Document:

exv10w1

 

Exhibit 10.1

LOAN AGREEMENT

This Loan Agreement (“Agreement”) is entered into by and between MBI FINANCIAL, INC., a Nevada
corporation with its principal place of business located at 1845 Woodall Rodgers, Suite 1225,
Dallas, Texas 75201 (“Borrower”), PATRICK A. McGEENEY, whose principal place of business is the
same as Borrower (“Guarantor”), and ___(“Lender”).

R E C I T A L S:

     WHEREAS, Borrower is in need of financing to provide funding of its acquisition and working
capital needs; and

     WHEREAS, pursuant to the terms of this Agreement, Lender has agreed to lend Borrower the sum
of Eight Hundred Thousand and No/100 Dollars ($800,000.00) to provide the financing for Borrower’s
needs.

     Now therefore, in consideration of the promises, payments, covenants, representations and
warranties hereinafter set forth, the parties hereto agree as follows:

     1. Loan Amount. Pursuant to the terms of this Agreement and satisfaction of the conditions
set forth below, Lender agrees to fund Borrower at closing the sum of Eight Hundred Thousand and
No/100 Dollars ($800,000.00).

     2. Consideration. In consideration for such loan, Borrower agrees to execute at closing a
promissory note (the “Note”) bearing interest at the rate of eighteen percent (18%) per annum which
Note shall be payable, principal and interest, in currency of the United States of America on
September  , 2007 (“Maturity Date”). The Note shall be pre-payable without penalty
and contain usual and customary language concerning default, post default interest, attorney’s fees
and court costs, and shall be in the form attached hereto as Exhibit “A.” The Note shall be
payable by wire transfer to an account designated in writing by Lender or such other method of
payment, address or account as Lender shall indicate in writing.

     As additional consideration for the loan, Borrower shall issue warrants (“Warrants”) to
purchase 1,600,000 shares (the “Warrant Shares”) of common stock (the “Common Stock”) of the
Borrower at a price of $0.40 per share, which Warrants shall be exercisable by no later than the
fifth (5th) anniversary of the Maturity Date, and otherwise have the rights set forth in
the Warrant Agreement, executed by the Borrower in favor of Lender.

     3. Collateral. As collateral to secure repayment of the Note and the obligations of Borrower
under this Agreement and the other documents executed in connection herewith, Borrower shall
provide Lender a Security Agreement covering all of Borrower’s assets that shall constitute a
second lien against such assets, subordinate only to the Senior Indebtedness (defined
below). Additionally, Guarantor shall personally guarantee the Note and the obligations of
Borrower under this Agreement and the other documents executed in connection herewith, pursuant to
the terms of a guaranty agreement containing terms and conditions acceptable to Lender. The term
“Senior Indebtedness” means any and all indebtedness relating to or arising under that certain
Credit Facility dated December 27, 2006, between Borrower and Old Master Giotto Fund Ltd., a Cayman
Islands exempt company.

-1-

 

     4. Use of Funds. The proceeds of the Loan shall be applied as follows:

     (a) $300,000 for the closing of the acquisition of the assets of Waterford Financial
Services, Inc., a Baltimore, Maryland based company (“Waterford”);

     (b) $250,000 for required bank cash reserves;

     (c) $140,000 working capital for the first month of Waterford’s operations; and

     (d) $110,000 for Borrower’s corporate working capital.

     5. Affirmative Covenants. Borrower shall, unless Lender consents otherwise in writing:

     (a) Pay all of Borrower’s taxes, assessments and other obligations, including, but not
limited to taxes and assessments and lawful claims which, if unpaid, might by law become a
lien against the assets of Borrower, as the same become due and payable, except to the
extent the same are being contested in good faith.

     (b) Comply with all applicable laws, rules, regulations and orders of any governmental
authority.

     (c) Comply in all respects with all existing and future agreements, indentures,
mortgages, or documents which are binding upon it or affect any of its properties or
business, including, without limitation, all agreements relating to the Senior
Indebtedness..

     (d) Keep at all times books and records of account in accordance with GAAP in which
full, true and correct entries will be made of all dealings or transactions in relation to
the business and affairs of Borrower.

     (e) Upon reasonable notice allow any representative of Lender to inspect Borrower’s
books of record and accounts and to discuss its affairs, finances and accounts with any of
its partners, officers, directors, employees and agents, all at such reasonable times and as
often as Lender may request.

     (f) Preserve and maintain its existence and good standing in Nevada and in each other
jurisdiction in which qualification is required.

     (g) Make, execute or endorse, acknowledge and deliver or file or cause the same to be
done, all such vouchers, invoices, notices, certifications and additional agreements,
undertakings, conveyances, assignments, financing statements or other assurances, and take
any and all such other action as Lender may from time to time deem necessary or appropriate
in connection with this Agreement or any of the other documents related to this transaction,
(i) to cure any defects in the creation of the documents related to this transaction, or
(ii) to evidence further or more fully describe, perfect or realize on the collateral
intended as security, or (iii) to correct any omissions in the documents related to this
transaction, or (iv) to state more fully the security for the Borrower’s obligations, or (v)
to perfect, protect or preserve any liens pursuant to any of the documents related to this
transaction, or (vi) for better assuring and confirming unto Lender all or any part of the
security for any of the Borrower’s obligations.

-2-

 

     6. Negative Covenants of Borrower. Borrower shall not:

     (a) Grant, suffer or permit, any contractual or noncontractual lien on or security
interest in any of its other assets.

     (b) Enter into any merger or consolidation or liquidation or dissolution.

     (c) Make any loan or advance to any individual, partnership, corporation or other
entity without consent of Lender.

     (d) Create, incur, assume or become liable in any manner for any indebtedness (for
borrowed money, deferred payment for the purchase of assets, lease payments, as surety or
guarantor for the debt for another, or otherwise) other than to Lender, except for normal
trade debts incurred in the ordinary course of Borrower’s business.

     (e) Do any of the following: (i) declare or pay any dividends or distributions; or (ii)
purchase, redeem, retire or otherwise acquire for value any of its stock now or hereafter
outstanding; (iii) or make any distribution of assets to its shareholders as such, whether
in cash, assets, or in obligations of Borrower; or (iv) allocate or otherwise set apart any
sum for the payment of any dividend or distribution on, or for the purchase, redemption, or
retirement of any partnership interests; or (v) make any other distribution by reduction of
capital or otherwise.

     (f) Convey, assign, transfer, sell, lease or otherwise dispose of, in one transaction
or a series of transactions (or agree to do any of the foregoing at any future time), all or
substantially all or a substantial part of its properties or assets (whether now owned or
hereafter acquired) or any part of such properties or assets which are essential to the
conduct of its business substantially as now conducted.

     (g) Permit a change of control to occur with respect to Borrower’s equity ownership.

     (h) Conduct any business other than, or make any material change in the nature of, its
business as carried on as of the date hereof.

     (i) Form or acquire any subsidiaries.

     (j) Modify, amend, increase, prepay (except as expressly required thereby), or permit
or suffer a default or event of default to exist with respect to the Senior Indebtedness.

     7. Negative Covenants of Guarantor. Guarantor shall not:

     (a) Sell, transfer, assign, or otherwise dispose of any of Guarantor’s stock or
other interest in Borrower.

     (b) Grant, suffer or permit, any contractual or noncontractual lien on or security
interest in any of its other assets.

     (c) Make any loan or advance to any individual, partnership, corporation or other
entity without consent of Lender.

     (d) Create, incur, assume or become liable in any manner for any indebtedness (for
borrowed money, deferred payment for the purchase of assets, lease payments, as surety or
guarantor for the debt for another, or otherwise) other than to Lender.

-3-

 

     8. Representations and Warranties. Borrower and Guarantor each hereby represents and warrants
to Lender as follows, which representations and warranties shall be deemed to be made at and as of
the date hereof and in all instances shall be true and correct in all material respects:

     (a) Borrower has good and defensible title to all of its assets, and none of such
assets are subject to any security interest, mortgage, deed of trust, pledge, lien, title
retention document or encumbrance of any character, except as disclosed in that certain
Security Agreement, dated the date hereof, executed by Borrower in favor of Lender.

     (b) The financial statements of Borrower and Guarantor heretofore delivered to Lender
have been prepared in accordance with GAAP (or other sound accounting practices acceptable
to Lender) and fairly present such party’s financial condition as of the date or dates
thereof, and there have been no material adverse changes in such party’s financial condition
or operation since the date or dates thereof.

     (c) Borrower is a corporation, duly organized, validly existing and in good standing
under the laws of Nevada and has the power and authority to own its property and to carry on
its business in Texas and in each other jurisdiction in which Borrower does business.

     (d) Each of Borrower and Guarantor has full power and authority to execute, deliver and
perform the documents to which it is a party and to incur and perform the obligations
provided for therein. No consent or approval of any public authority or other third party
is required as a condition to the validity or performance of any document relating to this
transaction, and each of Borrower and Guarantor is in compliance with all laws and
regulatory requirements to which it is subject.

     (e) This Agreement and the other documents executed in connection with this transaction
by Borrower and Guarantor constitute valid and legally binding obligations of such party,
enforceable in accordance with their terms.

     (f) There is no charter, bylaw, stock provision, partnership agreement or other
document pertaining to the power or authority of Borrower and no provision of any existing
agreement, mortgage, indenture or contract binding on Borrower or Guarantor or affecting any
property of such party, which would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement and the other documents executed in
connection with this transaction.

     (g) No default or event of default exists under or with respect to the Senior
Indebtedness. All payments under the Senior Indebtedness have been paid currently as they
become due and none are currently past due. Borrower has received no notice of default, of
acceleration, or of intention to accelerate or of any other material aspect of the Senior
Indebtedness.

     8. Closing. Closing shall occur in Borrower’s offices at a mutually agreeable date and time,
but not later than June 30, 2007.

     (a) At the closing, following execution of the closing documents, Lender shall provide
a cashier’s check or other certified funds in the amount of Eight Hundred Thousand Dollars
($800,000.00).

-4-

 

     (b) At the closing, Borrower shall deliver to Lender the following (each of which shall
be in form and substance satisfactory to Lender):

     (i) The Note.

     (ii) Personal Guaranty of Guarantor.

     (iii) Security Agreement of Guarantor.

     (iii) A Warrant Agreement in form and substance satisfactory to Lender.

     (iv) Security Agreement of Borrower.

     (v) A Subordination Agreement between Lender, Borrower, and the holder of the
Senior Indebtedness in form and substance acceptable to Lender.

     9. Events of Default. Any of the following shall constitute events of default (each an “Event
of Default”):

     (a) Borrower or Guarantor shall default in the due and punctual payment of any
principal or interest of the Note when due and payable, whether at maturity or otherwise, or
in the due and punctual payment of any of the other obligations of such party when due and
payable.

     (b) Any representation, warranty or statement made by any Borrower or Guarantor herein
or otherwise in writing in connection herewith or in connection with any of the other
documents executed in connection herewith, and the agreements referred to herein or therein
or in any financial statement, certificate or statement signed by any officer or employee of
any Borrower or Guarantor and furnished pursuant to any provision of the documents executed
in connection herewith shall be breached, or shall be materially false, incorrect or
incomplete when made.

     (c) Borrower or Guarantor shall default in the due performance or observance of any
term, covenant or agreement contained in this Agreement or the Guaranty, respectively.

     (d) Any of the documents executed in connection with this Transaction shall cease to be
a legal, valid and binding agreement enforceable against any party executing the same in
accordance with the respective terms thereof, or shall in any way be terminated, or become
or be declared ineffective or inoperative, or shall in any way whatsoever cease to give or
provide the respective rights, remedies, powers and privileges intended to be created
thereby

     (e) Borrower or Guarantor shall suspend or discontinue its business operations, or
shall generally fail to pay its debts as they mature, or shall file a petition commencing a
voluntary case concerning it under any chapter of the United States Bankruptcy Code; or any
involuntary case shall be commenced against any of them under the United States Bankruptcy
Code; or any of them shall become insolvent (howsoever such insolvency may be evidenced).

     (f) Borrower fails to make any payment under the Senior Indebtedness on or before the
date such payment becomes due, the Senior Indebtedness matures (either according to its
terms or by reason of acceleration), or a default or event of default exists with respect to
the Senior Indebtedness.

-5-

 

     10. Remedies. Upon the occurrence of an Event of Default, the entire principal of and accrued
interest on the Note shall forthwith be due and payable without demand, presentment for payment,
notice of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of
acceleration and all other notices and further actions of any kind, all of which are hereby
expressly waived by Borrower. Borrower waives demand, presentment for payment, notice of
nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and
all other notices and further actions of any kind, all of which are hereby expressly waived by
Borrower. Upon the occurrence and during the continuance of any Event of Default, Lender may (a)
exercise any and all rights under or pursuant to any of the documents executed in connection with
this transaction, and (b) exercise any and all rights afforded to Lender by the laws of the State
of Texas or any other applicable jurisdiction or in equity or otherwise, as Lender may deem
appropriate.

     11. Costs/Indemnity. Borrower shall pay to Lender immediately upon demand the full amount of
all costs and expenses, including reasonable attorneys’ fees, incurred by Lender in connection with
(a) the negotiation, preparation and delivery of this Agreement and each of the documents executed
in connection herewith, and all other costs and attorneys’ fees incurred by Lender for which
Borrower is obligated to pay in accordance with the terms of the Loan Documents, and (b) any
modifications of or consents or waivers under or amendments to or interpretations of this
Agreement, the Note, or the other documents related thereto. Borrower further agrees to pay on
demand all costs and expenses of Lender, if any, in connection with the enforcement (whether
through negotiations, arbitration proceedings, legal proceedings or otherwise) of the documents
relating to this transaction. Borrower further agrees to indemnify Lender and its employees and
agents, from and hold them harmless against any and all losses, liabilities, claims, damages or
expenses which any of them suffers or incurs as a result of Lender’s entering into this Agreement
and the documents relating hereto, or the consummation of the transactions contemplated by this
Agreement, or the use or contemplated use of the proceeds of the loan. IT IS THE INTENTION OF THE
PARTIES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO LOSSES, LIABILITIES, CLAIMS, DAMAGES OR
EXPENSES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF AN INDEMNIFIED
PARTY. No such indemnified party, however, shall be entitled to be indemnified for its or his own
gross negligence or willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section applies, such indemnities shall be effective
whether or not such investigation, litigation or proceeding is brought by Borrower, its directors,
shareholders or creditors, or by an indemnified party and whether or not the transactions hereby
are consummated. Borrower shall defend any claim for which an indemnified party is entitled to
seek indemnity pursuant to the preceding sentence, and the indemnified party shall cooperate with
the defense. The indemnified party may have separate counsel, and Borrower will pay the expenses
and reasonable fees of such separate counsel if either counsel for Borrower or counsel for the
indemnified party shall advise the indemnified party that the interests of both Borrower and the
indemnified party with respect to such claim are or with reasonable certainty will become adverse.
The agreements and obligations of Borrower contained in this Section shall survive payment in full
of the Obligations.

     12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the
parties, their successors, assigns and/or affiliates.

     13. Waiver of Jury Trial. BORROWER AND LENDER IRREVOCABLY WAIVE ANY AND ALL RIGHT EITHER OF
THEM MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS
AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
IN ANY OF SUCH DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.

-6-

 

     14. Arbitration; Venue; Jurisdiction. The parties acknowledge and agree that this Agreement
is being entered into in Dallas County, Texas and that venue over any disputes shall be in Dallas
County, Texas and that the laws of the State of Texas shall apply to the construction,
interpretation, and/or application of this Agreement. The parties agree that any disputes that may
arise concerning the construction, interpretation or application of this Agreement which cannot be
amicably resolved between the parties shall be resolved through mandatory arbitration conducted by
three arbitrators in accordance with the rules and pursuant to the administration of the American
Arbitration Association. Such arbitration shall be conducted in Dallas County, Texas and shall be
final and binding upon the parties. Any party seeking to reduce an award to a final judgment shall
do so through initiating litigation in a Dallas County Judicial District Court located in Dallas
County, Texas.

     15. Notices. All notices required by this Agreement shall be effective if provided in
writing and mailed to the other party by certified mail, return receipt requested to the following
address or such other address as either party may provide to the other party in writing in the
manner required by this paragraph:

If to Lender:

If to Borrower:

MBI Mortgage, Inc.

1845 Woodall Rodgers Freeway, Suite 1225

Dallas, Texas 75201

Attention: Patrick A. McGeeney

     16. Multiple Counterparts. This Agreement may be executed in multiple counterparts,
any of which shall be deemed an original.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-7-

 

This Agreement is entered into on this                           day of June, 2007.

LENDER:

CHARTER PRIVATE EQUITY, L.P.

By:

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	Name:  	 	 	 
	Title:  	 	 	 
	 

BORROWER:

MBI FINANCIAL, INC.

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	Name:  	 	 	 
	Title:  	 	 	 
	 

GUARANTOR:

	 	 	 	 	 
	PATRICK A. MCGEENEYexv10w2

 

Exhibit 10.2

MBI FINANCIAL, INC.

COMMON STOCK WARRANT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

     This certifies that, for good and valuable consideration, receipt of which is hereby
acknowledged, ___, a Texas limited partnership (“Holder”), is entitled to
purchase, subject to the terms and conditions of this Warrant, 1,600,000 shares (the “Warrant
Shares”) of common stock (the “Common Stock”) of MBI Financial, Inc., a Nevada corporation
(“Company”), in accordance with Section 2 during the period commencing as of the date hereof
(“Commencement Date”) and ending at 5:00 p.m. CST on a day sixty (60) months from such date
(“Expiration Date”), at which time this Warrant will expire and become void unless earlier
terminated as provided herein.

1. EXERCISE PRICE. The purchase price for the Warrant Shares shall be $0.40 per share.

2. EXERCISE AND PAYMENT.

     2.1. Manner of Exercise.

            (a) From and after the Commencement Date until the Expiration Date, the Holder of this Warrant
may from time to time exercise all or any part of this Warrant, on any Business Day, for all or any
part of the number of Warrant Shares purchasable hereunder. In order to exercise this Warrant, in
whole or in part, the Holder shall (i) deliver to the Company a written notice of the Holder’s
election to exercise this Warrant (an “Exercise Notice”), which Exercise Notice shall be
irrevocable, shall specify the number of Warrant Shares to be purchased and shall be delivered
together with this Warrant and (ii) pay to the Company the respective Exercise Price for the
Warrant Shares (the date on which both such delivery and payment shall have first taken place being
hereinafter sometimes referred to as the “Exercise Date”). Such Exercise Notice shall be in the
form of the subscription form appearing at the end of this Warrant as Annex A, duly executed by the
Holder or its duly authorized agent or attorney.

            (b) Upon receipt of such Exercise Notice, Warrant and payment, the Company shall, as promptly
as practicable, and in any event within five (5) business days thereafter, execute (or cause to be
executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates
representing the aggregate number of Warrant Shares issuable upon such exercise, together with cash
in lieu of any fraction of a share, as hereafter provided. The stock certificate or certificates so
delivered shall be, to the extent possible, in such denomination or denominations as the exercising
Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the
Holder or such other name as shall be designated in the Exercise Notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be deemed to have been
issued, and the Holder or any other Person so designated to be named therein shall be deemed to
have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

            (c) Payment of the respective Exercise Price for the Warrant Shares shall be made at the
option of the Holder by (i) the delivery of immediately available funds, and/or (ii) the Holder’s
surrender to the Company of that number of shares of Common Stock having an aggregate fair market

1

 

value equal to or greater than the respective Exercise Price for all Warrant Shares then being
purchased (including those being surrendered), or (iii) any combination thereof, duly endorsed by
or accompanied by appropriate instruments of transfer duly executed by Holder.

            (d) If this Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing the Warrant Shares being issued, deliver
to the Holder a new Warrant evidencing the rights of the Holder to purchase the un-purchased
Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be
identical with this Warrant.

     2.2. Payment of Taxes. All Warrant Shares issuable upon the exercise of this Warrant
pursuant to the terms hereof shall be validly issued, fully paid and non-assessable, issued without
violation of any preemptive rights and free and clear of all liens and other encumbrances (other
than any created by actions of the Holders). The Company shall pay all expenses in connection with,
and all taxes and other governmental charges that may be imposed with respect to, the issue or
delivery thereof, unless such tax or charge is imposed by law upon the Holder, in which case such
taxes or charges shall be paid by the Holder and the Company shall reimburse the Holder therefor on
an after-tax basis, excluding Holder’s income or capital gains taxes with respect to the
transaction.

     2.3. Fractional. The Company shall not be required to issue fractional shares of
Common Stock upon exercise of any Warrant. As to any fraction of a share that the Holder of one or
more Warrants, the rights under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such
final fraction in an amount equal to the same fraction of the fair market value of one share of
Common Stock on the Exercise Date.

     2.4. Continued Validity and Application. A Holder of Warrant Shares issued upon the
exercise of this Warrant, in whole or in part, including any transferee of such Warrant Shares
(other than a transferee in whose hands such Warrant Shares no longer constitute Warrant Shares as
defined herein), shall continue, with respect to such Shares, to be entitled to all rights and to
be subject to all obligations that are applicable to such Holder by the terms of this Warrant.

3. DELIVERY OF STOCK CERTIFICATES. Within a reasonable time after exercise, in whole or in part, of
this Warrant, the Company shall issue in the name of and deliver to the Holder, a certificate or
certificates for the number of fully paid and non-assessable Warrant Shares which the Holder shall
have requested in the Notice of Exercise or Election Notice.

4. NO FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares of Common
stock will be issued upon exercise of this Warrant. If upon any exercise of this Warrant a fraction
of a share results, the Company will pay the Holder the consideration provided by Section 2.3
herein.

5. CHARGES, TAXES AND EXPENSES. The Holder shall pay all transfer taxes or other incidental
charges, if any, in connection with the transfer of the Warrant Shares purchased pursuant to the
exercise of the Warrant hereunder, subject to the Company’s reimbursement obligations set forth in
Section 2.2 herein.

6. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in
case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and

2

 

upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant with the same terms and conditions and dated as of such cancellation, in lieu of this
Warrant.

7. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the taking of any action or
the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on the next
succeeding weekday which is not a legal holiday.

8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number of and kind of securities
purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time as follows:

            (a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the Company shall at any time after the
date hereof but prior to the expiration of this Warrant subdivide its outstanding securities as to
which purchase rights under this Warrant exist, by split-up or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the number of Warrant
Shares as to which this Warrant is exercisable as of the date of such subdivision, split-up or
combination shall forthwith be proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination. Appropriate adjustments shall also be made
to the Exercise Price payable per share, but the aggregate Exercise Price payable for the total
number of Warrant Shares purchasable under this Warrant as of such date shall remain the same.

            (b) STOCK DIVIDEND. If at any time after the date hereof the Company declares a dividend or
other distribution on Common Stock payable in Common Stock or other securities or rights
convertible into Common Stock (“Common Stock Equivalents”) without payment of any consideration by
such holder for the additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon exercise or conversion thereof), then the
number of shares of Common Stock for which this Warrant may be exercised shall be increased as of
the record date (or the date of such dividend distribution if no record date is set) for
determining which holders of Common Stock shall be entitled to receive such dividend, in proportion
to the increase in the number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock) of Common Stock as a result of
such dividend, and the Exercise Price shall be adjusted so that the aggregate amount payable for
the purchase of all the shares issuable hereunder immediately after the record date (or on the date
of such distribution, if applicable), for such dividend shall equal the aggregate amount so payable
immediately before such record date (or on the date of such distribution, if applicable).

            (c) OTHER DISTRIBUTIONS. If at any time after the date hereof the Company distributes to
holders of its Common Stock, other than as part of its dissolution or liquidation or the winding up
of its affairs, any shares of its capital stock, any evidence of indebtedness or any of its assets
(other than cash, Common Stock or securities convertible into Common Stock), then the Company may,
at its option, either (i) decrease the per share Exercise Price of this Warrant by an appropriate
amount based upon the value distributed on each share of Common Stock as determined in good faith
by the Company’s Board of Directors or (ii) provide by resolution of the Company’s Board of
Directors that on exercise of this Warrant, the Holder hereof shall thereafter be entitled to
receive, in addition to the shares of Common Stock otherwise receivable on exercise hereof, the
number of shares or other securities or property which would have been received had this Warrant at
the time been exercised.

            (d) MERGER. If at any time alter the date hereof there shall be a merger, consolidation or
other combination of the Company with or into another corporation or entity when the Company is not
the surviving corporation, then the Holder shall thereafter be entitled to receive upon

3

 

exercise of this Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares or other securities or property of the
successor corporation resulting from such merger or consolidation, which would have been received
by Holder for the shares of stock subject to this Warrant had this Warrant at such time been
exercised.

            (e) RECLASSIFICATION, ETC. If at any time after the date hereof there shall be a change or
reclassification of the securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes, then the Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein
and upon payment of the Exercise Price then in effect, the number of shares or other securities or
property resulting from such change or reclassification, which would have been received by Holder
for the shares of stock subject to this Warrant had this Warrant at such time been exercised.

9. NOTICE OF ADJUSTMENTS; NOTICES. Whenever the Exercise Price or number of Warrant Shares
purchasable hereunder, or associated rights, shall be adjusted in any manner pursuant to Section 8
hereof, the Company shall execute and deliver to the Holder a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Exercise Price and number of Warrant Shares
purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the Holder.

10. RIGHTS AS SHAREHOLDER. Prior to exercise of this Warrant, the Holder shall not be entitled to
any rights as a shareholder of the Company with respect to the Warrant Shares (except as otherwise
specifically provided herein), including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon, or be notified of shareholder meetings, and the
Holder shall not be entitled to any notice or other communication concerning the business or
affairs of the Company. However, in the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to each Holder of
this Warrant, at least ten (10) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.

11. RESTRICTED SECURITIES. The Holder understands that this Warrant and the Warrant Shares
purchasable hereunder constitute “restricted securities” under the federal securities laws inasmuch
as they are, or will be, acquired from the Company in transactions not involving a public offering
and accordingly may not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended (the “1933 Act”) or an applicable
exemption from such registration. In this connection, the Holder acknowledges that Rule 144 of the
Securities and Exchange Commission (the “SEC”) is not now, and may not in the future be, available
for resale of the Warrant and the Warrant Shares purchasable hereunder.

     Unless the Warrant Shares are subsequently registered pursuant to Section 14, the Holder
further acknowledges that the securities legend on Exhibit A to the Notice of Exercise attached
hereto shall be placed on any Warrant Shares issued to the Holder upon exercise of this Warrant.

     Notwithstanding the foregoing, if at any time the Company proposes to register any of its
Common Stock or any other equity securities (or other securities convertible into equity
securities) of the Company under the 1933 Act for sale to the public, whether for its own account
or for the account of other security holders or both (other than a registration on Form S-4 or Form
S-8 promulgated under the

4

 

Securities Act (or any successor forms thereto) or any other form not available for
registering the Warrant Shares for sale to the public), as soon as practicable prior to the filing
of such registration statement with the SEC, it will give written notice of its intention to effect
such registration (each such notice a “Piggyback Notice”) to each Holder. Upon the written request
of any Holder, given within ten (10) days after the giving of the Piggyback Notice to all Holders,
to register any of its Warrant Shares (which request shall state the number of shares of Warrant
Shares to be so registered and the intended method of disposition thereof), the Company will use
its commercially reasonable efforts to cause the Warrant Shares, as to which registration shall
have been so requested, to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to permit the sale or
other disposition by such Investor of such Warrant Shares so registered; provided, that nothing
herein shall prevent the Company from abandoning or delaying such registration at any time.

12. CERTIFICATION OF INVESTMENT PURPOSE. Unless a current registration statement under the 1933 Act
shall be in effect with respect to the securities to be issued upon exercise of this Warrant, the
Holder covenants and agrees that, at the time of exercise hereof, it will deliver to the Company a
written certification executed by the Holder that the securities acquired by him upon exercise
hereof are for the account of such Holder and acquired for investment purposes only and that such
securities are not acquired with a view to, or for sale in connection with, any distribution
thereof.

13. DISPOSITION OF SHARES. Holder hereby agrees not to make any disposition of any Warrant Shares
purchased hereunder unless and until:

            (a) Holder shall have notified the Company of the proposed disposition and provided a written
summary of the terms and conditions of the proposed disposition;

            (b) Holder shall have complied with all requirements of this Warrant applicable to the
disposition of the Warrant Shares; and

            (c) Holder shall have provided the Company with written assurances, in form and substance
satisfactory to legal counsel of the Company, that (i) the proposed disposition does not require
registration of the Warrant Shares under the 1933 Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act has been taken.

The Company shall NOT be required (i) to transfer on its books any Warrant Shares which have been
sold or transferred in violation of the provisions of this Section 13 or (ii) to treat as the owner
of the Warrant Shares, or otherwise to accord voting or dividend rights to, any transferee to whom
the Warrant Shares have been transferred in contravention of the terms of this Warrant.

14. TRANSFERABILITY.

            (a) GENERAL. This Warrant shall be transferable only on the books of the Company maintained at
its principal office in Dallas, Texas or wherever its principal office may then be located, upon
delivery thereof duly endorsed by the Holder or by its duly authorized attorney or representative,
accompanied by proper evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver new Warrants to the person entitled
thereto.

            (b) LIMITATIONS ON TRANSFER. This Warrant shall not be sold, transferred, assigned or
hypothecated by the Holder except to (i) one or more persons, each of whom on the date of transfer
is an officer or partner of the Holder; (ii) a general partnership or general partnerships, the
general partners of which are the Holder and one or more persons, each of whom on the date of
transfer is an officer of the

5

 

Holder; (iii) a successor to the Holder in any merger or consolidation; (iv) a purchaser of
all or substantially all of the Holder’s assets; (v) any person receiving this Warrant from one or
more of the persons listed in this Section 14(b) at such person’s or persons’ death pursuant to
will, trust or the laws of intestate succession, or (vi) a transferee approved by the Company
pursuant to Section 13 herein. This Warrant may be divided or combined, upon request to the Company
by the Holder, into a certificate or certificates representing the right to purchase the same
aggregate number of Shares.

15. MISCELLANEOUS.

            (a) CONSTRUCTION. Unless the context indicates otherwise, the term “Holder” shall include any
transferee or transferees of this Warrant pursuant to Section 14(b), and the term “Warrant”
shall-include any and all warrants outstanding pursuant to this Agreement, including those
evidenced by a certificate or certificates issued upon division, exchange, substitution or transfer
pursuant to Sections 8 or 14(b).

            (b) RESTRICTIONS. By receipt of this Warrant, the Holder makes the same representations with
respect to the acquisition of this Warrant as the Holder is required to make upon the exercise of
this Warrant and acquisition of the Warrant Shares purchasable hereunder as set forth in the Form
of Investment Letter attached as Exhibit A to the Notice of Exercise attached hereto.

            (c) NOTICES. Unless otherwise provided, any notice required or permitted under this Warrant
shall be given in writing and shall be deemed effectively given upon personal delivery to the party
to be notified or three (3) days following deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be notified (or one (1)
day following timely deposit with a reputable overnight courier with next day delivery
instructions), or upon confirmation of receipt by the sender of any notice by facsimile
transmission, at the address indicated below or at such other address as such party may designate
by ten (10) days’ advance written notice to the other parties.

            To Holder:

	 	 	 
	To: Company:

	 	MBI Financial, Inc.
	 

	 	1845 Woodall Rodgers Freeway, Suite 1225 Dallas, Texas 75201

            (d) GOVERNING LAW. This Warrant shall be governed by and construed under the laws of the State
of Texas as applied to agreements among Texas residents entered into and to be performed entirely
within Texas.

            (e) ENTIRE AGREEMENT. This Warrant, the exhibits and schedules hereto, and the documents
referred to herein, constitute the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and
understandings, whether oral or written, between the parties hereto with respect to the subject
matter hereof

            (f) BINDING EFFECT. This Warrant and the various rights and obligations arising hereunder
shall inure to the benefit of and be binding upon the Company and its successors and assigns, and
Holder and its successors, heirs and assigns.

            (g) WAIVER; CONSENT. This Warrant may not be changed, amended, terminated, augmented,
rescinded or discharged (other than by performance), in whole or in part, except by a writing
executed by the parties hereto, and no waiver of any of the provisions or conditions of this
Warrant or any of the rights of a party hereto shall be effective or binding unless such waiver
shall be in writing and

6

 

signed by the party claimed to have given or consented thereto.

            (h) SEVERABILITY. If one or more provisions of this Warrant are held to be unenforceable under
applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant
shall be interpreted as if such provision were so excluded and the balance shall be enforceable in
accordance with its terms.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

7

 

DATED: this ___day of June, 2007.

	 	 	 	 	 
	 	HOLDER:

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Its:  	 	 
	 

	 	 	 	 	 
	 	COMPANY:

MBI FINANCIAL, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Its:  	 	 

 

 

NOTICE OF EXERCISE TO: MBI FINANCIAL, INC.

     The undersigned hereby elects to purchase              shares of Common Stock
(“Stock”) of MBI Financial, Inc., a Nevada corporation (the “Company”) pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price pursuant to the terms of the
Warrant.

     Attached as Exhibit “A” is an investment representation letter addressed to the Company and
executed by the undersigned as required by Section 12 of the Warrant.

     Please issue certificates representing the Shares of Stock purchased hereunder in the names
and in the denominations indicated on Exhibit “A” attached hereto.

     Please issue a new Warrant for the unexercised portion of the attached Warrant, if any, in the
name of the undersigned.

Dated:

Name:

Title:

 

 

EXHIBIT A

To: MBI FINANCIAL, INC

     In connection with the purchase by the undersigned of ___shares of the Common Stock
(the “Stock”) of MBI FINANCIAL, INC.., a Nevada corporation (the “Company”), upon exercise of that
certain Common Stock Warrant dated as of the ___day of June, 2007, the undersigned hereby
represents and warrants as follows:

     The shares of Stock to be received by the undersigned upon exercise of the Warrant are being
acquired for its own account, not as a nominee or agent, and not with a view to resale or
distribution of any part thereof, and the undersigned has no present intention of selling, granting
any participation in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with respect to the Stock.
The undersigned believes it has received all the information it considers necessary or appropriate
for deciding whether to purchase the Stock.

     The undersigned understands that the shares of Stock are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being acquired from the Company
in transactions not involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of 1933, as amended
(the “Act”), only in certain limited circumstances. In this connection, the undersigned represents
that it is familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.

     Without in any way limiting the representations set forth above, the undersigned agrees not to
make any disposition of all or any portion of the Stock unless and until:

     There is then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with such registration statement; or

     (i) The undersigned shall have notified the Company of the proposed disposition and shall have
furnished the Company with a detailed statement of the circumstances surrounding the proposed
disposition, and (ii) if requested, the undersigned shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition will not require
registration of such shares under the Act. The Company will not require an opinion of counsel for
sales made pursuant to Rule 144 except in unusual circumstances.

     The undersigned understands the instruments evidencing the Stock may bear the following
legend:

 

 

     THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

Dated:

Name:

Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]