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EXHIBIT 10.85
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (the "Agreement") is made as of
June 29, 1998, by and among City National Bank of West Virginia, a national
banking association, with its principal offices at 0000 XxxXxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxx Xxxxxxxx ("City"), Sovereign Bancorp, Inc., a Pennsylvania
corporation, with its principal offices at 0000 Xxxxxxxxx Xxxxxxxxx, P.O. Box
12646, Xxxxxxx, Xxxxxxxxxxxx 00000 ("Sovereign"), and Mego Mortgage Corporation
(the "Company"), a Delaware corporation, with its principal offices at 0000
Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxx.
WHEREAS, the Company has entered into a Preferred Stock Purchase
Agreement dated as of June 9, 1998 with City (the "City Agreement");
WHEREAS, the Company has entered into a Preferred Stock
Purchase Agreement dated as of June 9, 1998 with Sovereign (the "Sovereign
Agreement"); and
WHEREAS, the City Agreement and the Sovereign Agreement both
require as a condition to closing the execution of a right of first refusal
agreement by and among the Company, City and Sovereign;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
Section 1. Definitions.
A. "Acquisition Agreement" shall mean an agreement which provides
for: (i) a merger, consolidation or similar transaction
involving the Company or any of its subsidiaries (other than
transactions solely between the Company's subsidiaries and
between the Company and one or more subsidiaries and
transactions involving the Company or any subsidiary in which
the voting securities of the Company outstanding immediately
prior thereto continue to represent (by either remaining
outstanding or being converted into securities of the
surviving entity or the parent thereof) at least 75% of the
combined voting power of the voting securities of the
surviving entity or the parent thereof outstanding immediately
after the consummation of the transaction), (ii) the
disposition, by sale, lease, exchange or otherwise, other than
in the ordinary course of business, of assets of the Company
or any of its subsidiaries representing in either case 50% or
more of the
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consolidated assets of the Company and its subsidiaries, or
(iii) the issuance, sale or other disposition of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 50% or more of the voting
power of the Company or any of its subsidiaries.
Section 2. Right of First Refusal. Prior to entering into any
Acquisition Agreement, the Company will proceed as follows:
A. The Company will advise City and Sovereign in writing of the
price and all other essential terms and conditions under which
it would be willing to enter into an Acquisition Agreement
with either City or Sovereign (the "Notice").
B. City and Sovereign shall each within ten (10) days following
receipt of the Notice advise the Company in writing whether or
not it is willing to enter into an Acquisition Agreement with
the Company at the price and on the other terms and conditions
set forth in the Notice. In the event that only one of City
and Sovereign advises the Company that it is willing to enter
into such an Acquisition Agreement, the Company and the
interested party shall negotiate in good faith with a view
toward the execution of a legally binding Acquisition
Agreement.
C. In the event that both City and Sovereign advise the Company
that they are willing to enter into such an Acquisition
Agreement with the Company at the price and on the other terms
and conditions set forth in the Notice, the Company shall
negotiate in good faith with each of City and Sovereign with a
view toward the execution of a legally binding Acquisition
Agreement with the party which offers terms most favorable to
the Company. The Company's decision as to which party's terms
are most favorable shall, if made in good faith, be final and
binding upon City and Sovereign.
D. In the event that each of City and Sovereign advises the
Company that it is not willing to enter into an Acquisition
Agreement with the Company at the price and on the terms and
conditions set forth in the Notice, or fails to advise the
Company of its intentions within the ten (10) day period
referred to in Paragraph B above, the Company shall be free
for a period of ninety (90) days following the expiration of
such ten (10) day period to enter into an Acquisition
Agreement with a third party at a price and on other terms and
conditions no more favorable to such third party than those
set forth in the Notice; provided, however that the Company
shall forward to City and to Sovereign a complete copy of the
Acquisition Agreement as negotiated with such third party at
least five (5) business days before it is signed.
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E. In the event that the Company does not enter into an
Acquisition Agreement with a third party within the ninety
(90) day period referred to in Paragraph D above, the Company
must once again follow the procedure set forth herein prior to
entering into an Acquisition Agreement with any third party.
F. The foregoing right of first refusal shall expire
automatically: (i) as to City on the 7% Termination Date as
defined in Section 5.19 of the City Agreement, (ii) as to
Sovereign on the 7% Termination Date as defined in Section
5.19 of the Sovereign Agreement, and (iii) as to both City and
Sovereign when the Company enters into an Acquisition
Agreement with City, Sovereign or a third party after having
duly followed the procedures set forth herein.
Section 3. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by registered air
mail, postage prepaid, or sent by facsimile transmission with a confirmation
copy sent by registered mail, and shall be deemed given when so mailed:
A. if to the Company, to 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000, Attention: Xxxxxxx X. Xxxxx, or to such other person at
such other place as the Company shall designate to the
Purchaser in writing;
B. if to City, to 00 Xxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxx
00000, Attention: Xxxxxx X. Xxxxxx, Chief Financial Officer,
or at such other address or addresses as City may have
furnished to the Company, with a copy to Hunton & Xxxxxxxx,
000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxx;
C. if to Sovereign, to 0000 Xxxxxxxxx Xxxxxxxxx, X.X. Xxx 00000,
Xxxxxxx Xxxxxxxxxxx 00000, Attention: Xxx X. Xxxxx, or at such
other address or addresses as City may have furnished to the
Company, with a copy to Xxxxxxx & Xxx, 000 Xxxxxxxxxx Xxxxxx,
X.X. Xxx 000, Xxxxxxx, Xxxxxxxxxxxx 00000-0000, Attention:
Xxxxxxx X. Xxxx; or
D. if to any transferee or transferees of City or Sovereign, at
such address or addresses as shall have been furnished to the
other parties hereto at the time of the transfer or transfers,
or at such other address or addresses as may have been
furnished by such transferee or transferees to the other
parties hereto in writing.
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Section 4. Amendments. No amendment, interpretation or waiver of any of
the provisions of this Agreement shall be effective unless made in writing and
signed by the parties to this Agreement.
Section 5. Headings. The headings of the sections, subsections and
subparagraphs of this Agreement are used for convenience only and shall not
affect the meaning or interpretation of the contents of this Agreement.
Section 6. Enforcement. The failure to enforce or to require the
performance at any time of any of the provisions of this Agreement shall in no
way be construed to be a waiver of such provisions, and shall not affect either
the validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every provision in accordance with the terms of
this Agreement.
Section 7. Governing Law. This Agreement and the relationships of the
parties in connection with the subject matter of this Agreement shall be
governed by and determined in accordance with the laws of the State of Georgia
in the United States of America.
Section 8. Severability. If any severable provision of this Agreement
is held to be invalid or unenforceable by any judgment of a tribunal of
competent jurisdiction, the remainder of this Agreement shall not be affected by
such judgment, and the Agreement shall be carried out as nearly as possible
according to its original terms and intent.
Section 9. Counterparts. This Agreement may be executed in
counterparts, all of which shall constitute one agreement, and each such
counterpart shall be deemed to have been made, executed and delivered on the
date set out at the head of this Agreement without regard to the dates or times
when such counterparts may actually have been made, executed or delivered.
Section 10. Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of, as the case may be, and be
enforceable by and against the parties hereto and their respective successors
and assigns, but neither this Agreement nor any of the rights, interests or
obligations of the parties hereunder shall be assigned by any of the parties
hereto without the prior written consent of each of the other parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
MEGO MORTGAGE CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
CITY NATIONAL BANK OF WEST
VIRGINIA
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
SOVEREIGN BANCORP, INC.
By: /s/ Xxx X. Xxxxx
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Name: Xxx X. Xxxxx
Title: President and Chief
Executive Officer
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