Exhibit 10.12

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT dated as of July 12,
2001 by and between E-LOAN, INC., a Delaware corporation (the "Company"), and
The Charles Schwab Corporation, a Delaware corporation ("Purchaser").

R E C I TA L S:

WHEREAS, the Company has authorized the issuance and sale
of a note in exchange for certain consideration; and

WHEREAS, the Purchaser desires to purchase and the Company
desires to sell its 8% Convertible Note (the "Note") on the terms and conditions
set forth herein; and

WHEREAS, the Note, attached hereto as Exhibit A, will be
convertible by its holder, into shares (the "Conversion Shares") of the
Company's common stock, $0.001 par value per share (the "Common Stock");

NOW, THEREFORE, in consideration of the mutual covenants and
agreements, the Company and Purchaser hereby agree as follows:

1. Purchase and Sale of the Note
2. Purchase and Sale of the
Note. Subject to the terms and conditions set forth in this Agreement and in
reliance upon the Company's and Purchaser's respective representations set forth
herein, on the Closing Date the Company shall sell to the Purchaser, and the
Purchaser shall purchase from the Company the Note for $5,000,000 (the "Purchase
Price"). The sale and purchase shall be effected on the Closing Date by the
Company delivering to the Purchaser the duly executed Note against delivery by
the Purchaser to the Company of cash by wire transfer of immediately available
funds in the amount of the Purchase Price.
3. The Closing. The closing
of the sale and purchase of the Note hereunder (the "Closing") shall take place
at the offices of Allen Matkins Leck Gamble & Mallory LLP, 333 Bush Street,
17th Floor, San Francisco, California, or such other location as
Purchaser and the Company shall agree, on July 12, 2001 or such other date
as the Purchaser and the Company shall agree (the "Closing Date").
4. Purchaser. The Purchaser
may, by notice in writing to the Company, assign its rights to purchase the Note
to one of its Affiliates; provided that, the representations and warranties set
forth in Article III are true with regard to the assignee and the assignee shall
agree to be bound by the terms of this Agreement.
5. Representations and Warranties of the
Company
6. Organization; Good
Standing. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as it is presently being conducted and as
proposed to be conducted.
7. Capital Stock. Immediately
prior to the Closing, the authorized capital stock of the Company consisted of:
(i) 150,000,000 shares of Common Stock of which, on May 31, 2001, 53,826,637
shares were duly and validly issued, fully paid, nonassessable and outstanding,
14,237,969 are reserved for issuance upon the exercise of stock options granted
or to be granted under the Company's 1997 Stock Option Plan and 2,568,984 are
reserved for issuance upon purchase under the Company's 1999 Employee Stock
Purchase Plan, and 13,400,000 are reserved for issuance upon the exercise of
warrants issued by the Company, and (ii) 5,000,000 shares of Preferred Stock,
par value $0.001 per share, of which no shares are outstanding. Except as set
forth above, (i) there are no shares of capital stock or other equity securities
of the Company outstanding and (ii) there are no outstanding warrants, options,
agreements, convertible or exchangeable securities or other commitments pursuant
to which the Company is or may become obligated to issue, sell, purchase, return
or redeem any shares of capital stock or other securities of the Company, and
there are not any equity securities of the Company reserved for issuance for any
purpose. All issued and outstanding shares of the Company's capital stock have
been duly authorized and validly issued, are fully paid and nonassessable, and
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. No Person has or will have any preemptive rights to
subscribe for the Note or the Conversion Shares.
8. Authority; Execution and
Delivery; Enforceability. This Agreement, the Note, the Security Agreement
to be entered into by and among the Company and the Purchaser on the Closing
Date in substantially the form attached as Exhibit B (the "Security Agreement")
and that certain Registration Rights Agreement to be entered into by and among
the Company and the Purchaser on the Closing Date in substantially the form of
Exhibit C attached hereto (the "Rights Agreement") (together, with the
Intercreditor Agreements in substantially the forms of Exhibit D attached hereto
(the "Intercreditor Agreements"), this Agreement, the Note, the Security
Agreement and the Rights Agreement are collectively referred to as the
"Transaction Documents") have been, or at the Closing, in the case of the Note,
the Security Agreement and the Rights Agreement, will have been, duly executed
and delivered by the Company and each constitutes or, in the case of the Note,
the Security Agreement, and the Rights Agreement, will constitute at the Closing
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms. The Board of Directors of the Company has duly
authorized the execution, delivery, and performance of the Transaction Documents
(other than the Intercreditor Agreements), and the exchange of the New Warrant
for the Old Warrant. No other corporate action is necessary to authorize the
execution or delivery of the Note, the Security Agreement, the Conversion Shares
or the performance by the Company of its obligations hereunder and thereunder,
including the exchange of the New Warrant for the Old Warrant. All approvals of
any matters required by the Company's Board of Directors have been made by a
majority of the directors (other than any director designated by the Purchaser).
Such approval required by the preceding sentence may include a unanimous written
consent signed by all of the directors of the Company in which any potential
conflict which may exist for any director designated by the Purchaser shall be
discussed.*
9. Conversion Shares.
10. At least 4,716,981 shares of Common Stock (subject to
adjustment pursuant to the Company's covenant set forth in Section 6.10) have
been duly authorized and reserved for issuance upon the conversion of the Note.
Upon conversion in accordance with the Note, the Conversion Shares will be
validly issued, fully paid and nonassessable shares of Common Stock of the
Company issued free and clear of any Lien, and no Person has or will have any
preemptive rights to subscribe for such Conversion Shares.
11. No Consent. Neither the
nature of the business which the Company currently conducts or proposes to
conduct, nor any relationship between the Company and any other Person, nor any
circumstance in connection with the creation, authorization, issuance, offer or
sale of the Note or the Conversion Shares, nor the execution and performance of
any of the Transaction Documents, is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of the Company or the vote, consent or
approval in any manner of any lender to the Company or the holders of any
security of the Company as a condition to the execution, delivery and
performance of the Transaction Documents other than consents or approvals of
Bank One, NA, Greenwich Capital Financial Products, Inc. and GE Capital Mortgage
Services, Inc. which consents the Company represents will have been obtained on
or prior to the Closing. In addition to the foregoing, there are no consents or
waivers, other than those which have been obtained, which the Company must
obtain so as to be able to fulfill its obligations and to provide the Purchaser
with all of its rights under the Transaction Documents, including the right to
acquire the Conversion Shares upon the conversion of the Note.
12. Authorization To Do
Business. The Company has filed all documents necessary to qualify it to do
business as a foreign corporation, and the Company is in good standing under the
laws of each jurisdiction in which the conduct of the Company's business or the
nature of the property owned by the Company requires such
qualification.
13. Control. The Company does
not own or Control, and is not owned or Controlled by, directly or indirectly,
any corporation, partnership, business trust, association or other business
entity other than E-Loan International, Inc., a British Virgin Islands
corporation which is a wholly-owned subsidiary of the Company, and E-Loan Japan
K.K., nor does the Company hold or own, directly or indirectly, any equity
investment or interest in any other Person.
14. Property. The Company owns
or leases all of the property and assets necessary for its business as currently
conducted and as proposed to be conducted and no such leases may be terminated
without the Company's consent where termination of any of such leases,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. The Company owns its property and assets free and clear
of all Liens, except those that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets which the Company leases, the Company is
in compliance with such leases and holds a valid and marketable leasehold
interest free of any Liens or claims which, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. All such
leases are enforceable in accordance with their terms and the Company has not
received any notice of any default thereunder.
15. Intellectual Property. The
Company owns or possesses sufficient legal rights to all trademarks, service
marks, trade names, business names, brand names, logos, domain names,
copyrights, copyright registrations, designs, design registrations, trade
secrets, licenses, and information and proprietary rights and processes
(collectively, "Intellectual Property") for its business as now conducted and as
proposed to be conducted. The conduct of the business of the Company as
presently conducted and as proposed to be conducted does not violate, conflict
with, misappropriate or infringe the Intellectual Property of any other Person.
No claims are pending or, to the knowledge of the Company, threatened, against
the Company by any Person with respect to the ownership, validity,
enforceability, effectiveness or use in the business of the Company of any
Intellectual Property. Except with respect to the Company's "E-Loan" trademarks,
service marks and trade names, the Company is not aware of any Person which is
materially infringing, misappropriating or violating any of its Intellectual
Property.
16. Litigation. There are no
actions, suits, proceedings or investigations pending or, to the best of the
Company's knowledge and belief, any basis therefor or threat thereof, against or
affecting the Company which question the validity of any Transaction Document or
the right of the Company to enter into or execute any of such agreements or
documents, or to consummate the transactions contemplated thereby, or, which
could reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect. The foregoing includes, without limitation,
actions pending or threatened (or any substantive basis therefor known to the
Company) involving the prior employment of any of the Company's employees, use
in connection with the Company's business of any information or techniques
allegedly proprietary to any former employers of the Company's employees, or
obligations of the Company's employees under any agreements with their prior
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or Governmental Authority.
There is no action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate.
17. Regulatory; No Violation; No
Conflicts.
18. The Company has in all material respects duly complied
with, and is presently in due compliance with, and is not in default in any
material respect under any applicable law, ordinance, code, rule, statute,
regulation, judgment, decree, writ, ruling, injunction, order or any other
requirement of any Governmental Authority relating in any way or applicable in
any manner to the Company, its properties or business (collectively, "Legal
Requirements"), including, without limitation, all Legal Requirements relating
to, in the United States, the Federal Trade Commission Act, and all regulations
issued thereunder, and there is no pending claim by the Federal Trade Commission
or any other Governmental Authority, whether national, state or local, in the
United States or elsewhere, that the Company is not in such compliance or is in
such breach. The Company holds, and is in compliance with, all franchises,
licenses, permits, waivers, registrations, certificates, consents, approvals or
authorizations required by any applicable Legal Requirement (collectively,
"Permits") and has not received any notice asserting any noncompliance with, or
breach or violation of, any Legal Requirement or Permit. The preceding sentence
shall not apply to any matter for which the failure to obtain a Permit or to
comply will not result in a Material Adverse Effect. The Company possesses all
Permits required for the conduct of its business as now being operated, and has
no reason to believe that it will be unable to obtain any Permits which are
required for the future conduct of such business.
19. The Company is not in violation or default of any
provisions of its Certificate of Incorporation or By-Laws.
20. Neither the execution, delivery and performance of the
Transaction Documents nor the conversion of the Note into the Conversion Shares
will result in any violation of, be in conflict with, give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or constitute a default under, with or without the
passage of time or the giving of notice: (i) any Legal Requirement or Permit;
(ii) any Contract, obligation or commitment to which the Company is a party or
by which it is bound; or (iii) the terms and conditions of the Certificate of
Incorporation or By-Laws.
21. The Company has not received any notice or letters of
inquiry from the Nasdaq National Market in connection with the delisting or
potential delisting of the Common Stock.
22. Except as set forth in the Transaction Documents, the
execution, delivery and performance of the Transaction Documents and the
conversion of the Note into the Conversion Shares will not result in the
creation or imposition of any Lien on any asset of the Company.
23. Material Contracts. The
Company has filed all material agreements as exhibits to filings with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are required to be filed as exhibits under the rules and
regulations of the SEC. All such agreements filed as exhibits, together with any
other agreements which would be required to be filed pursuant to any future
filing of a Quarterly Report on Form 10-Q by the Company, are referred to as
"Contracts". Each of the Contracts is valid, binding and in full force and
effect and is enforceable by the Company in accordance with its terms. The
Company has performed all material obligations required to be performed by it to
date under each of the Contracts and is not (with or without the lapse of time
or the giving of notice or both) in breach or default in any material respect
thereunder and, to the knowledge of the Company, no other party to any of the
Contracts is (with or without the lapse of time or the giving of notice or both)
in breach or default in any material respect thereunder. The Company has avoided
every condition, and has not performed any act, the occurrence of which would
result in the Company's loss of any right granted under any contract which would
result in a Material Adverse Effect. The Company has not granted any security
interest in any of the Collateral (as such term is defined in the Security
Agreement) other than to Bank One, NA, with a priority ahead of the Note or the
security interest granted to Christian A. Larsen.
24. Financial Information. The
most recent audited financial statements of the Company included within reports
filed by the Company with the SEC prior to the date hereof (the "Financial
Statements") are complete and correct in all material respects and have been
prepared in accordance with GAAP applied on a consistent basis with each other
and with the financial statements of all previous fiscal periods (subject only,
in the case of unaudited statements, to normal, recurring audit adjustments).
The Company maintains and will continue to maintain a standard system of
accounting established in accordance with GAAP. As of the date of the Financial
Statements, the Company had incurred no Indebtedness other than that disclosed
on the Financial Statements. Except as previously disclosed to Purchaser, since
the date of those Financial Statements, the Company has not:
25. incurred any Indebtedness, except current liabilities
incurred in the ordinary course of business, none of which (individually or in
the aggregate) could reasonably be expected to result in a Material Adverse
Effect;
26. discharged or satisfied any Liens other than those
securing, or paid any obligation or liability other than, current liabilities
shown on the Financial Statements and current liabilities incurred since the
most recent date thereof, in each case in the usual and ordinary course of
business;
27. mortgaged, pledged or subjected to Lien any of its
assets, tangible or intangible other than in the usual and ordinary course of
the Company's business;
28. sold, transferred or leased any of its assets except in
the usual and ordinary course of business;
29. canceled or compromised any debt or claim, or waived or
released any right of material value;
30. suffered any physical damage, destruction or loss
(whether or not covered by insurance) to Company assets which either alone or in
the aggregate could reasonably be expected to result in a Material Adverse
Effect;
31. entered into any transaction other than in the usual and
ordinary course of business except for the transactions contemplated by the
Transaction Documents;
32. declared or paid any dividends or other distributions
with respect to its outstanding shares of Common Stock;
33. breached any covenant of any Contract or suffered a
breach in any Contract by any other party to such Contract; or
34. suffered or experienced any other change that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
35. No Voting Agreement. There
are no outstanding stockholder agreements, voting trusts, proxies or other
arrangements or understandings among the stockholders of the Company or with the
Company relating to the voting of their respective shares or other securities
issued by the Company which include voting rights.
36. No Brokers or Finders. No
person, firm or corporation has or will have, as a result of any act or omission
by the Company, any right, interest or valid claim against the Purchaser for any
commission, fee or other compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by the Transaction.
The Company will indemnify and hold the Purchaser harmless against any and all
liability with respect to any such commission, fee or other compensation which
may be payable or determined to be payable as a result of the actions of the
Company in connection with the transactions contemplated by the Transaction
Documents.
37. Taxes.
38. For purposes of this Agreement:
39. (i) The Company, and any affiliated group, within the
meaning of Section 1504 of the Code, of which the Company is or has been a
member, has filed or caused to be filed in a timely manner (within any
applicable extension periods) all material Tax Returns required to be filed by
the Code or by applicable state, local or foreign tax laws, (ii) all material
Taxes with respect to taxable periods covered by such Tax Returns, and all other
Taxes for which the Company is or might otherwise be liable have been timely
paid in full or will be timely paid in full by the due date thereof and the most
recent audited financial statements for the Company reflect an adequate reserve
for all Taxes payable by the Company for all taxable periods and portions
thereof through the date of such financial statements, and (iii) there are no
material liens for Taxes with respect to any of the assets or properties of the
Company.
40. No Tax Return of the Company has ever been examined by
the Internal Revenue Service. No material Tax Return of the Company or any
affiliated group of which the Company is or has ever been a member is under
audit or examination by any Taxing Authority, and no written or unwritten notice
of such an audit or examination has been received by the Company.
41. Each material deficiency resulting from any audit or
examination relating to Taxes by any Taxing Authority has been timely paid. No
material issues relating to Taxes were raised by the relevant Taxing Authority
in any completed audit or examination that can reasonably be expected to recur
in a later taxable period. The relevant statute of limitations is closed with
respect to the federal, foreign and material state and local Tax Returns of the
Company and any affiliated group of which the Company has ever been a part for
all years through December 31, 1996.
42. The Company is not party to or bound by any tax sharing
agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Taxing
Authority).
43. The Company is not required to include in a taxable
period ending after the Closing Date taxable income attributable to income that
accrued in a prior taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting, the long-term
contract method of accounting, the cash method of accounting or Section 381 of
the Code or any comparable provision of state, local, or foreign Tax law, or for
any other reason.
44. (i) No property of the Company is "tax exempt use
property" within the meaning of Section 168(h) of the Code, (ii) the Company is
not a party to any lease made pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954, and (iii) none of the assets of the Company are subject to
a lease under Section 7701(h) of the Code or under any predecessor section
thereof.
45. (i) There are no outstanding agreements or waivers
extending, or having the effect of extending, the statutory period of limitation
applicable to any material Tax returns required to be filed with respect to the
Company, (ii) neither the Company, nor any affiliated group, within the meaning
of Section 1504 of the Code, of which the Company is or has been a member, has
requested any extension of time within which to file any material Tax return,
which return has not yet been filed, and (iii) no power of attorney with respect
to any Taxes has been executed or filed with any Taxing Authority by or on
behalf of the Company.
46. The Company has complied in all respects with all
applicable laws relating to the payment and withholding of Taxes (including
withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code
or any comparable provision of any state, local or foreign laws) and have,
within the time and in the manner prescribed by applicable law, withheld from
and paid over to the proper Taxing Authorities all amounts required to be so
withheld and paid over under applicable laws.
47. The Company is not a real property holding company within
the meaning of Section 897 of the Code.
48. The Company is not a "foreign person" within the meaning
of Section 1445 of the Code.
49. Disclosure. The Purchaser
has access to a true and complete copy of each report, schedule, registration
statement and definitive proxy statement, including exhibits filed therewith
(but excluding exhibits incorporated therein by reference and not attached
thereto), filed by the Company during the fiscal year ended December 31, 2000,
and any subsequent interim periods, with the SEC (the "SEC Documents"), which
are all the documents that the Company was required to file. As of their
respective dates and, except to the extent information contained therein has
been revised or superseded by a later filed SEC Document, as of the date hereof,
none of the SEC Documents contained or contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
with respect thereto, have been prepared in accordance with GAAP during the
periods presented and fairly present (subject only, in the case of the unaudited
statements, to normal, recurring audit adjustments) the financial position of
the Company as of the date thereof and the results of its operations and its
cash flows for the periods then ended. To the best of the Company's knowledge,
the financial projections provided by the Company to the Purchaser in connection
with the Company's second quarter of 2001 reflect the reasonable estimates of
revenues and earnings for such quarter by the Company's management.
50. Environmental Matters.
51. Except for matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, the Company (i) has not failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has not become subject to any
Environmental Liability, (iii) has not received notice of any claim with respect
to any Environmental Liability or (iv) does not know of any basis for any
Environmental Liability.
52. Investment and Holding Company
Status. The Company is not (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
53. ERISA. No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably expected to occur,
could reasonably be expected to result in a Material Adverse
Effect.
54. Insurance. The Company
maintains policies of fire and casualty, liability and other forms of insurance,
including directors' and officers' insurance, in such amounts, with such
deductibles and against such risks and losses as are customarily maintained by
companies engaged in the same or similar businesses. All such policies are in
full force and effect, all premiums due and payable thereon have been paid
(other than retroactive or retrospective premium adjustments that are not yet,
but may be, required to be paid with respect to any period ending prior to the
Closing Date), and no notice of cancellation or termination has been received
with respect to any such policy which has not been replaced on substantially
similar terms prior to the date of such cancellation. The activities and
operations of the Company have been conducted in a manner so as to conform in
all material respects to all applicable provisions of such insurance
policies.
55. Sources of Available
Funds. The Company maintains warehouse lines of credit and other credit
facilities that provide sufficient amounts of financing necessary for its
business as currently conducted and as proposed to be conducted. As of May 31,
2001, the total amount of mortgage loans held-for-sale was $216,505,178. All
such mortgage loans are listed as current assets on the Company's most recent
balance sheet.
56. Maintenance of Common
Stock. The Company at the Closing will have, a sufficient number of
authorized but unissued shares of Common Stock reserved for issuance upon the
conversion of the Note.
57. Employee and Labor
Matters. (i) There is not any, and during the past five years there has
not been any, labor strike, dispute, work stoppage or lockout pending, or, to
the knowledge of the Company, threatened, against or affecting the Company; (ii)
to the knowledge of the Company, no union organizational campaign is in progress
with respect to the employees of the Company and no question concerning
representation of such employees exists; (iii) the Company is not engaged in any
unfair labor practice; (iv) there are not any unfair labor practice charges or
complaints against the Company pending, or, to the knowledge of the Company,
threatened, before the National Labor Relations Board; (v) there are not any
pending, or, to the knowledge of the Company, threatened, union grievances
against the Company as to which there is a reasonable possibility of adverse
determination and that, if so determined, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; (vi) there are
not any pending, or, to the knowledge of the Company, threatened, charges
against the Company or any of its current or former employees before the Equal
Employment Opportunity Commission or any state or local agency responsible for
the prevention of unlawful employment practices; and (vii) the Company has not
received written or oral communication during the past five years of the intent
of any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation of the Company and, to the knowledge
of the Company, no such investigation is in progress.
58. Certain Regulatory
Matters. The Company is not currently engaged in any activity not permitted
by Section 4(c)(8) of the Bank Holding Company Act of 1956, as amended (the
"Bank Act"), or Regulation Y of the Federal Reserve Board (12 CFR 225.28(b))
("Regulation Y"). In addition, none of the sale of the Note pursuant to this
Agreement; the conversion of the Note into the Conversion Shares, based on
information currently known to the Company; nor the exchange of the Old Warrant
for the New Warrant shall require the Company to obtain approval from any
Governmental Authority, including in connection with any mortgage brokerage or
other similar license, except any approval necessary (i) as a result of any
matter specific to the operations or nature of the Purchaser of which the
Company is not aware, (ii) in connection with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act"), or (iii) any approval which if
not obtained would not have a Material Adverse Effect. To the Company's
knowledge, neither the acquisition by the Purchaser of the Note (or the
Conversion Shares issuable upon conversion thereof), nor the exchange of the Old
Warrant by Schwab for the New Warrant (or the Shares of Common Stock issuable
upon the exercise or conversion thereof) to be issued to Purchaser shall require
Schwab or any Purchaser to register as a real estate broker, mortgage broker,
mortgage lender, or otherwise with any Governmental Authority.
59. Acknowledgment Regarding
Purchaser's Investment. The Company acknowledges and agrees that the
Purchaser is acting solely in the capacity of arm's length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby. The Company further acknowledges that the Purchaser is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby and any advice given by the Purchaser or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Purchaser's purchase of the Note. The Company further represents to the
Purchaser that the Company's decision to enter into the Transaction Documents
and the other transactions contemplated hereby and thereby has been based solely
on the independent evaluation of the Company and its
representatives.
60. Representations and Warranties of Purchaser
61. Investment for Own
Account. The Purchaser is acquiring the Note hereunder for its own account
for investment only and not with a view to any public distribution of the Note;
and the Purchaser will not offer to sell or otherwise dispose of the Note except
pursuant to Article V hereof. No other Person has been granted by the Purchaser
any right with respect to or interest in the Note, nor has it agreed to give any
Person any such interest or right in the future.
62. Offering Exemption. The
Purchaser understands that the Note has not been registered under the Act, nor
qualified under any state securities laws, and that it is being offered and sold
pursuant to an exemption from such registration and qualification based in part
upon the representations of such party contained herein. The Purchaser is an
"accredited investor", as defined in Rule 501 of Regulation D under the
Act.
63. Legends. The Purchaser
understands that certificates representing the Note and any Conversion Shares
issued prior to the effectiveness of a registration statement registering the
resale of the Conversion Shares will be endorsed with the following legend:
64. Removal of Legend. The
Purchaser understands and agrees that any legend endorsed on a certificate or
instrument evidencing the Note or the Conversion Shares shall be removed, and
the Company shall issue a certificate or instrument without such legend to the
holder of such security only (a) if such security is being disposed of pursuant
to registration under the Act and any applicable state acts or pursuant to Rule
144 or any similar rule then in effect, or (b) if such holder provides the
Company with an opinion of counsel satisfactory to it to the effect that a sale,
transfer, assignment, offer, pledge or distribution for value of such security
may be made without registration and that such legend is not required to satisfy
the applicable exemption from registration.
65. Acts and Proceedings. This
Agreement has been duly authorized by all necessary action on the part of
Purchaser, has been duly executed and delivered by the Purchaser, and is a valid
and binding agreement upon the part of the Purchaser.
66. No Brokers or Finders. No
person, firm or corporation has or will have, as a result of any act or omission
by the Purchaser, any right, interest or valid claim against the Company for any
commission, fee or other compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by the Transaction
Documents. The Purchaser will indemnify and hold the Company harmless against
any and all liability with respect to any such commission, fee or other
compensation which may be payable or determined to be payable as a result of the
actions of the Purchaser in connection with the transactions contemplated by the
Transaction Documents.
67. Covenants of the Purchaser
68. Sales. The Purchaser
covenants that it will not sell or otherwise transfer the Note or the Conversion
Shares acquired by it hereunder other than pursuant to (i) Rule 144 or any
similar or analogous rule or rules or (ii) an effective registration under the
Act or in a transaction which, in the opinion of counsel reasonably satisfactory
to the Company, qualifies as an exempt transaction under the Act and the rules
and regulations promulgated thereunder.
69. Conditions
70. Conditions of the Purchaser's
Obligations. The obligations of the Purchaser hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 7.02):
71. The Purchaser (or its counsel) shall have received from
the Company a counterpart of this Agreement, the executed Note, a counterpart of
the Security Agreement and a counterpart of the Rights Agreement each signed on
behalf of the Company;
72. The Purchaser (or its counsel) shall have received from
the Company counterparts of the Intercreditor Agreements executed by all of the
parties thereto;
73. The Purchaser shall have received such documents and
certificates as it or its counsel may reasonably request relating to the
organization, existence and good standing of the Company, the authorization of
the transactions contemplated in this Agreement and the other Transaction
Documents and any other legal matters relating to the Company, this Agreement or
the transactions contemplated hereby or thereby, all in form and substance
satisfactory to the Purchaser and its counsel;
74. The representations and warranties of the Company under
this Agreement shall be true in all material respects and the Purchaser shall
have received from the Company's Financial Officer a certificate dated as of the
Closing Date with the same effect as though made on and as of the Closing Date
stating that the representations and warranties of the Company as set forth in
this Agreement are true in all material respects as of the Closing Date and that
the Company has suffered no Material Adverse Effect;
75. The Company shall have performed and complied in all
respects with the agreements and conditions required by this Agreement to be
performed and complied with by it prior to or as of the Closing, including
without limitation the execution and delivery by the Company of the other
Transaction Documents (other than the Intercreditor Agreements);
76. All registrations, qualifications, permits and approvals
required under applicable state securities laws for the lawful execution and
delivery of this Agreement and the offer, sale, issuance and delivery of the
Note shall have been obtained;
77. All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and in the other
Transaction Documents and all certificates, opinions, agreements, instruments
and documents mentioned herein or incident to any such transaction shall be
satisfactory in form and substance to the Purchaser and its counsel;
78. The Purchaser shall have received a favorable opinion
from legal counsel to the Company in substantially the form of Exhibit E
attached to this Agreement;
79. The Company shall have issued to Purchaser the New
Warrant in exchange for the Old Warrant previously issued to Schwab; provided
that, the Company shall have no obligation to comply with this condition if
Schwab does not tender the Old Warrant for exchange;
80. No Legal Requirement shall have been enacted, entered,
issued, promulgated or enforced by any Governmental Authority that prohibits or
restricts the transactions contemplated by this Agreement and the other
Transaction Documents;
81. The Company shall have given notice to the investors
under that certain Securities Purchase Agreement, dated as of April 25, 2000
(the "Original Purchase Agreement"), which are not the Purchaser, of the sale of
the Note and the Conversion Shares upon conversion thereof, pursuant to Section
6.10 of the Original Purchase Agreement;
82. All consents required for the transactions contemplated
herein and the Security Agreement from the creditors under all of the
Indebtedness of the Company shall have been obtained by the Company. Such
consents shall be in the form as shall be satisfactory to the
Purchaser;
83. The Company's Board of Directors shall have approved the
transaction in a manner to permit the Company to engage in a business
combination with the Purchaser and its Affiliates pursuant to Section 203 of the
Delaware General Corporation Law in the event that Purchaser exercises the New
Warrant or Schwab the Continuing Warrant;
84. The Common Stock shall then be traded on the Nasdaq
National Market and not subject to any stop orders or suspensions of trading for
any reason. All approvals required pursuant to the rules and regulations of the
Nasdaq National Market in connection with the Transaction Documents and the
issuance of the Note or the Conversion Shares shall have been
obtained.
85. Conditions of the Company's
Obligations. The Company's obligation to sell the Note to the Purchaser on
the Closing Date is subject to the fulfillment prior to or on the Closing Date
of the conditions set forth below. In the event that any such condition is not
satisfied, Company shall not be obligated to proceed with the sale of the
Note.
86. The representations and warranties of the Purchaser under
this Agreement shall be true in all material respects as of the Closing with the
same effect as though made on and as of the Closing Date.
87. The Purchaser shall have performed and complied with all
agreements or conditions required by this Agreement to be performed and complied
with by it prior to or as of the Closing Date.
88. Covenants of the Company
89. Existence; Conduct of
Business. The Company will do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence in good
standing and the rights, licenses, permits, privileges and franchises material
to the conduct of its business.
90. Payment of Obligations.
The Company will pay its Indebtedness and other obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Company has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation and the enforcement
of any Lien securing such obligation, and (d) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
91. Maintenance of Properties.
The Company will keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear
excepted.
92. Insurance. The Company
will maintain with financially sound and reputable insurance companies,
insurance in such amounts and against such risks (including fire and other risks
insured by extended coverage) as are customarily maintained by companies engaged
in the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury, death
or property damage occurring upon, about or in connection with the use of any
properties owned, occupied or controlled by it as well as such other insurance
as may be required by law.
93. Compliance with Laws. The
Company will comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
94. SEC Disclosures. Each
report, schedule, registration statement and definitive proxy statement filed by
the Company with the SEC from and after the date of this Agreement will comply
in all material respects with the requirements of the Exchange Act and/or the
Act as applicable to such documents and none of such documents will, when filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company shall comply with all SEC filing requirements to which
it is subject.
95. Covenants in Original Purchase
Agreement. Nothing in this Agreement shall affect any of the covenants
contained in the Original Purchase Agreement and no Purchaser, by entering into
this Agreement shall have waived any right to enforce any of the covenants set
forth in the Original Purchase Agreement.
96. Use of Proceeds. The
Company will use the proceeds from the sale of the Note for general working
purposes and the furtherance of the Company's business plan.
97. Maintenance on Nasdaq National
Market, Listing of Conversion Shares. The Company shall maintain the listing
of its Common Stock on the Nasdaq National Market or the American Stock
Exchange, Inc. or the New York Stock Exchange, Inc. and the Company shall use
its reasonable best efforts to prevent the suspension of trading or a failure to
be listed on any such exchange for a period in excess of 10 consecutive trading
days at any time. The Company shall secure the listing (subject to official
notice of issuance) of the Conversion Shares into which the Note may be
converted upon the Nasdaq National Market and, in the event it lists its shares
of Common Stock on any other exchange, upon such exchange, for the Conversion
Shares into which the Note may be converted as of the Closing Date, promptly
following the Closing Date. The Company shall maintain such listing or listings
so long as any other shares of Common Stock shall be so listed.
98. Reservation of Conversion
Shares. The Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than the number of
shares of Common Stock needed to provide for the issuance of the Conversion
Shares (without regard to any limitations on conversions).
99. Transfer Agent
Instructions. The Company shall issue irrevocable instructions to its
transfer agent, or any subsequent transfer agent, to issue certificates,
registered in the name of the Purchaser or its respective nominee(s), for the
Conversion Shares in such amounts as specified from time to time by the
Purchaser to the Company upon conversion of the Note (the "Irrevocable Transfer
Agent Instructions"). Prior to the registration of the Conversion Shares under
the Act, all such certificates shall bear the restrictive legend specified in
Section 3.03 of this Agreement.
100. Actions to Ensure Closing.
The Company agrees in good faith to take any such actions as necessary to ensure
the Closing.
101. Notification of Redemption
Right. The Company will immediately notify the Purchaser if it determines
that an event has occurred, or is almost certain to occur within 60 days, that
would give the Purchaser a right to cause the Company to redeem the
Note.
102. Perfection of Security
Interest. The Company shall assist the Purchaser and provide all necessary
information and sign all necessary documents in order to permit the Purchaser to
perfect its interest under the Security Agreement.
103. Amendment of Larsen Note.
The Company shall not, without the Purchaser's prior written consent, amend any
material term of the Larsen Note.
104. Miscellaneous
105. Notices. Any notice required
or permitted under this Agreement shall be in writing and shall be delivered in
person or mailed by certified or registered mail, return receipt requested,
overnight courier or facsimile, directed to the Purchaser at The Charles Schwab
Corporation, 101 Montgomery Street, San Francisco, CA 94104, attention:
Christopher V. Dodds, facsimile (415) 636-5877, with a copy to Howard, Rice,
Nemerovski, Canady, Falk & Rabkin, A Professional Corporation, at Three
Embarcadero Center, Seventh Floor, San Francisco, CA 94111, attention: Lawrence
B. Rabkin, facsimile (415) 217-5910; or (b) the Company at E-Loan, Inc., 5875
Arnold Road, Suite 100, Dublin, CA 94568, attention: Joseph Kennedy, facsimile
(925) 556-2178, with a copy to E-Loan, Inc., 5875 Arnold Road, Suite 100,
Dublin, CA 94568, attention: Edward A. Giedgowd, facsimile (925) 803-3503, or,
in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. The giving of any notice
required hereunder may be waived in writing by the parties hereto. Every notice
or other communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, or on the date actually
received.
106. Waivers;
Amendments.
107. No failure or delay by the Purchaser in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Purchaser hereunder are cumulative and are not exclusive of
any rights or remedies that it would otherwise have. No waiver of any provision
of this Agreement or consent to any departure by the Company therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
108. Neither this Agreement nor any provision hereof or
thereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Company and the
Purchaser.
109. Expenses. Each party will
pay all costs and expenses incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement and the other Transaction Documents, provided that the Company shall
pay the reasonable legal fees and expenses of the Purchaser, not to exceed
$100,000 in the aggregate, in connection with such transactions.
110. Survival. All covenants,
agreements, representations and warranties made by the Company in the
certificates delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement, regardless of any
investigation made by any such other party or on its behalf. The provisions of
Section 7.03 shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby or the termination of this
Agreement or any provision hereof or thereof.
111. Severability. Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
112. Governing Law. This
Agreement shall be construed in accordance with and governed by the law of the
State of California.
113. Successors and Assigns.
Except as otherwise expressly provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. Except as expressly provided in
this Agreement, nothing in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
114. Headings. Article and
Section headings are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
115. Directly or Indirectly.
Where any provision in this Agreement refers to action to be taken by, or
prohibited to be taken by, any Person, such provision shall be applicable
whether such action is taken directly or indirectly by such Person.
116. Legal Counsel. The Company
has been informed that Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation ("Howard Rice"), has previously provided legal advice
to Palo Alto Funding Group ("PAFG"), a predecessor of the Company, and the
Company hereby expressly waives any conflict which may arise or may have arisen
due to such past provision of legal advice to PAFG arising out of the current
representation by Howard Rice adverse to the Company in connection
herewith.
117. Definitions
118. Defined Terms. As used in
this Agreement, the following terms have the meanings specified
below:
119. Terms Generally. The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, the Note, accounts and
contract rights.
120. Accounting Terms; GAAP.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Company notifies Purchaser that the Company
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if Purchaser notifies the Company that it
requests an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.

This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

"Company"

E-LOAN, INC.

/s/ Joseph J. Kennedy

Name:	Joseph J. Kennedy

Title:	President and COO

"Purchaser"

THE CHARLES SCHWAB CORPORATION

/s/ Christopher V. Dodds

Name:	Christopher V. Dodds

Title:	EVP, CFO

EXHIBIT A

Note

EXHIBIT B

Security Agreement

EXHIBIT C

Rights Agreement

EXHIBIT D

Intercreditor Agreements

EXHIBIT E

Legal Counsel Opinion Letter

EXHIBIT F

Warrant















NOTE PURCHASE AGREEMENT
dated as of
July 12, 2001
between
E-LOAN, INC.
and
THE CHARLES SCHWAB CORPORATION









|ARTICLE I	Purchase and Sale of the Note	*SECTION 1.01.	Purchase and Sale of the Note	*
SECTION 1.02.	The Closing 12	*
SECTION 1.03.	Purchaser	*ARTICLE II	Representations and Warranties of the Company	*SECTION 2.01.	Organization; Good Standing	*
SECTION 2.02.	Capital Stock	*
SECTION 2.03.	Authority; Execution and Delivery; Enforceability	*
SECTION 2.04.	Conversion Shares	*
SECTION 2.05.	No Consent	*
SECTION 2.06.	Authorization	*
SECTION 2.07.	Control	*
SECTION 2.08.	Property conducted	*
SECTION 2.09.	Intellectual Property	*
SECTION 2.10.	Litigation	*
SECTION 2.11.	Regulatory; No Violation; No Conflicts	*
SECTION 2.12.	Material Contracts	*
SECTION 2.13.	Financial Information	*
SECTION 2.14.	No Voting Agreement	*
SECTION 2.15.	No Brokers or Finders	*
SECTION 2.16.	Taxes	*
SECTION 2.17.	Disclosure	*
SECTION 2.18.	Environmental Matters	*
SECTION 2.19.	Investment and Holding Company Status	*
SECTION 2.20.	ERISA	*
SECTION 2.21.	Insurance	*
SECTION 2.22.	Sources of Available Funds	*
SECTION 2.23.	Maintenance of Common Stock	*
SECTION 2.24.	Employee and Labor Matters	*
SECTION 2.25.	Certain Regulatory Matters	*
SECTION 2.26.	Acknowledgment Regarding Purchaser's Investment	*ARTICLE III	Representations and Warranties of Purchaser	*SECTION 3.01.	Investment for Own Account	*
SECTION 3.02.	Offering Exemption	*
SECTION 3.03.	Legends	*
SECTION 3.04.	Removal of Legend	*
SECTION 3.05.	Acts and Proceedings	*
SECTION 3.06.	No Brokers or Finders	*ARTICLE IV	Covenants of the Purchaser	*SECTION 4.01.	Sales	*ARTICLE V	Conditions	*SECTION 5.01.	Conditions of the Purchaser's Obligations	*
SECTION 5.02.	Conditions of the Company's Obligations	*ARTICLE VI	Covenants of the Company	*SECTION 6.01.	Existence; Conduct of Business	*
SECTION 6.02.	Payment of Obligations	*
SECTION 6.03.	Maintenance of Properties	*
SECTION 6.04.	Insurance	*
SECTION 6.05.	Compliance with Laws	*
SECTION 6.06.	SEC Disclosures	*
SECTION 6.07.	Covenants in Original Purchase Agreement	*
SECTION 6.08.	Use of Proceeds	*
SECTION 6.09.	Maintenance on Nasdaq National Market, Listing of Conversion
Shares	*
SECTION 6.10.	Reservation of Conversion Shares	*
SECTION 6.11.	Transfer Agent Instructions	*
SECTION 6.12.	Actions to Ensure Closing	*
SECTION 6.13.	Notification of Redemption Right	*
SECTION 6.14.	Perfection of Security Interest	*ARTICLE VII	Miscellaneous	*SECTION 7.01.	Notices	*
SECTION 7.02.	Waivers; Amendments	*
SECTION 7.03.	Expenses	*
SECTION 7.04.	Survival	*
SECTION 7.05.	Severability	*
SECTION 7.06.	Governing Law	*
SECTION 7.07.	Successors and Assigns	*
SECTION 7.08.	Headings	*
SECTION 7.09.	Directly or Indirectly	*
SECTION 7.10.	Legal Counsel	*ARTICLE VIII	Definitions	*SECTION 8.01.	Defined Terms	*
SECTION 8.02.	Terms Generally	*
SECTION 8.03.	Accounting Terms; GAAP	*
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