Exhibit 2.2
CALL OPTION AGREEMENT
THIS CALL OPTION AGREEMENT (this "Agreement") is made and entered
into as of June 15, 2005 by and among Xxxxxxx Capital, L.L.C., a Delaware
limited liability company ("Xxxxxxx Capital"), Mortgage Guaranty Insurance
Corporation, a Wisconsin corporation ("MGIC") and Radian Guaranty, Inc., a
Pennsylvania corporation ("Radian").
WHEREAS, MGIC and Radian own Percentage Interests in Xxxxxxx
Financial Group LLC ("Xxxxxxx Financial") and may each desire to increase their
equity interests in Xxxxxxx Financial; and
WHEREAS, Xxxxxxx Capital is willing to sell to MGIC and Radian, and
MGIC and Radian are willing to purchase from Xxxxxxx Capital, an option to
purchase all or a portion of certain Percentage Interests currently owned by
Xxxxxxx Capital up to an aggregate amount equal to 13.84% of the aggregate
Percentage Interests, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Grant of Option.
(a) Xxxxxxx Capital hereby grants to MGIC an irrevocable option (the
"MGIC Option"), on the terms set forth in Section 2 below, to require Xxxxxxx
Capital to sell to MGIC on the Exercise Date the Final Option Amount with
respect to MGIC in consideration of the payment by MGIC to Xxxxxxx Capital of
the Settlement Price.
(b) Xxxxxxx Capital hereby grants to Radian an irrevocable option
(the "Radian Option"), subject to Section 2 below, to require Xxxxxxx Capital to
sell to Radian on the Exercise Date the Final Option Amount with respect to
Radian in consideration of the payment by Radian to Xxxxxxx Capital of the
Settlement Price.
(c) In consideration of Xxxxxxx Capital's granting of the Options
hereunder, each of MGIC and Radian shall each, simultaneously with the execution
of this Agreement, pay to Xxxxxxx Capital an amount equal to $1 million (the
"Option Premium") in immediately available funds to the account specified in
writing by Xxxxxxx Capital.
(d) Subject to Section 2(a), each of the MGIC Option and the Radian
Option shall expire immediately following the exercise thereof or, if
unexercised, shall expire as of the close of business on the Exercise Date.
(e) Definitions.
"Business Day" means any day other than (a) Saturday or Sunday or
(b) a day on which commercial banks in New York, New York, are authorized or
required by applicable Law or executive order to close.
"Collateral" has the meaning set forth in Section 3(b).
"Defaulting Party" has the meaning set forth in Section 3(f).
"Delaying Event" has the meaning set forth in Section 2(a)(i).
"Event of Default" has the meaning set forth in Section 3(f).
"Exercise Date" has the meaning set forth in Section 2(a)(i).
"Final Option Amount" means (i) with respect to MGIC, the MGIC
Option Amount plus, if MGIC has elected to purchase the Radian Option Amount in
accordance with Section 2(a)(ii), the Radian Option Amount and (ii) with respect
to Radian, the Radian Option Amount plus, if Radian has elected to purchase the
MGIC Option Amount in accordance with Section 2(a)(ii), the MGIC Option Amount.
"Governmental Entity" means (i) any foreign, federal, state or local
government and (ii) any agency or instrumentality thereof, with authority to
regulate any operations of the Xxxxxxx Capital or any of its Subsidiaries,
including banking, lending and credit collection operations.
"Law" means any statute, law, ordinance, regulation, rule, code,
order, rule of common law or judgment enacted, promulgated, issued, enforced or
entered by any Governmental Entity.
"Manager" has the meaning assigned to such term in the Xxxxxxx
Financial LLC Agreement.
"MGIC" has the meaning set forth in the introductory paragraph to
this Agreement.
"MGIC Collateral" has the meaning set forth in Section 3(a).
"MGIC Option Amount" means Percentage Interests currently owned by
Xxxxxxx Capital equal in the aggregate to 6.92% of the aggregate Percentage
Interests of Xxxxxxx Financial, but excluding all Percentage Interests included
in the Radian Option Amount.
"MSI Stockholders Agreement" means that certain Stockholders
Agreement of Meeting Street Partners Inc., dated as of the date hereof.
"Option" means either the Radian Option or the MGIC Option, as the
case may be.
"Option Amount" means either the MGIC Option Amount or the Radian
Option Amount, as the case may be.
"Optionholder" means either MGIC or Radian, as the case may be.
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"Party" or "Parties" means the persons appearing on the signature
page to this Agreement.
"Percentage Interests" has the meaning assigned to such term in the
Xxxxxxx Financial LLC Agreement.
"Radian" has the meaning set forth in the introductory paragraph to
this Agreement.
"Radian Collateral" has the meaning set forth in Section 3(b).
"Radian Option Amount" means Percentage Interests currently owned by
Xxxxxxx Capital equal in the aggregate to 6.92% of the aggregate Percentage
Interests of Xxxxxxx Financial, but excluding all Percentage Interests included
in the MGIC Option Amount.
"Representatives" means, with respect to any Party, such Party's
agents, representatives (including its employees, attorneys and consultants,
financial or otherwise) and affiliates.
"Settlement Price" means, with respect to each Optionholder, an
amount equal to the Final Option Amount with respect to such Optionholder
multiplied by the Xxxxxxx Financial Enterprise Value.
"Xxxxxxx Capital LLC Agreement" means that certain Limited Liability
Company Agreement of Xxxxxxx Capital, dated as of the date hereof.
"Xxxxxxx Financial" has the meaning set forth in the recitals to
this Agreement.
"Xxxxxxx Financial Enterprise Value" has the meaning set forth on
Schedule 1.
"Xxxxxxx Financial LLC Agreement" means the Third Amended and
Restated Limited Liability Company Agreement of Xxxxxxx Financial, dated as of
June 1, 2005.
"UCC" shall mean the Uniform Commercial Code in the State of New
York.
All other capitalized terms used herein without definition shall
have the respective meanings ascribed to them in the Xxxxxxx Financial LLC
Agreement.
As used in this Agreement, unless the context otherwise requires,
words in the singular include the plural and words in the plural include the
singular. A reference to any Party to this Agreement or any other agreement or
document shall include such Party's successors and permitted assigns. A
reference to any agreement or order shall include any amendment of such
agreement or order from time to time in accordance with the terms herewith and
therewith. A reference to any legislation, to any provision of any legislation
or to any regulation issued thereunder shall include any amendment to, and any
modification or re-enactment thereof, any legislative provision or regulation
substituted therefor and all regulations issued thereunder or pursuant thereto.
The headings contained in this Agreement are for convenience and reference
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only and do not form a part of this Agreement. Section references in this
Agreement refer to sections of this Agreement unless otherwise specified.
Section 2. Exercise of Option.
(a) Exercise of Option.
(i) Each Optionholder shall each have the right, but not the
obligation, to exercise its Option at 10:00 A.M., New York City time on
July 7, 2006 or, if such day is not a Business Day, on the next succeeding
Business Day (the "Exercise Date"), by paying to Xxxxxxx Capital the
Settlement Price in accordance with the following procedures and
limitations. Each Optionholder shall give written notice to Xxxxxxx
Capital and the other Optionholder during a period beginning on the first
Business Day following the first anniversary of the signing of this
Agreement (which signing occurred June 24, 2005) and ending on the fourth
Business Day following such anniversary (but in no event prior to the
beginning of such period) indicating whether it will purchase the Option
Amount pursuant to its Option. Any such notice shall become irrevocable at
the end of such fourth Business Day. If no notice is received from an
Optionholder by Xxxxxxx Capital during such period, Xxxxxxx Capital shall
so notify such Optionholder and the other Optionholder and for two (2)
Business Days after such notice is received, an Optionholder who had not
given notice may give notice as provided above. An Optionholder's failure
to notify Xxxxxxx Capital that it will purchase the Option Amount in
accordance with this Section 2(a) shall be deemed to be an irrevocable
election by such Optionholder not to exercise its Option. Notwithstanding
the foregoing, an Optionholder's failure to notify Xxxxxxx Capital that it
will purchase the Option Amount in accordance with this Section 2(a) or to
deliver the Settlement Price on July 7, 2006 shall not be deemed an
irrevocable election not to exercise its Option to the extent (i) such
failure is the result of any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or other
calamity or crisis the effect of which is such as to pose extreme
difficulty for the Optionholder to timely deliver such notice or exercise
its Option on the Exercise Date or a circumstance in which the Chief
Financial Officer, the Treasurer and the General Counsel of an
Optionholder are disabled during a period that includes the first
anniversary of the signing of this Agreement and ending on the fourth
Business Day thereafter (each a "Delaying Event") and such Optionholder
delivers the Settlement Price as soon as practicable, but in no event
later than five (5) Business Days, following the later of the onset of the
Delaying Event or the availability of communication systems sufficient to
permit the delivery of such notice or (ii) (A) such failure is a result of
a failure by the Federal Reserve Wire System to deliver the Settlement
Price, (B) such Optionholder delivered the appropriate wire instructions
in a timely manner to effect the transfer of the Settlement Price to
Xxxxxxx Capital through the Federal Reserve Wire System prior to the
Exercise Date and (C) Xxxxxxx Capital receives the Settlement Price from
such Optionholder no later than five(5) Business Days after July 7, 2006.
(ii) (A) If MGIC fails to give notice to Xxxxxxx Capital that it
will purchase the MGIC Option Amount or elects not to exercise its Option
and Radian has elected to purchase the Radian Option Amount, Xxxxxxx
Capital shall notify Radian of such failure
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or election on or prior to two (2) Business Days prior to July 7, 2006,
and Radian shall be entitled pursuant to its Option to purchase the MGIC
Option Amount in addition to the Radian Option Amount by delivering notice
to Xxxxxxx Capital to that effect on or prior to one (1) Business Day
prior to July 7, 2006. (B) If Radian fails to give notice to Xxxxxxx
Capital that it will purchase the Radian Option Amount or elects not to
exercise its Option and MGIC has elected to purchase the MGIC Option
Amount, Xxxxxxx Capital shall notify MGIC of such failure or election on
or prior to two (2) Business Days prior to July 7, 2006, and MGIC shall be
entitled pursuant to its Option to purchase the Radian Option Amount in
addition to the MGIC Option Amount by delivering written notice to Xxxxxxx
Capital to that effect on or prior to one (1) Business Day prior to July
7, 2006.
(iii) Unless otherwise agreed by the parties and except as provided
in the final sentence of Section 2(a)(i), each Optionholder exercising its
Option shall make payment on July 7, 2006 of its Settlement Price in
immediately available funds to the account specified in writing to such
Optionholder by Xxxxxxx Capital.
(b) Actions Following Exercise. Upon payment of the Settlement
Price, Sherman Capital, MGIC and Radian shall take all such action as may be
necessary under the Xxxxxxx Financial LLC Agreement to reflect the transactions
consummated pursuant to this Agreement on the books and records of Xxxxxxx
Financial. At the reasonable request of any other Party hereto and without
further consideration, each Party hereto shall execute and deliver such
additional documents and take such further action as may be necessary or
appropriate under all applicable Laws to consummate and make effective, in the
most expeditious manner practicable, the exercise of the Options and the
transfer of the Percentage Interests purchased by MGIC and/or Radian hereunder.
Section 3. Grant of Security Interest.
(a) Grant of Security Interest to MGIC. As security for the timely
performance of Xxxxxxx Capital's obligation to deliver the Final Option Amount
with respect to MGIC to MGIC upon payment of the relevant Settlement Price
pursuant to this Agreement, Xxxxxxx Capital hereby grants to MGIC a first
priority security interest in all of Xxxxxxx Capital's right, title and
interest, whether now or hereafter acquired, in, to and under the following (the
"MGIC Collateral"):
(i) the Final Option Amount with respect to MGIC;
(ii) all rights and privileges relating to the foregoing (including,
without limitation, voting rights); and
(iii) all proceeds (as such term is defined in the UCC) of any and
all of the foregoing.
(b) Grant of Security Interest to Radian. As security for the timely
performance of Xxxxxxx Capital's obligation to deliver the Final Option Amount
with respect to Radian to Radian upon payment of the relevant Settlement Price
pursuant to this Agreement, Xxxxxxx Capital hereby grants to Radian a first
priority security interest in all of Xxxxxxx Capital's right,
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title and interest, whether now or hereafter acquired, in, to and under the
following (the "Radian Collateral" and, together with the MGIC Collateral, the
"Collateral"):
(i) the Final Option Amount with respect to Radian;
(ii) all rights and privileges relating to the foregoing (including,
without limitation, voting rights); and
(iii) all proceeds (as such term is defined in the UCC) of any and
all of the foregoing.
(c) Transfer of Security Interest. In the event that MGIC becomes
entitled to purchase the Radian Option Amount pursuant to Section 2(a)(ii)(B),
the security interest granted to Radian pursuant to Section 3(b) with respect to
the Radian Collateral shall be released from the grant pursuant to Section 3(b).
In the event that Radian becomes entitled to purchase the MGIC Option Amount
pursuant to Section 2(a)(ii)(A), the security interest granted to MGIC pursuant
to Section 3(a) with respect to the MGIC Collateral shall be released from the
grant pursuant to Section 3(a).
(d) Rights and Obligations Regarding Collateral.
(i) Xxxxxxx Capital agrees promptly to deliver or cause to be
delivered to MGIC and Radian any certificate or certificates and any other
instruments and documents evidencing the MGIC Collateral, in the case of
MGIC, and the Radian Collateral, in the case of Radian, that come into
existence from time to time after the date hereof.
(ii) Xxxxxxx Capital will, at its expense, execute, endorse,
acknowledge and deliver to MGIC and Radian, all such financing and
continuation statements, certificates, legal opinions, instruments and
other documents and take all such action, and do or cause to be done all
such other things, as MGIC or Radian may, from time to time, deem
necessary or advisable, or may reasonably request, in order to give full
effect to this Section 3 and to protect and enforce the rights intended to
be granted to MGIC and Radian hereunder.
(iii) Unless and until an Event of Default shall have occurred and
be continuing:
(1) Xxxxxxx Capital shall be entitled to exercise any and all voting
rights and/or other consensual rights and powers inuring to an owner
of the Collateral or any part thereof for any purpose consistent
with the terms of this Agreement;
(2) Xxxxxxx Capital shall be entitled to receive and retain any and all
distributions made with respect to the Collateral; provided,
however, that until actually paid, all rights to such distributions
shall remain subject to the security interest of this Agreement; and
(3) MGIC and Radian shall execute and deliver to Xxxxxxx Capital, or
cause to be executed and delivered to Xxxxxxx Capital, all such
proxies, powers of attorney and other instruments as Xxxxxxx Capital
may reasonably request for the purpose
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of enabling Xxxxxxx Capital to exercise the voting and/or consensual
rights and powers it is entitled to exercise pursuant to paragraph
(iii)(1) above and to receive the distributions it is entitled to
receive pursuant to paragraph (iii)(2) above, as soon as reasonably
practicable after receipt of a written request from Xxxxxxx Capital
together with a certificate by Xxxxxxx Capital's principal financial
officer stating that no Event of Default has occurred and is
continuing.
(e) Representations, Warranties and Covenants. Xxxxxxx Capital
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to MGIC and Radian (which representations, warranties
and covenants will be deemed to be repeated as of the Exercise Date) that:
(i) on the date of this Agreement, the Collateral is not evidenced
by any certificate or certificates or other instruments or documents;
(ii) it has the power and right to grant a security interest in and
lien on the Collateral and has taken all necessary actions to authorize
the granting of that security interest and lien;
(iii) it is the sole owner of the Collateral free and clear of any
security interest, lien, encumbrance or other restrictions other than the
security interest and lien granted under Section 3 and such other
encumbrances or restrictions arising under the Xxxxxxx Financial LLC
Agreement, MSI Stockholders Agreement or Xxxxxxx Capital LLC Agreement;
(iv) it will make no assignment, pledge, hypothecation or transfer
of, or create or permit to exist any security interest in or other lien
on, the Collateral, other than the security interest and lien granted
under Section 3 hereof and such other encumbrances or restrictions arising
under the Xxxxxxx Financial LLC Agreement, MSI Stockholders Agreement or
Xxxxxxx Capital LLC Agreement;
(v) upon the filing of a UCC financing statement naming Xxxxxxx
Capital as debtor and MGIC as secured party and a description of the MGIC
Collateral in the office of the Secretary of State of the State of
Delaware, MGIC will have a valid and perfected first priority security
interest therein;
(vi) upon the filing of a UCC financing statement naming Xxxxxxx
Capital as debtor and Radian as secured party and a description of the
Radian Collateral in the office of the Secretary of State of the State of
Delaware, Radian will have a valid and perfected first priority security
interest therein;
(vii) the performance by it of its obligations under this Agreement
will not result in the creation of any security interest, lien or other
encumbrance on the Collateral other than the security interest and lien
granted under Section 3;
(viii) its exact legal name, corporate structure and jurisdiction of
organization are as shown in Section 4(i) hereof and its chief executive
office and primary place of business are located at the address specified
in Section 4(i); and
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(ix) it will not change (i) its name, identity or corporate
structure in any manner (including, without limitation, by merger,
consolidation, change in corporate form or otherwise) or (ii) the location
of its chief executive office, type of organization or jurisdiction of
organization or establish any trade names unless it shall have given MGIC
and Radian not less than 30 days' prior notice thereof in writing and
taken all actions necessary or advisable to maintain the continuous
validity, perfection and the same or better priority of MGIC's and
Radian's security interests in the MGIC Collateral and Radian Collateral,
respectively, intended to be granted and agreed to hereby.
(f) Events of Default. Each of the following constitutes an event of
default hereunder (an "Event of Default"). An Event of Default will exist with
respect to a Party (such Party, the "Defaulting Party") if:
(i) any representation or warranty made by a Party in this Agreement
proves to have been incorrect or misleading in any material respect when
made;
(ii) that Party fails to comply with or perform any agreement or
obligation set forth in this Agreement and that continues for 30 days
after notice of that failure is given to that Party.
(g) Remedies upon Default.
(i) If any Event of Default shall have occurred and be continuing,
subject to the Xxxxxxx Financial LLC Agreement, MGIC and Radian shall each
have all of the rights and remedies with respect to the MGIC Collateral
and Radian Collateral, respectively, of a secured party under the UCC
(whether or not in effect in the jurisdiction where the rights and
remedies are asserted or sought to be exercised), and such additional
rights and remedies to which a secured party is entitled under the Laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted or sought to be exercised. In addition, without being required to
give any notice, except as may be required by mandatory provisions of Law,
subject to the Xxxxxxx Financial LLC Agreement, upon the exercise of its
rights and remedies hereunder, MGIC shall have the right to hold the MGIC
Collateral and Radian shall have the right to hold the Radian Collateral
absolutely free from any claim or right of whatsoever kind.
(ii) Upon the occurrence and during the continuance of an Event of
Default:
(1) All rights of Xxxxxxx Capital to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to Section
3(d)(iii)(1) above, and the obligations of MGIC and Radian under
paragraph 3(d)(iii)(3) above, shall cease, and all such rights shall
thereupon become vested in MGIC and Radian, which shall have sole
and exclusive right and authority to exercise such voting and
consensual rights and power; and
(2) All rights of Xxxxxxx Capital to distributions or other payments
pursuant to Section 3(d)(iii)(2) above shall cease, and all such
rights shall thereupon become vested in MGIC and Radian, which shall
have the sole and exclusive right and authority to receive and
retain such distributions or other payments. All
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distributions or other payments received by Xxxxxxx Capital contrary
to the provisions of this paragraph (g)(ii)(2) shall be held in
trust for the benefit of MGIC and Radian, shall be segregated from
other property or funds of Xxxxxxx Capital and shall be forthwith
delivered to MGIC and Radian upon demand in the same form as so
received (with any necessary endorsement). Any and all money and
other property paid over to or received by MGIC and Radian pursuant
to this paragraph (g)(ii)(2) shall be retained by MGIC and Radian as
additional Collateral hereunder and applied in accordance with the
provisions hereof.
(h) Termination. This Agreement shall create a continuing security
interest in the MGIC Collateral and Radian Collateral and shall remain in full
force until the exercise or expiration of the Options.
Section 4. Miscellaneous.
(a) Confidentiality. (i) The parties hereto agree to keep this
Agreement strictly confidential, and neither Radian, MGIC nor Xxxxxxx Capital
shall, without the prior written consent of the other parties, disclose this
Agreement or any of its terms to any person (other than its Representatives),
except to the extent otherwise required by Law (in which case, the provisions of
Section 4(a)(ii) shall apply).
(i) Notwithstanding anything in this Agreement to the contrary, in
the event that a Party is advised by its counsel (who may be internal
counsel) that disclosure of this Agreement is required by law, the
provisions of the following sentence shall apply. Notwithstanding anything
in this Agreement to the contrary, in the event that a Party hereto is
advised by its counsel that disclosure of this Agreement is required by
law, it is agreed that such Party or its Representative, as the case may
be, (i) shall notify the other Parties of such requirement as promptly as
practicable, (ii) may, without liability hereunder, disclose this
Agreement in the manner it is advised is required by law and (iii) will
exercise its best efforts to have confidential treatment accorded to any
provision of this Agreement that a Party hereto reasonably requests to
have accorded such treatment if such requesting Party takes primary
responsibility for preparing and, to the extent permissible by law,
processing such request.
(b) Covenant Not to Permit Distributions. Each Party agrees that,
prior to the exercise of the Option or the expiration thereof in accordance with
this Agreement, it shall not approve, and shall cause its Manager not to
approve, any distribution by Xxxxxxx Financial to the extent such distribution
will be made following the Exercise Date.
(c) Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their successors. This Agreement may not
be assigned by any Party without the prior written consent of the other parties;
provided, that each of MGIC and Radian may assign this Agreement in connection
with a Transfer as permitted by Section 9.1(c)(i) or (ii) of the Xxxxxxx
Financial LLC Agreement.
(d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
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WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
(e) Resolutions of Disputes.
(i) Generally. Unless prohibited by applicable Law, the Parties
agree that any dispute, controversy or claim arising out of or relating to
this Agreement or the performance by the Parties of its terms shall be
settled by binding arbitration held in the Borough of Manhattan, City of
New York, State of New York in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect, except as
specifically otherwise provided in this Section 4(d). Notwithstanding the
foregoing, to the extent the arbitrator(s) does not possess the power to
subpoena witnesses necessary to the resolution of a dispute, controversy
or claim brought hereunder which a court of competent jurisdiction would
possess, such dispute, controversy or claim shall not be subject to the
terms of this Section 4(d) and shall instead be subject to resolution in
such court. If the Parties to the Xxxxxxx Financial LLC Agreement are
engaged in or submit a matter to arbitration with respect to or related to
the same subject matter as a matter which is to be submitted to
arbitration pursuant to this Agreement, such arbitrations shall be jointly
conducted.
(ii) Arbitrators. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand for
arbitration, to exceed $500,000, then the panel to be appointed shall
consist of three neutral arbitrators; otherwise, one neutral arbitrator.
No arbitrator shall be a current or former officer, manager, director or
employee of any Party or any member of Xxxxxxx Financial.
(iii) Procedures: No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determines appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the arbitrator(s). The arbitrator(s) shall give the Parties
written notice of the decision, with the reasons therefor set out, and
shall have 30 days thereafter to reconsider and modify such decision if
any Party so requests within 10 days after the decision. Thereafter, the
decision of the arbitrator(s) shall be final, binding, and nonappealable
with respect to all persons, including (without limitation) persons who
have failed or refused to participate in the arbitration process, except
to the extent such decision shall be premised upon an erroneous
application of or shall be contrary to applicable Law. In making any
decision, the arbitrator(s) is instructed to preserve, as nearly as
possible, to the extent compatible with applicable Law, the original
business and economic intent of the Parties embodied in this Agreement.
(iv) Authority. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
(v) Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject
matter jurisdiction. Each
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Party hereby submits to the in personam jurisdiction of the federal and
state courts in the Southern District of New York, and in the borough of
Manhattan for the purpose of confirming any such award and entering
judgment thereon.
(vi) Confidentiality. All proceedings under this Section 4 and all
evidence given or discovered pursuant hereto, shall be maintained in
confidence by all Parties and by the arbitrators.
(vii) Continued Performance. The fact that the dispute resolution
procedures specified in this Section 4 shall have been or may be invoked
shall not excuse any Party from performing its obligations under this
Agreement and during the pendency of any such procedure all Parties shall
continue to perform their respective obligations in good faith.
(viii) Tolling. All applicable statutes of limitation shall be
tolled while the procedures specified in this Section 4 are pending. The
Parties will take such action, if any, required to effectuate such
tolling.
(f) Waiver of Jury Trial. WITHOUT LIMITING SECTION 4(D), AND ONLY TO
THE EXTENT THAT ANY PROVISION OF SECTION 4(D) IS HELD BY A COURT OF COMPETENT
JURISDICTION NOT TO BE ENFORCEABLE, EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
AND FOR ANY COUNTERCLAIM THEREIN TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW.
(g) Amendments. Neither this Agreement nor any provision hereof may
be amended, modified or waived except by an instrument in writing duly signed by
or on behalf of the parties.
(h) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties hereto shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at Law or in equity.
(i) Notice. Notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when received if delivered by facsimile transmission:
if to Radian:
Radian Guaranty, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: General Counsel
Telephone No.: (000) 000-0000, ext. 3388
Fax No.: (000) 000-0000
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if to MGIC:
Mortgage Guaranty Insurance Corporation
MGIC Plaza, P.O. Box 488
Milwaukee, Wisconsin 53201-0488
Attention: Chief Financial Officer
With a copy to: General Counsel
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000 (General Counsel)/
(000) 000-0000 (CFO)
if to Xxxxxxx Capital:
Xxxxxxx Capital, L.L.C.
0000 Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Secretary
Telephone No.:(000) 000-0000
Fax No.: (000) 000-0000
(j) Headings. The headings of this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
(k) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(l) Consistent Reporting. The Parties agree that in preparing and
filing federal income tax returns and state or local tax returns that follow
federal principles (including returns of Xxxxxxx Financial), and in any Internal
Revenue Service audit, they will treat the grant of the MGIC Option and Radian
Option as the grant of an option on a capital asset that (i) produces no current
income for Xxxxxxx Capital and (ii) will result in capital gain income to
Xxxxxxx Capital on the Exercise Date equal to the excess of the Settlement Price
plus the Option Premium over Xxxxxxx Capital's basis in the Percentage Interests
transferred pursuant to the Options.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written by their duly authorized officers.
RADIAN GUARANTY, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President and
Chief Financial Officer
MORTGAGE GUARANTY INSURANCE CORPORATION
By: /s/ J. Xxxxxxx Xxxxx
-----------------------------------------
Name: J. Xxxxxxx Xxxxx
Title: Executive Vice President & Chief
Financial Officer
XXXXXXX CAPITAL, L.L.C.
By: /s/ Xxx Xxxxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxxxx
Title: Authorized Representative
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Schedule 1
Xxxxxxx Financial Enterprise Value shall mean (i) $1.25 billion plus (ii) the
lesser of (A) $250 million and (B) the net income of Xxxxxxx Financial, as
determined in accordance with U.S. generally accepted accounting principles
applied consistently, for the period starting on January 1, 2005 and ending on
May 31, 2006 minus (iii) the excess of (A) the aggregate amount of all
distributions made by Xxxxxxx Financial to its members during the period
starting on May 1, 2005 and ending on the Exercise Date over (B) $111,728,689.
