.
"INTELLECTUAL PROPERTY" means all (i) trademarks and service marks,
logos,
trade dress, product configurations, trade names and other
indications of
origin, applications or registrations in any jurisdiction
pertaining to the
foregoing and all goodwill associated therewith; (ii) inventions
(whether or not
patentable), discoveries, improvements, ideas, know-how, formula
methodology,
research and development, business methods, processes, technology,
software
(including password unprotected interpretive code or source code,
object code,
development documentation, programming tools, drawings,
specifications and data)
and applications or patents in any jurisdiction pertaining to the
foregoing,
including re-issues, continuations, divisions,
continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential
information and the
right in any jurisdiction to limit the use or disclosure thereof;
(iv)
copyrights in writings, designs, software, mask works or other
works,
applications or registrations in any jurisdiction for the foregoing
and all
moral rights related thereto; (v) database rights; (vi) Internet
Web sites, Web
pages, domain names and applications and registrations pertaining
thereto; and
(vii) all rights under agreements relating to the foregoing.
"INVESTMENT" means, for any Person: (a) the acquisition (whether
for cash,
property, services or securities or otherwise) of capital stock,
bonds, notes,
debentures, partnership or other ownership interests or other
securities of any
other Person or any agreement to make any such acquisition
(including, without
limitation, any "short sale" or any sale of any securities at a
time when such
securities are not owned by the Person entering into such sale);
(b) the making
of any deposit with, or advance, loan or other extension of credit
to, any other
Person (including the purchase of property from another Person
subject to an
understanding or agreement, contingent or otherwise, to resell such
property to
such Person), but excluding any such advance, loan or extension of
credit having
a term not exceeding 90 days arising in connection with the sale of
inventory or
supplies by such Person in the ordinary course of business; (c) the
entering
into of any guarantee of, or other contingent obligation with
respect to,
Indebtedness or other liability of any other Person and (without
duplication)
any amount committed to be advanced, lent or extended to such
Person; or (d) the
entering of any Hedging Agreement.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest,
charge or encumbrance of any kind (including any conditional sale
or other title
retention agreement, any lease in the nature thereof and any
agreement to give
any of the foregoing).
"LISTED INTELLECTUAL PROPERTY" shall have the meaning assigned
thereto in
Section 3.20(b).
"MAJORITY PURCHASERS" means at any given time the Purchasers
holding more
than fifty percent (50%) of the then outstanding principal amount
of the Notes.
-6-
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the
business, properties, assets, liabilities, profits, results of
operations or
financial condition of the Company and its Subsidiaries, taken as a
whole or
(ii) the ability of the Company or any Guarantor to perform its
obligations
under any of the Transaction Documents.
"MATERIAL AGREEMENT" shall have the meaning assigned thereto in
Section
3.14.
"MERRILL LYNCH MASTER REPURCHASE AGREEMENT" means that certain
Master
Repurchase Agreement, dated as of June 8, 2005, by and between the
Company, the
Parent, MHL Funding Corp. and Next at Bat Lending, Inc. and Merrill
Lynch
Mortgage Capital Inc. (as may be amended, supplemented or modified
from time to
time in accordance with the terms therein).
"MOODY'S" means Moody's Investors Service, Inc. and any successor
entity.
"OBLIGORS" means, collectively, the Company and the Guarantors.
"OFFICER" means, with respect to any Person, the Chairman of the
Board of
Directors, the Chief Executive Officer, the Chief Operating
Officer, the
President, any Vice President, the Chief Financial Officer, the
Treasurer, the
Controller, the Chief Administrative Officer, the General Counsel
or the
Secretary of such Person, or any other officer designated by the
Board of
Directors of such Person serving in a similar capacity.
"OFFICERS' CERTIFICATE" means a certificate signed by any Officer
of the
Company.
"ORGANIZATIONAL DOCUMENTS" has the meaning assigned thereto in
Section
3.1(a).
"PARENT" means MortgageIT Holdings, Inc., a Maryland corporation.
"PERMITTED AFFILIATE TRANSACTIONS" means any of the following:
(a) reasonable fees and compensation paid to and indemnity provided
on
behalf of, officers, directors, employees, consultants or agents of
the Company
or any as determined in good faith by the Company's Board of
Directors or senior
management, it being agreed that the level of compensation paid to
the Company's
officers, directors, employees, consultants and agents as of the
Closing Date is
reasonable;
(b) transactions between or among the Company and its wholly owned
Subsidiaries or between or among such wholly owned Subsidiaries;
provided that
such transactions are not otherwise prohibited under this Agreement
and such
Subsidiaries are Guarantors;
(c) any agreement as in effect as of the Closing Date, as set forth
on
Schedule 3.25 hereto, or any amendment thereto or any transaction
contemplated
thereby (including pursuant to any amendment thereto) or in any
replacement
agreement thereto so long as any such amendment or replacement
agreement is not
more disadvantageous to the Purchasers in any material respect than
the original
agreement as in effect on the Closing Date; and
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(d) advances to officers and employees of the Company in the
ordinary
course of business and in compliance with past practice and all
applicable laws.
"PERMITTED INDEBTEDNESS" means and includes:
(a) Indebtedness to the Purchasers hereunder;
(b) Indebtedness existing on the date hereof and set forth on the
Schedule attached hereto as Schedule II (prior to any amendment,
modifications,
extensions thereof or supplements thereto after the date hereof);
(c) Indebtedness that is junior in right of payment to the Notes
and
that is expressly subordinated to the obligations of the Company to
pay
principal of and interest on the Notes on terms reasonably
acceptable to the
Majority Purchasers;
(d) Indebtedness incurred by the Company and its Subsidiaries
pursuant
to equipment financing; provided, that the Company shall at the
time of such
incurrence be in compliance with its financial covenants on a pro
forma basis;
(e) Warehouse Line financing incurred in the ordinary course of
business; and
(f) unsecured Indebtedness in an amount not to exceed an aggregate
of
$25,000,000.
"PERMITTED INVESTMENTS" means: (a) direct obligations of the United
States
of America, or of any agency thereof, or obligations guaranteed as
to principal
and interest by the United States of America, or of any agency
thereof, in
either case maturing not more than 90 days from the date of
acquisition thereof;
(b) certificates of deposit issued by any bank or trust company
organized under
the laws of the United States of America or any State thereof and
having
capital, surplus and undivided profits of at least $500,000,000,
maturing not
more than 90 days from the date of acquisition thereof; (c)
commercial paper
rated A-2 or better or P-2 by S&P or Moody's, respectively,
maturing not more
than 90 days from the date of acquisition thereof; in each case so
long as the
same (x) provide for the payment of principal and interest (and not
principal
alone or interest alone) and (y) are not subject to any contingency
regarding
the payment of principal or interest; and (d) mortgages,
mortgage-backed
securities and asset-backed securities.
"PERMITTED LIENS" means:
(a) Liens imposed by law for taxes that are not yet due or are
being
contested in compliance with Section 5.10;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's
and other like Liens imposed by law, arising in the ordinary course
of business
and securing obligations that are not overdue by more than 30 days
or that are
being contested in good faith and by appropriate proceedings;
-8-
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and
other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and
other obligations of a like nature, in each case in the ordinary
course of
business;
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course
of business that do not secure any monetary obligations and do not
materially
detract from the value of the affected property or interfere with
the ordinary
conduct of business of the Company or any of its Subsidiaries;
(f) Liens to secure Indebtedness consisting solely of Permitted
Indebtedness of the type described in clause (d) of the definition
thereof
secured solely by the equipment purchased with the proceeds of such
Indebtedness, provided that such Liens shall not secure
Indebtedness exceeding
in the aggregate $500,000 at any time outstanding;
(g) Liens in favor of the Purchasers and/or their agents as are
contemplated hereunder and/or under any of the Transaction
Documents;
(h) Liens to secure mortgage loans acquired with the proceeds of
Warehouse Lines and related books, records, insurance proceeds and
other related
assets; and
(i) Liens set forth on Schedule IV hereto;
provided that the term "Permitted Liens" other than those set forth
under
clauses (f), (g), (h) and (i) shall not include any Lien securing
Indebtedness.
"PERSON" shall be construed in the broadest sense and means and
includes
any natural person, a partnership, a corporation, an association, a
joint stock
company, a limited liability company, a trust, a joint venture, an
unincorporated organization and other entity or Governmental
Authority.
"PLAN" has the meaning assigned thereto in Section 3.2.
"PREFERRED STOCK" has the meaning assigned thereto in Section 3.2.
"PROPRIETARY SOFTWARE" shall have the meaning assigned thereto in
Section
3.21.
"PURCHASER PUT RIGHT" shall have the meaning assigned thereto in
Section
2.2(b).
"RELATED BUSINESS" has the meaning assigned thereto in Section 6.6.
"RESTATEMENT EFFECTIVE DATE" has the meaning assigned thereto in
Section 8.
"RESTRICTED PAYMENT" has the meaning assigned thereto in Section
6.4(a).
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"RFC WAREHOUSE AGREEMENT" means that certain First Amended and
Restated
Warehousing Credit and Security Agreement, dated as of April 12,
2005, by and
between the Company and Residential Funding Corporation (as may be
amended,
supplemented or modified from time to time).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Pledge and Security Agreement, dated
as of
March 29, 2004, by the Company and the other Obligors in favor of
the Collateral
Agent, as amended, supplemented, restated or otherwise modified
from time to
time.
"SERIES A COMMON STOCK" has the meaning assigned thereto in Section
3.2.
"SERIES B COMMON STOCK" has the meaning assigned thereto in Section
3.2.
"S&P" means Standard & Poor's Ratings Services and any
successor entity.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation
of
which the outstanding Capital Stock having at least a majority of
the votes
entitled to be cast in the election of directors under ordinary
circumstances
shall at the time be owned, directly or indirectly, by such Person,
(ii) any
other Person (other than a partnership) of which at least a
majority of the
voting interest under ordinary circumstances is at the time,
directly or
indirectly, owned by such Person or (iii) any partnership (a) the
sole general
partner or the 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).
"TICC" means Technology Investment Capital Corp. and its successors
and
assigns.
"TRANSACTION DOCUMENTS" means this Agreement, the Security
Agreement, the
Notes, the Guaranty Agreement and all other documents executed or
delivered by
the Company in connection with the transaction contemplated herein.
"UBS WAREHOUSE FACILITY" means, collectively, (i) that certain
Amended and
Restated Mortgage Loan Purchase Agreement, dated as of January 10,
2003, between
the Company and UBS Warehouse Real Estate Facilities ("UBS") and
(ii) that
certain Amended and Restated Mortgage Loan Repurchase Agreement,
dated as of
January 10, 2003, between the Company and UBS (as each may be
amended,
supplemented or modified from time to time in accordance with terms
hereof).
"WAREHOUSE AGREEMENTS" means the agreements set forth on SCHEDULE V
hereto.
"WAREHOUSE LINE" means any agreement, document or instrument
(including any
repurchase agreement or similar agreement) entered into by the
Company, the
Parent or any of its Subsidiaries in the ordinary course of their
business
pursuant to which the Parent or the Company or any of its
Subsidiaries agrees to
sell, hypothecate, pledge or otherwise transfer mortgage loans, or
any interest
in mortgage loans, to any Person, who is not an Affiliate of the
Parent or the
Company or any of its Subsidiaries in connection with an extension
of credit (or
repurchase arrangement) by such Person to the Parent or the Company
or any of
its Subsidiaries,
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including, but not limited to, the CSFB Master Repurchase
Agreement, the
Greenwich Master Loan Agreement, the Merrill Lynch Master
Repurchase Agreement,
the RFC Warehouse Agreement and the UBS Warehouse Facility.
"WAREHOUSE LINE RATIO" means, as of any date of determination, (x)
the
aggregate principal amount of Warehouse Lines outstanding as of
such date
divided by (y) the sum of (i) Cash and Cash Equivalents and (ii)
the par value
of mortgage loans held for sale. All the foregoing categories shall
be
determined in accordance with GAAP applied on a consistent basis.
"WORKS" shall have the meaning assigned thereto in Section 3.21.
2.
PURCHASE AND SALE OF NOTES.
2.1 SALE AND ISSUANCE OF NOTES. The Company issued and sold to each
Purchaser on the Closing Date (as defined below), and each
Purchaser agreed,
severally and not jointly, to purchase for face value on the
Closing Date a
senior secured promissory note containing the terms and conditions
set forth
herein and in the form of note attached hereto as EXHIBIT A (each a
"NOTE" and
collectively, the "NOTES"), payable to the order of such Purchaser
in the
principal amount specified opposite such Purchaser's name on
SCHEDULE I attached
hereto. The aggregate principal amount of all such Notes issued on
the Closing
Date was Fifteen Million Dollars ($15,000,000).
2.2 NOTES.
(a) Security. Each Note and the obligations of the Company and
the Guarantors under the Transaction Documents shall be secured in
accordance
with the terms of the Security Agreement, a form of which is set
forth as
EXHIBIT B hereto, which shall be executed and delivered by the
parties thereto
at the Closing, and pursuant to which the Company and each
Guarantor (other than
the Parent) will grant the Purchasers a security interest in all of
such
Person's tangible and intangible assets and property, other than
mortgage loans
held for sale pursuant to Warehouse Agreements.
(b) Maturity Date. The entire unpaid principal amount of the
Notes and any accrued and unpaid interest thereon shall be due and
payable on
March 29, 2007 (the "MATURITY DATE"), unless such amounts become
due and payable
earlier upon acceleration in accordance with the terms hereof or
otherwise;
provided, however, that notwithstanding anything herein to the
contrary, any
Purchaser shall have the right to put its Notes (a "PURCHASER PUT
RIGHT") to the
Company, in whole or in part, on or after July 31, 2006 in
accordance with the
provisions of this Section 2.2(b). Any Purchaser desiring to so
exercise its
Purchaser Put Right shall deliver a written notice of such desire
to the Company
at least ninety (90) days prior to the exercise of such Purchaser
Put Right. At
the closing of any such exercise of a Purchaser Put Right, the
exercising
Purchaser shall receive in immediately available funds (i) the
outstanding
principal amount of the Notes subject to the Purchaser Put Right,
(ii) all
accrued but unpaid interest on such Notes up to (and including) the
date of the
closing of any such exercise of a Purchaser Put Right and (iii) all
other
amounts and fees owed by the Company and any Guarantor pursuant to
the terms of
the Financing Documents, all in accordance with Section 2.6.
Promptly after the
closing of any such exercise of a Purchaser Put Right, the
exercising
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Purchaser shall return to the Company all of the Notes subject to
the Purchase
Put Right marked as "Cancelled".
(c) Interest.
(i) Interest. The outstanding principal amount of each Note
shall bear interest at a rate per annum equal to ten percent (10%)
payable
quarterly in arrears on the last Business Day of each fiscal
quarter, commencing
on June 30, 2004. During the period beginning October 1, 2004 and
ending March
31, 2005, the outstanding principal amount of each Note shall bear
interest at a
rate per annum equal to seven and one-half percent (7.5%) payable
quarterly in
arrears on the last Business Day of each fiscal quarter, commencing
December 31,
2004. During the period beginning April 1, 2005 and ending on (and
including)
the Restatement Effective Date, the outstanding principal amount of
each Note
shall bear interest at a rate per annum equal to ten percent (10%)
payable
quarterly in arrears on the last Business Day of each fiscal
quarter, commencing
on June 30, 2005. As of (but not including) the Restatement
Effective Date, the
outstanding principal amount of each Note shall bear interest at a
rate per
annum equal to five and one half percent (5.5%) payable quarterly
in arrears on
the last Business Day of each fiscal quarter, commencing on
September 30, 2005,
and on any date that the principal of any Note is repaid or prepaid
(including
without limitation the Maturity Date).
(ii) Post-Default Interest. Notwithstanding clause (i)
above, upon the occurrence and during the continuance of any Event
of Default,
upon the written demand of the Majority Purchasers, the outstanding
principal
amount on each Note shall bear interest at a rate per annum equal
to fifteen
percent (15%). Interest payable under this clause (ii) shall be
payable within
48 hours of the Company's receipt of written demand therefor.
(iii) Computation. All computations of interest payable
hereunder shall be on the basis of a 360 day year consisting of
twelve 30-day
months and actual days elapsed in the period of which such interest
is payable.
2.3 CLOSING. The closing of the purchase and sale of the Notes to
the
Purchasers hereunder (the "CLOSING") took place on March 29, 2004
(the "CLOSING
DATE"). At the Closing, the Company delivered to each Purchaser a
Note, pursuant
to Section 2.1, representing the principal amount specified
opposite such
Purchaser's name on Schedule I attached hereto the purchase price
for the Notes
purchased by such Purchaser set forth opposite such Purchaser's
name on Schedule
I attached hereto.
2.4 PREPAYMENT.
(a) Optional Prepayment. The Company may prepay the Notes in
aggregate multiples of $100,000, provided that the Company shall
pay a premium
on the amount of principal prepaid equal to (i) 3.00% of the
principal prepaid
with respect to any prepayment made on or prior July 31, 2006 and
(ii) 0% at any
time thereafter, plus in each case accrued and unpaid interest on
the amount of
any principal prepaid. The Company shall pay to each holder of a
Note a pro rata
portion of the aggregate amount paid under this clause (a) based on
the
respective original principal amounts of the Notes.
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(b) Mandatory Prepayment. The Company shall apply the net
proceeds received by the Company upon the occurrence of any of the
following
events to the prepayment of the Notes:
(i) any incurrence of bank or similar Indebtedness of the
Company (other than purchase money Indebtedness permitted under
this Agreement
or Warehouse Lines);
(ii) any proceeds of insurance policies maintained by the
Company and the Guarantors (other than the Parent) received during
the term of
the Notes in excess of an aggregate of $1,000,000; provided that
any proceeds of
fire and casualty insurance policies may be retained by the Company
or the
affected Guarantor and need not be used to prepay the Notes, if and
to the
extent that (i) no Default or Event of Default has occurred and is
continuing at
the time such insurance proceeds are paid, (ii) such insurance
proceeds are used
by the Company or such Guarantors within ninety (90) days after
receipt thereof
to repair or replace the assets in respect of which such proceeds
were paid, and
(iii) the aggregate amount of such insurance proceeds does not
exceed $1,000,000
in any fiscal year; and
(iii) any proceeds from sales or other dispositions outside
the ordinary course of business (it being understood that nothing
in this
Section 2.4(b) shall authorize any sale or other disposition not
expressly
permitted by Section 6.5).
2.5 APPLICATION OF PAYMENTS. All payments hereunder shall first be
applied to costs and expenses, then to interest and then to
principal.
2.6 PAYMENTS GENERALLY.
(a) All payments hereunder and under each other Transaction
Document to any Purchaser shall be made in the lawful money of the
United States
of America, in immediately available funds and without set-off,
defense,
deduction or counterclaim to the account of such Purchaser most
recently
designated to the Company by such Purchaser for such purpose.
(b) If the due date of any payment under this Agreement would
otherwise fall on a day that is not a Business Day, such date shall
be extended
to the next succeeding Business Day, and interest shall be payable
for any
principal so extended for the period of such extension.
(c) The Company shall pay accrued interest on the principal
amount of any Note prepaid or repaid.
2.7 PRO RATA SHARING. If any Purchaser shall obtain from the
Company
or any Guarantor payment of any principal of or interest on any
Note owing to it
or payment of any other amount under this Agreement or any other
Transaction
Document or the Guaranty Agreement through the exercise of any
right of set-off,
banker's lien or counterclaim or similar right or otherwise, and,
as a result of
such payment, such Purchaser shall have received a greater
percentage of the
principal of or interest on the Notes or such other amounts then
due hereunder
or thereunder by the Company or any Guarantor to such Purchaser
than the
percentage received
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by any other Purchaser, it shall promptly purchase from such other
Purchasers
participations in (or, if and to the extent specified by such
Purchaser, direct
interests in) the Notes or such other amounts, respectively, owing
to such other
Purchasers (or in interest due thereon, as the case may be) in such
amounts, and
make such other adjustments from time to time as shall be
equitable, to the end
that all the Purchasers shall share the benefit of such excess
payment (net of
any expenses that may be incurred by such Purchaser in obtaining or
preserving
such excess payment) pro rata in accordance with the unpaid
principal of and/or
interest on the Notes or such other amounts, respectively, owing to
each of the
Purchasers. To such end all the Purchasers shall make appropriate
adjustments
among themselves (by the resale of participations sold or
otherwise) if such
payment is rescinded or must otherwise be restored.
2.8 SET-OFF. The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim
a Purchaser
may otherwise have, each Purchaser shall be entitled, at its option
(to the
fullest extent permitted by law), to set off and apply any deposit
(general or
special, time or demand, provisional or final), or other
indebtedness, held by
it for the credit or account of the Company at any of its offices,
in any
currency, against any principal of or interest on any of such
Purchaser's Notes
or any other amount payable to such Purchaser hereunder, that is
not paid when
due (regardless of whether such deposit or other indebtedness is
then due to the
Company), in which case it shall promptly notify the Company and
the other
Purchasers thereof, provided that such Purchaser's failure to give
such notice
shall not affect the validity thereof.
2.9 TRANSFER OF THE NOTES. Except as otherwise provided herein, a
Purchaser may transfer its Notes in whole or in part without the
consent of the
Company or any other Purchasers in accordance with this Section
2.9:
Upon surrender of any Note at the principal executive office of the
Company or
the office of any paying agent located in the United States
designated by the
Company for registration of transfer or exchange (and in the case
of a surrender
for registration of transfer, accompanied by a written instrument
of transfer
duly executed by the registered holder of such Note or such
holder's attorney
duly authorized in writing and accompanied by the address for
notices of each
transferee of such Note or part thereof), the Company shall execute
and deliver
(within five Business Days), at the Company's expense (except as
provided
below), one or more new Notes (as requested by the holder thereof)
in exchange
therefor, in an aggregate principal amount equal to the unpaid
principal amount
of the surrendered Note. Each such new Note shall be payable to
such Person as
such holder may request; provided, however, that unless an Event of
Default has
occurred and is continuing, such Person is not a direct competitor
of the
Company. Each such new Note shall be dated and bear interest from
the date to
which interest shall have been paid on the surrendered Note or
dated the date of
the surrendered Note if no interest shall have been paid thereon.
The Company
may require payment by such holder or transferee of a sum
sufficient to cover
any stamp tax or governmental charge imposed in respect of any such
transfer of
Notes. Notes shall not be transferred in denominations of less than
$1,000,000,
provided that if necessary to enable the registration of transfer
by a holder of
its entire holding of Notes, one Note may be in a denomination of
less than
$1,000,000. Any transferee, by its acceptance of a Note registered
in its name
(or the name of its nominee), shall be deemed to have made the
representations
set forth in Section 4.
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3.
REPRESENTATIONS AND WARRANTIES OF COMPANY.
In order to induce the Purchasers to enter into this Agreement and
consummate the transactions contemplated hereby, the Company hereby
makes to the
Purchasers the representations and warranties contained in this
Section 3. Such
representations and warranties are subject to the qualifications
and exceptions
set forth in the disclosure schedule delivered to the Purchasers in
connection
herewith (the "Disclosure Schedule"). References to the knowledge
or awareness
of the Company are deemed to include the actual knowledge of any
officer or
director of the Company.
3.1 COMPANY ORGANIZATION.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New
York. Each
Guarantor is an entity duly organized and validly existing in good
standing
under the laws of the state of its incorporation or formation, as
the case may
be. Attached hereto as EXHIBIT C and EXHIBIT D, respectively, are
true and
complete copies of the Certificate of Incorporation and the Bylaws
of the
Company and each Guarantor, each, as amended through the date
hereof
(collectively, the "ORGANIZATIONAL DOCUMENTS"), and neither the
Company nor any
Guarantor is in violation of any term thereof.
(b) Each Obligor has all requisite power and authority and has
all necessary approvals, licenses, permits and authorization to own
its
properties and to carry on its business as now conducted and as
presently
contemplated to be conducted. Each Obligor has all requisite power
and authority
to execute and deliver the Transaction Documents and to perform its
obligations
hereunder and thereunder.
(c) Each Obligor has filed all necessary documents to qualify to
do business as a foreign corporation in, and each Obligor is in
good standing
under, the laws of each jurisdiction in which the conduct of the
Company's
business as now conducted and as presently contemplated to be
conducted or the
nature of the property owned requires such qualification, except
where the
failure to so qualify would not have a Material Adverse Effect.
3.2 CAPITALIZATION. All of the issued and outstanding shares of
Capital Stock of the Company have been duly authorized and validly
issued and
are fully paid and nonassessable. All the issued and outstanding
shares of
Capital Stock of each Subsidiary have been duly authorized and
validly issued
and are wholly owned, directly or indirectly, by the Company. All
of the
outstanding Shares of Capital Stock, options and warrants have been
validly
issued in compliance with applicable state and federal securities
laws. The
authorized capital of the Company consists of (a) 24,250,000 shares
of Class A
common stock, par value $0.01 per share ("Class A Common Stock"),
(b) 7,500,000
shares of Class B non voting common stock, par value $0.01 per
share ("Class B
Common Stock"), and (c) shares of 22,000,000 preferred stock, par
value $0.01
per share ("Preferred Stock"), with 6,250,000 shares designated as
Series A
Convertible Preferred Stock, 7,000,000 shares designated as Series
B Convertible
Preferred Stock, 6,500,000 shares designated as Series C
Convertible Preferred
Stock, and shares of 2,250,000 Preferred Stock remaining
undesignated. The only
share of Capital Stock of the Company issued and outstanding,
reserved for
issuance or committed to be issued is 1 Share of Class A Common
Stock.
-15-
3.3 COMPANY PROCEEDINGS, ETC. All corporate actions on the part of
each Obligor necessary for the authorization, execution, and
delivery of this
Agreement and the Transaction Documents, the performance of all
obligations of
each Obligor hereunder and thereunder, and the authorization,
issuance and
delivery of the Notes, have been taken or will be taken prior to
the Closing.
This Agreement, the Transaction Documents and the Notes constitute
the valid and
legally binding obligations of the Obligor party thereto,
enforceable in
accordance with their respective terms, except as limited by (a)
applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws
of general
application affecting enforcement of creditors' rights generally,
(b) laws
relating to the availability of specific performance, injunctive
relief or other
equitable remedies and (c) state and federal securities laws with
respect to
rights to indemnification or contribution.
3.4 CONSENTS AND APPROVALS. Except for consents, approvals,
actions,
filings or notices which have already been obtained or given, as
the case may
be, the execution and delivery by each Obligor of the Transaction
Documents, the
performance by each Obligor of its obligations hereunder and
thereunder and the
consummation by each Obligor of the transactions contemplated
hereby and thereby
do not require any Obligor to obtain any consent, approval or
action of, or make
any filing with or give any notice to, any corporation, person or
firm or any
public, governmental or judicial authority.
3.5 VALID ISSUANCE OF NOTES. The Notes were issued on March 29,
2004
in compliance with all applicable federal and state securities
laws.
3.6 ABSENCE OF DEFAULTS. The execution and delivery of the
Transaction
Documents and the performance of its obligations hereunder and
thereunder
(including the issuance and sale of the Notes) will not result in a
breach of
any of the terms, conditions or provisions of, or constitute a
default under, or
permit the acceleration of rights under or termination of, any
material
indenture, mortgage, deed of trust, credit agreement, note or other
evidence of
indebtedness, or other material agreement of any Obligor or the
Organizational
Documents, other than with respect to any breach or default for
which a written
waiver or consent has been obtained prior to the Restatement
Effective Date. No
event has occurred and no condition exists which, upon notice or
the passage of
time (or both), would constitute a default under any of the
foregoing or in any
license, permit or authorization to which any Obligor is a party or
by which it
may be bound.
3.7 LITIGATION.
(a) Except as set forth on SCHEDULE 3.7(A), there is no action,
suit, proceeding or investigation pending or, to the Company's
knowledge,
currently threatened against any Obligor that questions the
validity of this
Agreement, the Notes or any other Transaction Document or the right
of any
Obligor to enter into them, or to consummate the transactions
contemplated
hereby or thereby, or that might result, either individually or in
the
aggregate, in any Material Adverse Effect or in which the amount in
controversy
exceeds $1,000,000, nor is the Company aware that there is any
basis for the
foregoing. None of the Obligors is a party or subject to the
provisions of any
order, writ, injunction, judgment or decree of any court or
government agency or
instrumentality. Except as set forth ON SCHEDULE 3.7(A),
-16-
there is no action, suit, proceeding or investigation by any
Obligor currently
pending or which any Obligor intends to initiate in which the
amount in
controversy exceeds $1,000,000.
(b) Set forth on SCHEDULE 3.7(B) is a summary of the actions,
suits, proceedings or investigations pending or, to the Company's
knowledge,
currently threatened against any Obligor which are not set forth on
SCHEDULE
3.7(A), including the aggregate amount in controversy of all such
litigation and
a general description of the nature of such litigation.
3.8 SOLVENCY. Immediately after the Closing and after giving effect
to
the purchase and sale of the Notes (a) the fair value of the assets
of each
Obligor, at a fair valuation, will exceed its debts and
liabilities,
subordinated, contingent or otherwise; (b) the present fair
saleable value of
the property of each Obligor will be greater than the amount that
will be
required to pay the probable liability of its debts and other
liabilities,
subordinated, contingent or otherwise, as such debts and other
liabilities
become absolute and matured; (c) each Obligor will be able to pay
its debts and
liabilities, subordinated, contingent or otherwise, as such debts
and
liabilities become absolute and matured; and (d) no Obligor will
have
unreasonably small capital with which to conduct the business in
which it is
engaged as such business is now conducted and is proposed to be
conducted
following the Closing.
3.9 SUBSIDIARIES. Except as set forth on SCHEDULE 3.9, the Company
does not have any Subsidiaries.
3.10 STATUS OF SECURITY INTERESTS. The security interest purported
to
be created by the Security Agreement and each Control Agreement
constitutes a
first priority security interest in the collateral specified
therein, subject to
no other Liens except Permitted Liens.
3.11 Financial Statements.
Attached as SCHEDULE 3.11 are true and complete copies of:
(a) the consolidated balance sheet of the Company as at December
31, 2003 (the "BALANCE SHEET"), and the related consolidated
statement of
income, stockholders equity and cash flow for the fiscal year ended
on such
dates, together with the notes thereto, in each case examined by
and accompanied
by the report of BDO Seidman, LLP, independent certified public
accountants; and
(b) the unaudited consolidated balance sheet of the Company as at
February 29, 2004, and the unaudited consolidated statements of
income,
stockholders equity and cash flow for the two month period ended on
such date,
together with the notes thereto.
(c) The financial statements described in clauses (a) and (b) of
this Section 3.11, including the notes thereto, are referred to
herein
collectively as the "FINANCIAL STATEMENTS". The Financial
Statements (i) were
prepared in accordance with GAAP applied on a consistent basis
throughout the
periods covered thereby, (ii) present fairly the consolidated
financial
position, results of operations and changes in financial position
of the Company
as at such date and for the period then ended, (iii) are complete,
correct and
in accordance with the books of account and records of the Company
in all
material respects, and (iv) can be legitimately reconciled with the
financial
statements and the financial records maintained and the
-17-
accounting methods applied by the Company for federal income tax
purposes. The
unaudited financial statements included in the Financial Statements
indicate all
adjustments, which consist of only normal recurring accruals,
necessary for such
fair presentations, subject to year-end audit adjustments. The
statements of
income included in the Financial Statements do not contain any
items of special
or nonrecurring income except as expressly specified therein, and
the balance
sheets included in the Financial Statements do not reflect any
write-up or
revaluation increasing the book value of any assets. The books and
accounts of
the Company are complete and correct in all material respects and
fairly reflect
all of the transactions, items of income and expense and all assets
and
liabilities of the Company consistent with prior practices of the
Company.
3.12 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on
SCHEDULE
3.12, since December 31, 2004, there has been not been:
(a) any change in the business, financial condition, properties,
operations or prospects of any Obligor from that reflected in the
Financial
Statements, other than changes in the ordinary course of business
or otherwise
disclosed in the filings described in Section 5.20 hereof, none of
which
individually or in the aggregate has had or is expected to have a
Material
Adverse Effect;
(b) any resignation or termination of any officers or key
employees of any Obligor, and the Company, to the best of its
knowledge, does
not know of the impending resignation or termination of employment
of any such
officer of key employee;
(c) any material change, except in the ordinary course of
business, in the contingent obligations of any Obligor by way of
guaranty,
endorsement, indemnity, warranty or otherwise;
(d) any damage, destruction or loss, whether or not covered by
insurance, which has had a Material Adverse Effect;
(e) any waiver by any Obligor of a valuable right or of a
material debt owed to it in excess of $100,000;
(f) any direct or indirect loans made by any Obligor to any
shareholder, employee, officer or director of any Obligor, other
than advances
made in the ordinary course of business;
(g) any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(h) any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) to the best of the Company's knowledge, any labor
organization activity with respect to any Obligor's employees;
-18-
(j) any debt, obligation or liability incurred, assumed or
guaranteed by any Obligor, except those for immaterial amounts and
for current
liabilities incurred in the ordinary course of business;
(k) any sale, assignment or transfer or any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) any change in any Material Agreement in effect that would
have a Material Adverse Effect;
(m) any satisfaction or discharge of any Lien or payment of any
obligation by any Obligor, except in the ordinary course of
business and that is
not material to the business, properties, financial condition,
operations or
prospects of the Company;
(n) any Lien on any Asset of any Obligor except Permitted Liens;
(o) any action, suit, proceeding or investigation against any
Obligor, except any such action, suit, proceeding or investigation
that (i) is
not material to the business, properties, financial condition,
operations or
prospects of the Company or (ii) is set forth on SCHEDULE 3.7;
(p) any written communication received by any Obligor alleging
that the Company or its products has violated any of the patents or
patent
related licenses and other proprietary rights and processes of any
other Person;
or
(q) any other events or conditions of any character that, either
individually or cumulatively, have resulted in a Material Adverse
Effect.
3.13 COMPLIANCE WITH LAW.
(a) No Obligor is in material violation of any laws, ordinances,
governmental rules or regulations to which it is subject,
including, without
limitation, laws or regulations relating to the environment or to
occupational
health and safety, and no material expenditures are or will be
required in order
to cause its current operations or properties to comply with any
such laws,
ordinances, governmental rules or regulations.
(b) Each Obligor has all licenses, permits, franchises or other
governmental authorizations necessary for the ownership of its
property or to
the conduct of its business as now conducted and as presently
contemplated to be
conducted, which if violated or not obtained might have a Material
Adverse
Effect. No Obligor has finally been denied any application for any
such
licenses, permits, franchises or other governmental authorizations
necessary to
its business. There has not been, and there is no proceeding
pending, served or
threatened to suspend, revoke or limit such license, and there is
no
circumstance that exists which with notice or passage of time or
both, will
result in such revocation, suspension or limitation.
3.14 MATERIAL AGREEMENTS. SCHEDULE 3.14, sets forth a true and
complete list of each contract, agreement, instrument, commitment
and other
arrangement to which any
-19-
Obligor is a party or is otherwise bound which is material to the
ongoing
operations, financial condition or prospects of the Company (each,
a "MATERIAL
AGREEMENT"). Each Material Agreement is valid, binding and
enforceable against
the applicable Obligor, in full force and effect and, to the
Company's
knowledge, the other parties thereto, in accordance with its terms,
except as
limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium,
and other laws of general application affecting enforcement of
creditors' rights
generally, (b) laws relating to the availability of specific
performance,
injunctive relief or other equitable remedies and (c) state and
federal
securities laws with respect to rights to indemnification or
contribution. No
Obligor is in default or breach under any of the Material
Agreements, nor, to
the knowledge of the Company, is any other party thereto in default
or breach
thereunder, nor are there facts or circumstances which have
occurred which, with
or without the giving of notice or the passage of time or both,
would constitute
a material default or breach under any of the Material Agreements.
3.15 ENVIRONMENTAL MATTERS. Neither any Obligor nor, to the
Company's
knowledge, any other Person has ever caused or permitted any
Hazardous Material
to be disposed of in violation of any applicable Environment Laws
on or under
any real property now or previously owned, leased or operated by
any Obligor.
None of Obligors has any liability with respect to Hazardous
Materials, and no
facts or circumstances exist which could give rise to liabilities
with respect
to Hazardous Materials that could reasonably be expected to result
in a
liability to any Obligor in excess of $100,000.
3.16 EMPLOYEES.
(a) Except as set forth on SCHEDULE 3.16(A), each Obligor is in
compliance in all material respects with all laws regarding
employment, wages,
hours, equal opportunity, collective bargaining and payment of
social security
and other taxes except to the extent that noncompliance would not,
in the
aggregate, have a Material Adverse Effect. No Obligor is engaged in
any un
