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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of January
17, 1997 between Xxxx Xxxxxxx ("Seller") and Xxxxxx X. Xxxxxxx ("Buyer").
R E C I T A L S
A. Seller is the owner of record of 3,099,978 common shares of Rock
Financial Corporation, a Michigan corporation (the "Company").
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, 1,022,680 common shares of the Company on the terms and conditions set
forth in this Agreement.
THEREFORE, the parties agree as follows:
1 PURCHASE AND SALE OF STOCK.
1.1 Agreement to Purchase and Sell Stock. Upon the terms and subject to
the conditions of this Agreement, at the Closing, as defined in Section 1.3,
Buyer shall buy from Seller, and Seller shall sell and deliver to Buyer,
1,022,680 common shares of the Company (the "Shares"). The certificates for the
Shares shall, when so delivered by Seller, be duly endorsed for transfer to
Buyer or have executed stock powers endorsed to Buyer attached to the Shares,
and Seller shall have paid or provided for all requisite documentary and/or
stock transfer stamps. Such certificates for the Shares shall also be
accompanied by any other documents that are necessary to transfer to Buyer good
and marketable title to the Shares.
1.2 Purchase Price. The purchase price for the Shares shall be
$4,242,500. If, on or before the Closing Date, Bear Xxxxxxx & Co., Inc. or
another similar financing source shall have funded a loan to Buyer sufficient
to pay the entire purchase price for the Shares or if Buyer otherwise desires
to pay the entire purchase price in cash at the Closing, such purchase price
shall be payable in cash, by check or by wire transfer delivered by Buyer to
Seller at the Closing, subject to the provisions of Section 3.2. If, on or
before the Closing Date, Bear Xxxxxxx & Co., Inc. or another similar financing
source shall not have funded a loan to Buyer sufficient to pay the entire
purchase price for the Shares and Buyer does not otherwise desire to pay the
entire purchase price in cash at the Closing, such purchase price shall be
payable as follows:
1.2.1 payment of $300,000 in cash, by check or by wire
transfer delivered by Buyer to Seller at the Closing, subject to the provisions
of Section 3.2; and
1.2.2 delivery to Seller at the Closing of a promissory note
in the principal amount of $3,942,500, maturing on August 31, 1998, bearing
interest at the annual rate of 9%, in substantially the form attached as
Exhibit 1.2.2.
.
1.3 The Closing. The Closing under this Agreement shall be held at
10:00 a.m. at the offices of Rock Financial Corporation, 00000 Xxxxxxxxx Xxxx,
Xxxxxx Xxxxx, Xxxxxxx Farms,
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Michigan 48025, on the earlier of (i) February 28, 1997, or (ii) two business
days after Bear Xxxxxxx & Co., Inc. or another similar financing source funds a
loan to Buyer sufficient to pay the purchase price for the Shares, or such
other day and time as Buyer and Seller shall mutually agree upon in writing, or
such date as extended pursuant to Section 4.1.2 or Section 4.2.2. The
consummation of the transactions set forth in this Agreement at such place and
time are sometimes referred to in this Agreement as the "Closing", and such
date is sometimes referred to as the "Closing Date". At the Closing, Seller
shall deliver the Shares pursuant to Section 1.1, Buyer shall pay or deliver
the purchase price pursuant to Section 1.2, and Buyer and Seller shall comply
with the covenants and conditions to closing set forth in Sections 3 and 4.
2 REPRESENTATIONS AND WARRANTIES.
2.1 Seller's Representations and Warranties. Seller hereby represents
and warrants the following to Buyer as of the date of this Agreement and as of
the Closing Date:
2.1.1 Authority Relative to This Agreement. Seller has full
power and authority to execute, deliver and perform the terms of this Agreement.
No other action on the part of Seller or any other individual, person or entity,
is necessary to authorize this Agreement or the performance by Seller of the
terms of this Agreement. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding agreement of Seller.
2.1.2 Consents and Approvals; No Violation. Except for the
consent of the other shareholders pursuant to the Rock Financial Corporation
Stock Purchase Agreement, dated as of June 29, 1987, among Buyer, Seller, Xxxxxx
Xxxxxx, Xxxxxxx Xxxxx and the Company (the "Shareholder Agreement"), neither the
execution and delivery by Seller of this Agreement nor the performance by Seller
of the terms of this Agreement, (i) will require any authorization, consent or
approval of any governmental or regulatory authority or of any other person or
entity, (ii) will breach any provision of, constitute a default under, or result
in the creation of any lien or security interest under any of the terms or
conditions of any license, agreement, evidence of indebtedness, mortgage,
security agreement, lease or other obligation to which Seller is a party, or by
which Seller or any of his properties or assets may be bound, or (iii) will
violate any order, writ, injunction, decree, judgment or arbitration award or
any statute, rule, regulation or ruling of any court or governmental authority,
applicable to Seller or to his property or assets.
2.1.3 Ownership of the Shares. The Shares are all of the
issued and outstanding shares of capital stock of the Company of any class or
nature whatsoever and all rights to acquire any such shares owned of record or
beneficially by Seller, except for the 2,077,298 common shares of the Company
retained by Seller. The transfer of the Shares pursuant to this Agreement will
effectively transfer full and complete ownership of the Shares to Buyer. All of
the Shares are validly issued, fully paid, nonassessable, and free of preemptive
rights. Seller has, and upon consummation of the sale of the Shares to Buyer,
Buyer will acquire, good title to all of the Shares, free and clear of all
pledges, warrants, calls, options, rights, commitments, subscriptions,
contracts, agreements, understandings, arrangements, voting trusts or
agreements, proxies, unpaid taxes, adverse claims and other claims and options
of whatever nature, except for any such rights
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in favor of Buyer. Seller has owned the Shares since at least February 1992, and
fully paid the purchase price for the Shares on or before February 1992.
2.1.4 Sophistication. Seller has substantial prior investment
experience, including investments in non-listed and non-registered securities of
corporations and partnership interests in various partnerships, and Seller has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the potential sale of Seller's
Shares.
2.1.5 Independent Decision. Seller will make his own
investment decision concerning the sale of the Shares and the sale price of the
Shares. Seller has not received, and has not and will not rely on, any
representations, opinions or recommendations from Buyer concerning the sale,
except as otherwise provided in this Agreement, including, without limitation,
concerning the Shares, Buyer or the Company.
2.1.6 Information. At all times following Seller's initial
contact with Buyer pertaining to the Shares, Buyer and the Company have made
available to Seller the opportunity to ask questions of, and receive answers
from, Buyer, the Company and persons acting on its behalf concerning the terms
and conditions of the transactions contemplated by this Agreement, concerning
the transactions described in Section 2.1.7 and concerning the Company
(including its financial condition, results of operations, cash flows,
prospects, business, products, facilities, management, principals, business
risks, securities, capitalization, financial needs and shareholders), and to
obtain any additional information, to the extent Buyer or the Company possessed
such information or could acquire it without unreasonable effort or expense,
that was necessary to verify the information furnished about the foregoing to
Seller by Buyer or the Company. Seller acknowledges receipt of a copy of this
Agreement, the Company's audited financial statements for the fiscal year ended
December 31, 1995 and the Company's unaudited financial statements for the nine
months ended September 30, 1996. Seller is assuming responsibility, and is not
relying on Buyer in any manner whatsoever, to analyze and evaluate any
information Seller has received and any additional information Seller desires
to obtain. Seller has been furnished, or will obtain, all information Seller
requests or desires to know before selling any Company common shares or other
equity securities. Seller has had the opportunity to consult with counsel
concerning the terms and conditions of this Agreement and the transactions
described in this Agreement.
2.1.7 Purchase Price. Seller acknowledges and accepts that the
purchase price for the Shares has been determined by negotiations between Seller
and Buyer based primarily on the net proceeds Seller desires to receive and the
amount Buyer is willing to pay, and the price is not necessarily related to the
Company's asset value, net worth, earnings potential or other established
criteria of value. Seller acknowledges that he is selling the Shares without
obtaining a full valuation of the Company or Seller's interest in the Company.
Seller further acknowledges that he is aware (i) that the Company has received a
preliminary indication of the range of its valuation under various circumstances
from an investment banking firm that may differ from those on which Seller's
purchase price is based, (ii) that the Company is discussing potential
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capital raising transactions, including, without limitation, a potential initial
public offering, that might occur as soon as 6 to 18 months after the date of
this Agreement, which, if done, could be based on implied valuations that are
significantly higher than those on which Seller's purchase price is based, and
(iii) that management's projections indicate a significant increase in revenues
and income in the near future. However, as with any estimate or projection, the
numbers in the estimated valuations and projections are estimates and reflect
numerous assumptions, including various assumptions with respect to the
anticipated future performance of the Company, industry performance, general
business and economic conditions, interest rates, buyers' interests in the
Company's business and other matters, most of which are beyond the control of
the Company. In addition, unanticipated events and circumstances may affect the
actual financial results of the Company. Notwithstanding the foregoing, Seller
has satisfied himself regarding the purchase price for the Shares, and Seller
agrees that he is assuming sole responsibility to evaluate the fairness of the
purchase price. To Buyer's knowledge, there are no current agreements or
commitments for an initial public offering of the Company's securities or a
business combination involving the Company.
2.2 Buyer's Representations and Warranties. Buyer hereby represents and
warrants the following to Seller as of the date of this Agreement and as of the
Closing Date:
2.2.1 Authority Relative to This Agreement. Buyer has full
power and authority to execute, deliver and perform the terms of this Agreement.
No other action on the part of Buyer or any other individual, person or entity,
is necessary to authorize this Agreement or the performance by Buyer of the
terms of this Agreement. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding agreement of Buyer.
2.2.2 Consents and Approvals; No Violation. Except for the
consent of the other shareholders pursuant to the Shareholder Agreement, neither
the execution and delivery by Buyer of this Agreement nor the performance by
Buyer of the terms of this Agreement, (i) will require any authorization,
consent or approval of any governmental or regulatory authority or of any other
person or entity, (ii) will breach any provision of, constitute a default under,
or result in the creation of any lien or security interest under any of the
terms or conditions of any license, agreement, evidence of indebtedness,
mortgage, security agreement, lease or other obligation to which Buyer is a
party, or by which Buyer or any of his properties or assets may be bound, or
(iii) will violate any order, writ, injunction, decree, judgment or arbitration
award or any statute, rule, regulation or ruling of any court or governmental
authority, applicable to Buyer or to his property or assets.
2.2.3 Accredited Investor. Buyer is an "accredited investor"
as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). Buyer is an
individual with a net worth (including Buyer's spouse's net worth) is in excess
of $1,000,000, and with individual income was in excess of $200,000 (or $300,000
with Buyer's spouse's income) for each of 1994 and 1995 and is reasonably
expected to be so for 1996.
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2.2.4 Sophistication. Buyer has substantial prior investment
experience, including investments in non-listed and non-registered securities of
corporations, and Buyer has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
potential purchase of Seller's Shares.
2.2.5 Investment Intent; Resale. Buyer is purchasing Seller's
Shares for Buyer's own account, and not with a view to, or for sale in
connection with, any distribution of the Shares, unless the Shares are
registered under the Securities Act of 1933, as amended, or an exemption from
the registration requirements of such act is available.
2.2.6 Independent Decision. Buyer will make his own investment
decision concerning the purchase of the Shares and the purchase price of the
Shares. Buyer has not received, and has not and will not rely on, any
representations, opinions or recommendations from Seller concerning the
purchase, except as otherwise provided in this Agreement, including, without
limitation, concerning the Shares, Seller or the Company.
3 COVENANTS.
3.1 Additional Loans. Buyer shall cause the Company to make additional
officer loans available to Seller at any time between the date of this Agreement
and the Closing Date in an aggregate outstanding principal amount not to exceed
$225,000 at the same interest rate (3% per year) and on the same terms and
conditions as other loans outstanding from the Company to Seller.
3.2 Repayment of Loans from the Company. On the Closing Date, Seller
shall repay, or cause to be repaid, all indebtedness, including, without
limitation, all accrued interest, of Seller to the Company (collectively, the
"Indebtedness"), including without limitation, (i) the officer loan from the
Company to Seller in the original principal amount of $545,000, plus accrued
interest, and (ii) any loans made pursuant to Section 3.1 and all accrued
interest with respect to such loans. If any of the Indebtedness is not repaid
before the purchase price for the Shares is paid, Seller authorizes Buyer
to pay to the Company, on behalf of Seller, that portion of the purchase price
for the Shares equal to all remaining unpaid Indebtedness to the Company (but
not more than the entire purchase price). Such payment shall be credited to the
purchase price for the Shares, and Buyer's obligations under Section 1.2 shall
be reduced by the amount of such payment. Notwithstanding anything in this
Section 3.2 to the contrary, if Buyer pays a portion of the purchase price for
the Shares under this Agreement by delivery to Seller at the Closing of a
promissory note, (i) Seller's obligation to repay any Indebtedness shall be
deferred (and shall continue to accrue interest at the same rate as before the
Closing Date) until Buyer makes principal payments under the promissory note
described in Section 1.2.2, and (ii) if any of the Indebtedness remains unpaid
at the time such principal payments are made on such promissory note, Seller
authorizes Buyer to pay to the Company, on behalf of Seller, that portion of
the amount due under such promissory note equal to all remaining unpaid
Indebtedness to the Company (but not more than the entire amount of such
principal payment under such promissory
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note). Such payment shall be credited to the amount due under such promissory
note, and Buyer's obligations under such promissory note shall be reduced by the
amount of such payment.
3.3 Resignation. Buyer shall cause the Company to continue to employ
Seller as its Executive Vice President in charge of the Rock Direct division at
an annual salary of $130,000 until the date of this Agreement (the "Resignation
Date"). After the Resignation Date, Seller shall not perform any duties for the
Company, including, without limitation, directing the activities of any other
employee of the Company; provided that, from the Resignation Date through
February 28, 1997, Seller shall continue to perform only such duties for the
Company and only at such times as are requested by Buyer on behalf of the
Company. On or before the Resignation Date, Seller shall resign from all of his
positions with the Company, except as a director of the Company, pursuant to a
resignation substantially in the form of the attached Exhibit 3.3. Seller shall
deliver a copy of such resignation to Buyer at the Closing. Buyer shall cause
the Company to provide the following to Seller as his exclusive severance
compensation:
3.3.1 Salary. The ratable portion of Seller's $130,000 per
year annual salary through February 28, 1997, payable in accordance
with the Company's usual payroll procedures.
3.3.2 Loan Officer Commissions. Seller's loan officer
commissions for loans closed on or before February 28, 1997, on the
same basis and at the same times as Seller has been paid such
commissions in the past.
3.3.3 Bonus. A $200,000 bonus, payable on or before
December 31, 1996.
3.3.4 Use of Office. Continued use of Seller's office at the
Company through July 1, 1997 for personal purposes or for purposes of
carrying on non-Company business; provided that Seller shall reimburse
the Company for any extraordinary, incremental (i.e., beyond those
incurred if Seller were not using such office) out-of-pocket expenses
the Company must pay to third party vendors as a result of Seller's
presence in, or use of, that office or his activities in connection
with the use of that office. Such purposes may include Seller's use of
such office to train his employees for his Business (as defined in
Section 3.6).
3.3.5 Medical Insurance. Continued medical and dental
insurance for as long as Seller remains a director of the Company,
except that (i) if Seller resigns as a director of the Company as
described in Section 3.5, the Company will continue to provide such
insurance for one year after the date Seller resigns as a director of
the Company, and (ii) notwithstanding anything in this Section 3.3.5
to the contrary, the Company's obligation (and Buyer's obligation to
cause the Company) to provide Seller with such insurance shall end on
the date Seller is employed by another entity providing health
coverage.
3.3.6 Office Furniture. Effective on the Resignation Date, Buyer
will cause the Company to transfer to Seller all of its right, title
and interest in the furniture in Seller's
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office at the Company on the date of this Agreement. Buyer and Seller
agree that the value of such furniture is $3,500, and Seller will, and
Buyer will cause the Company to, use that value for federal income tax
purposes.
3.3.7 Additional Severance Compensation. The Company has
provided, or Buyer will cause the Company to provide, Xxxxxx Xxxxxxxx
and Xxxxx Xxxxx with their loan officer commissions, overrides and
other normal severance compensation (not including any continuation of
salary beyond the dates on which their respective employments with the
Company terminated) for loans closed on or before January 31, 1997, on
the same basis and at the same times as they have been paid such
amounts in the past. In addition, Buyer will cause the Company to pay
$20,000 in additional severance compensation to each of Xxxxxx Xxxxxxxx
and Xxxxx Xxxxx on or before July 1, 1997. Also, the Company has
provided, or Buyer will cause the Company to provide, Xxx Xxxxxx and
Xxxx Xxxxx with their loan officer commissions, overrides and other
normal severance compensation (not including any continuation of salary
beyond the dates on which their respective employments with the Company
terminate) for loans closed on or before 30 days after the termination
of their employment with the Company if they are offered employment in
Seller's Business (as defined in Section 3.6) and agree to be so
employed, on the same basis and at the same times as they have been
paid such amounts in the past.
3.4 Dividend. Buyer will cause the Company to declare a dividend,
payable on or before September 1, 1997, that will result in Seller receiving a
distribution of $1,000,000, and will cause the Company to pay such $1,000,000
distribution to Seller.
3.5 Service as a Director of the Company. Buyer will vote his common
shares in the Company to elect Seller as a director of the Company until the
earlier of (i) the date on which a company of which Seller is a director,
officer, key employee or at least 10% shareholder engages in a business similar
to that of the Company and has annual gross revenues of at least $10,000,000,
and (ii) the date the Company closes a public offering of its securities
registered under the Securities Act of 1933, as amended, pursuant to a
registration statement filed with the Securities and Exchange Commission (each a
"Terminating Event"). On the date of any Terminating Event, at the request of
Buyer, Seller will resign as a director of the Company.
3.6 Consulting with Company Employees. Buyer will cause the Company to
permit (i) Seller, and (ii) if Buyer is informed in advance, including, without
limitation, by voice mail message, Xxxxxx Xxxxxxxx and Xxxxx Xxxxx, if they
become executive officers of Seller's Business (as defined below), and (iii)
with Buyer's advance permission, any other executive officer of Seller's
Business (as defined below), at any time through December 31, 1998 (and
thereafter as Buyer, Seller and the Company may agree), to consult with Company
employees concerning areas of the Company's business and operations that are
similar to the business or operations of any mortgage business formed or
acquired by Seller and that is consistent with Seller's obligations under
Section 3.8 (the "Business"); provided that (i) such consultation shall not
disrupt the Company's business, (ii) such right to consult shall expire when
the Business has annual gross revenues in any year of at least $10,000,000,
(iii) if such consultation requires more
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than occasional personal or telephone conversations or sporadic meetings with
Company employees, Seller must (A) obtain Buyer's prior consent to such
consultation, and (B) pay fair market value for the consulting services provided
to Seller, and (iv) any request for any documentation or anything else in
writing must be made through Buyer, including, without limitation, any requests
for books, memoranda and forms of agreements.
3.7 Reimbursement for Costs of Outstanding Promises. Seller shall
indemnify, defend and save and hold harmless the Company from and against any
damage, liability, loss, claim, cost, debt, expense, obligation, tax,
assessment, public charge, lawsuit, contract, agreement, undertaking, deficiency
of any kind or nature, demand, lawsuit, action or cause of action, whether
known or unknown, fixed, actual, accrued, or contingent, liquidated or
unliquidated (including but not limited to, interest, penalties, reasonable
attorneys' fees and other actual reasonable costs and expenses incident to
proceedings or investigations or the defense of any claim, whether or not
litigation has commenced) arising out of, resulting from, or relating to, and
will pay the Company on demand the full amount of any sum which the Company pays
or becomes obligated to pay on account of, (i) Seller's written commitments on
behalf of the Company to provide Xxxxxx Xxxxxxx and A. Xxxxxx Xxxxxxx with
mortgage loans at fixed rates and with specified maturities, which rates and/or
maturities differ from the loans actually made to them, or (ii) any other
written commitment made by Seller on behalf of the Company outside of the
ordinary course of the Company's business that is similar to those described in
clause (i).
3.8 Covenant Not to Compete and Related Matters.
3.8.1 Seller's Acknowledgment. Seller acknowledges that the
Company has expended considerable time, money and resources in initiating and
commencing the operations of the Company; recruiting, training and developing
the skills and abilities of the employees of the Company; developing business
relationships with investors, referral sources and customers so as to improve
the goodwill of the Company; establishing and maintaining close business
relationships between the Company and its customers; and obtaining, compiling
and developing confidential customer lists, various internal computer reports,
and other proprietary business information not readily available to the public
or through other sources. Seller further acknowledges that, except as otherwise
provided in this Section 3.8, the Company is entitled to keep the results of
such efforts (to the extent they represent protectable proprietary information
or other protectable intellectual property of the Company) for its exclusive
use. Accordingly, Seller agrees to the provisions of this Section 3.8
and agrees that such provisions are necessary to preserve and protect the
legitimate business interests of the Company.
3.8.2 Seller's Non-Compete Covenant. Seller represents,
warrants, covenants and agrees, for the benefit of Buyer, the Company and their
affiliates, successors and assigns, that from the date of this Agreement through
December 31, 1998 (the "Covenant Period'), he shall not, either directly or
indirectly, whether on his own behalf or on behalf of any other person, business
or entity whatsoever, engage in, or have any interest in or be associated with
(whether as an officer, director, shareholder, partner, member, associate,
employee, consultant, advisor, owner or otherwise), any corporation,
partnership, limited liability company, association, trust,
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firm or other enterprise (including any pre-incorporated association) which is
engaged in originating any loans secured by any property located in the State of
Michigan (the "Mortgage Activity") without first obtaining the express written
consent of the President of the Company; except that notwithstanding the
foregoing, Seller may (i) invest in any publicly-held corporation engaged in the
Competing Activity, if such investment does not exceed one (1%) percent in the
aggregate in value of the issued and outstanding capital stock of such
corporation, and (ii) continue to own the interest in the Company he owns as of
the date of this Agreement.
3.8.3 Seller's Non-Solicitation Covenant. Seller represents,
warrants, covenants and agrees, for the benefit of Buyer, the Company and their
affiliates, successors and assigns, that from the date of this Agreement
through two years after the Closing Date, he shall not, either directly or
indirectly, whether on his own behalf or on behalf of any other person,
business or entity whatsoever, solicit, induce or attempt to induce any present
employee of the Company or any former employee of the Company who left the
employ of the Company at any time within one year immediately preceding the
date of this Agreement to leave the employment of the Company or enter into the
employ of (i) Seller, (ii) any entity of or to which Seller is an employee,
member, officer, consultant or advisor or in which Seller otherwise has any
interest whatsoever, or (iii) any competitor of the Company, without the
Company's prior written consent, except that Seller may (A) during the 30-day
period beginning on the date Seller notifies Buyer that such period is starting
(which must be on or before June 1, 1997), talk about the possibility of
employment by the Business (subject to the restrictions described in Section
3.8) to Xxxxxx Xxxxxxxx, Xxxxx Xxxxx, Xxx Xxxxxx, Xxxx Xxxxx and any four
additional employees, provided that only three of such four additional
employees may be employed in the Company's Boulder Financial division (the
"Additional Employees"), outside of the Company's offices only (except that he
may talk to Xxxxxx Xxxxxxxx, Xxxxx Xxxxx, Xxx Xxxxxx and Xxxx Xxxxx at any time
before the beginning of such 30-day period through the end of such 30-day
period), and (B) hire, only during the same 30-day period, any of such persons
for such Business, if they agree to be so employed and if no more than two of
the Additional Employees hired for such Business were employed in the Company's
Boulder Financial division; and Buyer shall cause the Company to waive any of
its non-competition restrictions prohibiting such persons from being so
employed, but not otherwise. If Xxx Xxxxxx and Xxxx Xxxxx are offered such
employment and agree to be so employed, Buyer will cause the Company, at no
cost to Seller or the Business, to allow them to participate in the Company's
Boulder Financial division's normal training program.
3.8.4 Seller's Confidentiality Covenant. Seller represents,
warrants, covenants and agrees, for the benefit of Buyer, the Company and their
affiliates, successors and assigns, that before, on and after the date of this
Agreement, he shall not, either directly or indirectly, whether on his own
behalf or on behalf of any other person, business or entity whatsoever use,
copy, publish, disseminate, distribute or otherwise disclose any proprietary
information, customer lists, advertising materials or copy, trademarks, service
marks, copyrights, logos, packaging, trade secrets or other intellectual
property of the Company, including, without limitation, any of the foregoing
relating to any of the Company's proprietary applications packages, such as
"MORTGAGE IN A BOX(R)" products and forms (collectively, "Proprietary
Information"); provided that the parties agree the Proprietary Information does
not include any of the following:
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(i) internal Company documents, such as management report forms, employee
handbooks and similar documents, or (ii) standardized industry and other
non-proprietary legal forms, other than those relating to any of the Company's
proprietary application kits, such as "MORTGAGE IN A BOX(R)" products and forms
and other than those containing any Company trademarks, service marks,
copyrights, logos, proprietary packaging or similar rights.
3.8.5 Distinct Covenants. Buyer, Seller and the Company intend
that the covenants set forth in this Section 3.8 (the "Covenants") shall be
deemed to be a series of separate covenants with respect to the Mortgage
Activities of the Company, one for each and every political subdivision of each
state and county to which such Covenants apply. Seller acknowledges and agrees
that the Covenants are reasonable and valid in geographical and temporal scope
and in all other respects. If any court determines that any Covenant, or any
portion of any Covenant, is invalid or unenforceable, the remainder of the
Covenants shall not be affected and shall be given full force and effect,
without regard to the invalid Covenant or the invalid portion. If any court
determines that any Covenant, or any portion of any Covenant, is unenforceable
because of its duration or geographic scope, such court shall have the power to
reduce such duration or scope, as the case may be, and, enforce such Covenant
or portion in such reduced form. Seller intends to and hereby confers
jurisdiction to enforce the Covenants above upon the courts of any jurisdiction
within the geographical scope of such Covenants. If the courts of any one or
more of such jurisdictions hold the Covenants, or any portion of any Covenant,
unenforceable by reason of their breadth of scope or otherwise, it is the
intention of Seller that such determination not bar or in any way affect the
right of Buyer or the Company to the relief provided above in the courts of any
other jurisdiction within the geographical scope of such Covenants as to
breaches of such Covenants in such other respective jurisdictions.
3.8.6 Breach of Covenants Constitutes Breach of
Agreement/Specific Enforcement. Seller covenants and agrees that a breach or
attempted breach of any of the Covenants, constitutes a breach of this
Agreement. In the event of a breach of any Covenant or any other provision of
this Agreement, in addition to any and all legal and equitable rights available
to Buyer, the Company or both, such Covenants may be specifically enforced by a
temporary and/or permanent injunction in an action in equity. Seller hereby
acknowledges that remedies at law for such a breach or threatened breach of the
Covenants are inadequate.
3.9 Rock Insurance Interest. Buyer hereby grants Seller an option to
purchase, at any time within 90 days after a time chosen by Buyer, but the time
chosen by Buyer must be on or before March 31, 1997 (because Buyer intends to
address the capitalization of Rock Insurance Company during the first quarter of
1997), sufficient shares of Buyer's Rock Insurance Company stock so that Seller
would own 30% of the combined Rock Insurance Company shares owned by Seller and
Buyer on the date of the exercise of such option. The exercise price of such
option is payable by Seller to Buyer, in cash at the time of such exercise, and
equals the same average cost per share paid by Buyer for his equity interest in
Rock Insurance Company through the first date such option is exercisable.
Notwithstanding the preceding sentence, if Buyer pays a portion of the purchase
price for the Shares under this Agreement by delivery to Seller at the Closing
of a promissory note, Seller may pay such exercise price by delivery of a
promissory note in the
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principal amount equal to such exercise price, maturing on August 31, 1998, and
bearing interest at the annual rate of 9%, in substantially the form attached as
Exhibit 1.2.2, except that Buyer and Seller would be reversed and the principal
amount would be adjusted to equal the option exercise price. This option is not
transferrable by Seller without Buyer's consent. It is a condition to the
exercise of such option that Seller enter into a shareholders agreement among
Rock Insurance Company's shareholders with respect to their interests in Rock
Insurance Company on the same terms and conditions as the agreement among the
Company's shareholders as of the date of such exercise, except as modified by
mutual agreement of the parties to such shareholders agreement.
If Seller exercises such option and desires to sell or transfer all or
any part of such shares (other than to a revocable inter vivos trust for the
benefit of Seller and of which Seller is the sole trustee, which trust shall be
treated for all purposes as the Seller for purposes of this Section 3.9, and
such trust and the shares transferred to the trust, shall be bound by the terms
and conditions of this Section 3.9), he must first give written notice to Buyer
of such proposed sale or transfer, which notice shall state the name and
address of the proposed transferee, the amount of the equity interest, and the
price, terms of payment, and conditions of such proposed sale or transfer.
Buyer shall have the exclusive option for a period of sixty days after receipt
of such notice in which to purchase all or none of such shares proposed to be
sold or transferred at the price and on the other terms and conditions stated
in such notice. Such option shall be exercised by giving written notice thereof
to Seller. If Buyer fails to exercise his option within such sixty-day period,
Seller shall be free, for the next sixty days after the expiration of the
sixty-day option period, to sell or transfer such equity interest to the
proposed person or entity on the proposed terms and conditions free of any
restrictions under this Agreement. If the sale or transfer is not consummated
within such sixty-day period, the restrictions and option provided in this
Section 3.9 shall again apply.
3.10 Interest in Seller's New Business. Seller hereby grants Buyer an
option to purchase, at any time within 90 days after Seller notifies Buyer in
writing that he has both formed the Business and signed a lease for the premises
from which the Business will be operated, a 17% equity interest in the Business,
at the same average cost per share paid by Xxxx Xxxxxxx for his interest. Until
the later of two years after the Closing Date and six months after Seller
provides Buyer with the notice described in the preceding sentence (the
"Period"), Buyer may sell or transfer all or any portion of such equity
interest, such option or any combination of the foregoing to Xxxxxxx Xxxxx,
Xxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxx, or any combination of the foregoing,
without obtaining the consent of any person or entity and without providing any
person or entity a right of first refusal with respect to such sale or transfer.
During the Period, no other sale or transfer of such equity interest, such
option or any combination of the foregoing shall be permitted without Seller's
consent. It is a condition to the exercise by any person (including, Buyer,
Xxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxx, or any combination of
the foregoing, as the case may be) of such option that such person enter into a
Shareholders Agreement among the shareholders of the Business on the same terms
and conditions as the agreement among the Company's shareholders as of the date
of such exercise (except that Seller would be substituted for Buyer and Buyer
would be substituted for Seller in
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the new agreement), except as modified by mutual agreement of the parties to
such Shareholders Agreement.
After the end of the Period, if Buyer desires to sell or transfer all
or any part of such equity interest (other than to a revocable inter vivos
trust for the benefit of Buyer and of which Buyer is the sole trustee, which
trust shall be treated for all purposes as the Buyer for purposes of this
Section 3.10, and such trust and the shares transferred to the trust, shall be
bound by the terms and conditions of this Section 3.10), he must first give
written notice to Seller of such proposed sale or transfer, which notice shall
state the name and address of the proposed transferee, the amount of the equity
interest, and the price, terms of payment, and conditions of such proposed sale
or transfer. Seller shall have the exclusive option for a period of sixty days
after receipt of such notice in which to purchase all or none of such equity
interest proposed to be sold or transferred at the price and on the other terms
and conditions stated in such notice. Such option shall be exercised by giving
written notice thereof to Buyer. If Seller fails to exercise his option within
such sixty-day period, Buyer shall be free, for the next sixty days after the
expiration of the sixty-day option period, to sell or transfer such equity
interest to the proposed person or entity on the proposed terms and conditions
free of any restrictions under this Agreement. If the sale or transfer is not
consummated within such sixty-day period, the restrictions and option provided
in this Section 3.10 shall again apply.
3.11 Consent. Buyer, Seller and the Company are all parties to the Rock
Financial Corporation Stock Purchase Agreement, dated as of June 29, 1987 (the
"Shareholders Agreement"). Each of Buyer, Seller and the Company has received,
has read and understands this Agreement. Each of Buyer, Seller and the Company
agrees that this Section 3.11 constitutes prior written consent of the Company,
Buyer and Seller (i.e., the Corporation, as defined in the Shareholders
Agreement, and two of the Shareholders, as defined in the Shareholders
Agreement) pursuant to Section 1 of the Shareholders Agreement with respect to
the transactions described in this Agreement. Each of Buyer, Seller and the
Company consents to the sale and transfer of the Shares to Buyer pursuant to
the terms and conditions of this Agreement, notwithstanding any restrictions on
sale or transfer of such Shares or any options to purchase such equity interest
or Shares pursuant to the Shareholders Agreement, all of which are hereby
waived. Each of Buyer, Seller and the Company also agrees that the provisions
of Section 3 of the Shareholders Agreement shall not apply to the Shares being
sold pursuant to this Agreement as a result of Seller's resignation as an
employee of Rock Financial Corporation.
3.12 Subchapter S Filings. If the Company's Board of Directors
determines to treat the taxable year of the Company in which Seller's interest
in the Shares is sold to Buyer as two taxable years pursuant to Section
1377(a)(2) of the Internal Revenue Code of 1986, as amended (the "Code") or
Section 1.1368-1(g) of the Treasury Regulations, then Seller shall execute and
file any and all consents and other documents required by Section 1377(a)(2) of
the Code, the underlying Treasury Regulations or Section 1.1368-1(g) of the
Treasury Regulations as may be necessary to effect such determination.
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3.13 Further Assurances. Each of the parties will promptly prepare,
execute and deliver to the other party such lists, instruments and documents and
cooperate with the other party in such other respects as the other party may
from time to time, before or after the Closing, reasonably request.
4 CONDITIONS TO CLOSING.
4.1 Conditions to Buyer's Obligations. The obligations of Buyer under
this Agreement are subject to the satisfaction of the following conditions at or
before the Closing, provided that Buyer may waive the satisfaction of any such
condition pursuant to a writing signed by Buyer:
4.1.1 Accuracy of Seller's Representations and Warranties. All
representations and warranties made by Seller in this Agreement, including,
without limitation, the representations and warranties in Section 2.1, shall be
true, accurate and correct in all material respects at and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made at and as of the Closing Date.
4.1.2 Compliance with Covenants. All actions, undertakings,
covenants or agreements required to be performed by Seller, on or before the
Closing Date, including, without limitation, the covenants of Seller in Section
3, shall have been so performed or complied with in all material respects
within 30 days after Buyer notifies Seller in writing of any failure of such
performance or compliance by Seller, and Seller shall have delivered evidence
of such performance or compliance on the Closing Date. The parties agree to
extend the Closing Date until the earlier of the expiration of such 30-day
period or the date such failure is cured.
4.1.3 Resignation. Seller shall have signed and delivered the
resignation described in Section 3.3 and shall have delivered a copy of such
executed resignation to Buyer.
4.2 Conditions to Seller's Obligations. The obligations of Seller under
this Agreement are subject to the satisfaction of the following conditions at or
before the Closing, provided that Seller may waive the satisfaction of such
conditions pursuant to a writing signed by Seller:
4.2.1 Accuracy of Buyer's Representations and Warranties. All
representations and warranties made by Buyer in this Agreement, including,
without limitation, the representations and warranties in Section 2.2, shall be
true, accurate and correct in all material respects at and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made at and as of the Closing Date.
4.2.2 Compliance with Covenants. All actions, undertakings,
covenants or agreements required to be performed by Buyer, on or before the
Closing Date, including, without limitation, the covenants of Buyer in Section
3, shall have been so performed or complied with in all material respects
within 30 days after Seller notifies Buyer in writing of any failure of such
performance or compliance by Buyer, and Buyer shall have delivered evidence of
such
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performance or compliance on the Closing Date. The parties agree to extend the
Closing Date until the earlier of the expiration of such 30-day period or the
date such failure is cured.
4.3 Remedy for Failure of a Condition. If any condition to Buyer's
obligations under this Agreement, as set forth in Section 4.1, is not met on or
before the Closing Date, Buyer's sole and exclusive remedy shall be to
terminate this Agreement by written notice to Seller. If any condition to
Seller's obligations under this Agreement, as set forth in Section 4.2, is not
met on or before the Closing Date, Seller's sole and exclusive remedy shall be
to terminate this Agreement by written notice to Buyer. If this Agreement is
terminated pursuant to this Section 4.3, this Agreement shall be void and
treated as if it never existed; for example, Seller's resignation pursuant to
Section 3.3 shall be void and treated as if it had never been given.
5 INDEMNITY. Notwithstanding the Closing, and regardless of any investigation
made at any time by or on behalf of either party, each of the parties shall
indemnify, defend and save and hold harmless the other party from and against
any damage, liability, loss, claim, cost, debt, expense, obligation, tax,
assessment, public charge, lawsuit, contract, agreement, undertaking, deficiency
of any kind or nature, demand, lawsuit, action or cause of action, whether known
or unknown, fixed, actual, accrued, or contingent, liquidated or unliquidated
(including but not limited to, interest, penalties, reasonable attorneys' fees
and other actual reasonable costs and expenses incident to proceedings or
investigations or the defense of any claim, whether or not litigation has
commenced) arising out of, resulting from, or relating to, and to pay the other
party on demand the full amount of any sum which the other party pays or becomes
obligated to pay on account of (i) any breach by such party of the terms,
provisions, conditions, representations, warranties or covenants contained in
this Agreement, or (ii) any actions of such party, or his agents or
representatives inconsistent with such terms, provisions, conditions,
representations, warranties or covenants. Notwithstanding anything in this
Section 5 to the contrary, no party (the "Paying Party") shall be liable to
indemnify, defend and save and hold harmless any other party under this Section
5 unless (i) the Paying Party shall have received notice of a claim under this
Section 5, which notice identifies the breach or actions giving rise to such
claim, and (ii) such breach or actions shall not have been cured within 30 days
after the Paying Party receives such notice.
6 RELEASE. As of the Closing Date, Seller releases Buyer, the Company and the
Company's directors, officers, employees, affiliates, representatives, agents
and attorneys, and their successors and assigns from all causes of action,
claims, and damages based on any facts existing at the Closing Date, except for
any claims under this Agreement. As of the Closing Date, Buyer and the Company
release Seller and his successors and assigns from all causes of action, claims,
and damages based on any facts existing at the Closing Date, except for any
claims under this Agreement.
7 DISCLAIMER. Neither party is recommending the purchase or sale of the Shares
to the other party or giving the other party any representations, warranties or
opinions whatsoever, including any concerning such purchase and sale, the
purchase price, or the Shares, except for those explicitly contained in this
Agreement. Each party has determined and evaluated the
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purchase price for the Shares himself. Seller is assuming full responsibility to
independently evaluate its sale of the Shares and the sale price of the Shares
without any reliance on Buyer, and to obtain, verify and evaluate all material
information necessary or desired by Seller to make his decision, including,
without limitation, information concerning Buyer, the Company, its directors,
officers and principal shareholders, its related party transactions, its
financial condition and needs, its business, its products, markets, customers,
suppliers, and competitors, its facilities, its contingent obligations, its
securities and their relative rights, preferences and privileges, and any
potential issuance of additional securities. The parties agree that no
representations or warranties are made regarding the transactions described in
this Agreement, except for those representations and warranties explicitly
contained in this Agreement.
8 MISCELLANEOUS.
8.1 Transfer or Other Taxes. Any sales, use, stock transfer, excise or
other taxes payable in connection with the sale of the Shares to Buyer and
consummation of the transactions described in this Agreement shall be paid by
Seller, and evidence of the payment of such taxes shall be furnished to Buyer
upon its request.
8.2 Finder's Fee. Buyer and Seller each represents and warrants that no
broker, finder or other person is entitled to any brokerage fee, commission, or
finder's fee in connection with the transactions contemplated by this Agreement.
Buyer and Seller shall each pay or discharge and shall indemnify and hold the
other harmless from and against any and all claims or liabilities for brokerage
commissions or finder's fees incurred in any action taken by him.
8.3 Survival of Provisions. The representations, warranties and
covenants of the parties contained in this Agreement shall survive the Closing,
and each of them shall be binding upon the parties at all times after the
execution of this Agreement, including, without limitation, after the Closing,
and they shall be enforceable against each of the parties by the other party at
all times after the execution of this Agreement, including, without limitation,
after the Closing.
8.4 Governing Law and Forum. The laws of the State of Michigan shall
govern this Agreement, its construction, and the determination of any rights,
duties or remedies of the parties arising out of or relating to this Agreement.
The parties acknowledge that the United States District Court for the Eastern
District of Michigan or the Michigan Circuit Court of the County of Oakland
shall have exclusive jurisdiction over any case or controversy arising out of or
relating to this Agreement and that all litigation arising out of or relating to
this Agreement shall be commenced in the United States District Court for the
Eastern District of Michigan or in the Oakland County (Michigan) Circuit Court.
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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8.6 Interpretation. The headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement.
8.7 Entire Agreement. This Agreement, including the exhibits and other
documents referred to in this Agreement, embodies the entire agreement and
understanding of the parties to this Agreement with respect to the subject
matter of this Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth in
this Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter, and any
such prior agreements or understandings are merged into this Agreement.
8.8 Severability. If any provision of this Agreement is determined to
be illegal or invalid, such illegality or invalidity shall have no effect on the
other provisions of this Agreement, which shall remain valid, operative and
enforceable.
8.9 Notices. Any notice required or permitted to be given pursuant to
this Agreement shall be delivered in person, sent by certified or registered
mail, sent by facsimile or similar method of transmission or sent by overnight
courier, (i) if to Buyer, to Xxxxxx X. Xxxxxxx, c/o Rock Financial Corporation,
00000 Xxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000 (fax number (810)
000-0000), and (ii) if to Seller, to Xxxx Xxxxxxx, 584 Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000. Such notice shall be deemed given as of the earliest of (i) when
received, (ii) three business days after sent by certified or registered mail,
(iii) the day sent by facsimile or similar transmission, and (iv) the date by
which the overnight courier guaranties delivery. Either party may change his
address for such notice by notice to the other party.
8.10 No Waiver. No waiver of any breach of any agreement or provision
contained in this Agreement shall be deemed a waiver of any preceding or
succeeding breach of this Agreement or of any other agreement or provision
contained in this Agreement. No extension of time for the performance of any
obligations or acts shall be deemed an extension of time for the performance of
any other obligations or acts.
8.11 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors. Neither party may assign or transfer any of his rights or delegate
any of his obligations under this Agreement without the prior written consent of
the other party, and any purported assignment or transfer by either party
without such consent shall be void.
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IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of
the date set forth in the introductory paragraph of this Agreement.
/s/ Xxxxxx X. Xxxxxxx
-------------------------
Xxxxxx X. Xxxxxxx
"Buyer"
/s/ Xxxx Xxxxxxx
-------------------------
Xxxx Xxxxxxx
"Seller"
The undersigned is signing this Agreement solely to agree to the
provisions of Sections 3.11 and 6.
ROCK FINANCIAL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-----------------------
Its: President
------------------
The undersigned is signing this Agreement solely to agree to the
provisions of Section 3.11.
/s/ Xxxxxxx Xxxxx
--------------------------
Xxxxxxx Xxxxx
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EXHIBIT 1.2.2
PROMISSORY NOTE
$3,942,500
Date of Note: February 28, 0000 Xxxxxxx Xxxxx, Xxxxxxxx
FOR VALUE RECEIVED, Xxxxxx X. Xxxxxxx ("Buyer"), promises to pay to
Xxxx Xxxxxxx (the "Seller"), (i) the principal sum of Three Million Nine Hundred
Forty-Two Thousand Five Hundred Dollars ($3,942,500) on or before August 31,
1998 (the "Maturity Date"), and (ii) accrued, but unpaid, interest on the unpaid
principal from time to time outstanding from and including the date of this
Promissory Note (the "Note") until the full amount of principal has been paid,
all as specified below, and all subject to the prepayment provisions specified
below.
Buyer will pay interest on the indebtedness outstanding under this Note
from time to time (calculated on the basis of a year of 365 or 366 days, as
applicable, for the actual number of days elapsed) at an annual interest rate of
nine percent (9%) until paid; provided that such annual interest rate shall be
twelve percent (12%) on any installment of principal or interest due (including
by acceleration) and not paid by 10 days after its due date, from the date the
installment was due until the date it is paid. All accrued interest shall be
payable on the first day of each month beginning April 1, 1997, and on the
Maturity Date, but not at the date of any prepayment under this Note.
This Note may also be prepaid, in whole or in part, at any time and
from time to time at Buyer's discretion without any prepayment charge, premium
or penalty, except that this Note may not be prepaid without Seller's consent
before January 1, 1998. Any partial prepayment shall be applied first against
the principal amount outstanding under this Note and then against the accrued
interest under this Note.
If any payment of interest made under this Note or made in connection
with the indebtedness evidenced by this Note, or if any law that applies to this
loan and which sets maximum loan charges, shall at any time be determined by a
competent court to be in excess of the amount which can lawfully be charged
under applicable law, then any such payment, to the extent of such excess, shall
be credited to the payment of principal, or, at the election of the Seller,
returned to Buyer. Any such amounts credited to the payment of principal shall
be treated as a partial prepayment.
Both principal and interest shall be payable in lawful money of the
United States of America at the Seller's address set forth in the Stock Purchase
Agreement, dated as of January 17, 1997, between Buyer and Seller (the "Stock
Purchase Agreement"), or at such other place as the Seller may from time to time
designate in writing.
Buyer will be in default under this Note if he does not pay the full
amount of each payment (principal, interest or both) within 10 days after the
date it is due. If Buyer is in default, unless such default is remedied, Seller
may require Buyer to pay immediately the full amount of
19
principal under this Note which has not been paid and all interest that Buyer
owes on that amount. Seller's exercise of this right shall be by written notice
to Buyer. Even if, at a time when Buyer is in default, Seller does not require
Buyer to pay immediately in full as described above, Seller will still have the
right to do so if Buyer is in default at a later time. Seller will also have all
rights and remedies afforded by law or available under this Note upon any
default under this Note. The Seller shall not, by any act or omission, be deemed
to waive any of his rights, remedies or powers under this Note or otherwise,
unless such waiver is in writing signed by the Seller. Any written waiver of a
default shall not be construed as a waiver of such default in the future or of
any other default.
Buyer agrees to pay all costs of enforcement of this Note, including
reasonable attorneys' fees and court costs.
This Note is subject to the terms and conditions of Section 3.2 of the
Stock Purchase Agreement.
Unless applicable law requires a different method, any notice that must
be given under this Note will be given in the manner described in Section 8.9
of the Stock Purchase Agreement.
This Note shall not be transferable or assignable by Buyer or Seller
without the prior written consent of the other party.
No party shall be deemed, by an act or omission to have waived any
right or remedy under this Note, unless the waiver is in writing and signed by
such party, and then only to the extent specifically set forth in that writing.
A waiver with reference to one event shall not be construed as continuing, or as
a bar or waiver to any right or remedy as to a subsequent event.
This Note is executed and delivered in the State of Michigan, and the
laws of the State of Michigan shall govern this Note, its construction, and the
determination of any rights, duties or remedies of the parties arising out of or
relating to this Note. Buyer and Seller acknowledge that the United States
District Court for the Eastern District of Michigan or the Michigan Circuit
Court of the County of Oakland shall have exclusive jurisdiction over any case
or controversy arising out of or relating to this Note and that all litigation
arising out of or relating to this Note shall be commenced in the United States
District Court for the Eastern District of Michigan or in the Oakland County
(Michigan) Circuit Court.
Buyer waives presentment, notice of dishonor and nonpayment of this
Note.
All references in this Note to the Seller or the Buyer shall apply to
their respective successors and assigns.
--------------------------
Xxxxxx X. Xxxxxxx
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EXHIBIT 3.3
RESIGNATION
Effective January 17, 1997, I, Xxxx Xxxxxxx, resign from all of my
positions with, including, without limitation, as Executive Vice President of,
Rock Financial Corporation, a Michigan corporation (the "Company"), except as a
director of the Company. Effective January 17, 1997, I, Xxxx Xxxxxxx, also
resign from all of my positions with, including, without limitation, as trustee
of, and from any other fiduciary capacity with, any of the Company's employee
benefit plans.
IN WITNESS WHEREOF, I have signed this Resignation as of January 17,
1997.
----------------------
Xxxx Xxxxxxx
21
AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT TO STOCK PURCHASE AGREEMENT (the "Amendment") is made as
of February 26, 1997 between Xxxx Xxxxxxx ("Seller") and Xxxxxx X. Xxxxxxx
("Buyer").
R E C I T A L S
A. Seller and Buyer have entered into the Stock Purchase Agreement,
dated as of January 17, 1997 (the "Agreement").
B. Neither Bear Xxxxxxx & Co., Inc. nor any other similar financing
source has funded a loan to Buyer sufficient to pay the entire purchase price
for the Shares (as defined in the Agreement), and Buyer and Seller desire to
revise the provisions of the Agreement concerning the payment of the purchase
price for the Shares.
THEREFORE, the parties agree as follows:
1. Purchase Price. Section 1.2 of the Agreement is deleted and
restated to read as follows:
"1.2 Purchase Price. The purchase price for the Shares shall
be $4,242,500. Such purchase price shall be payable as follows:
"1.2.1 payment in cash, by check or by wire transfer
delivered by Buyer to Seller at the Closing, subject to the
provisions of Section 3.2, of (i) $2,000,000, plus (ii) an amount
of cash equal to all indebtedness, including, without limitation,
all accrued interest, of Seller to the Company as of the Closing
Date; and
"1.2.2 delivery to Seller at the Closing of 142,857 shares of
iCat Corporation, a Delaware corporation, Series C Convertible
Preferred Stock, par value $.001 per share, valued for purposes of
this Agreement at $3.50 a share (the "iCat Shares"). The
certificates for the iCat Shares shall, when so delivered by
Buyer, be duly endorsed for transfer to Seller or have executed
stock powers endorsed to Seller attached to the iCat Shares, and
Buyer shall have paid or provided for all requisite documentary
and/or stock transfer stamps. Such certificates for the iCat
Shares shall also be accompanied by any other documents that are
necessary to transfer to Seller good and marketable title to the
Shares.
1.2.2.1 Buyer represents, warrants and covenants that
(i) he is the legal and beneficial owner of the iCat Shares, (ii)
the iCat Shares are free and clear of all liens, encumbrances,
security interests, mortgages, pledges, rights, options, warrants,
and adverse claims of any nature whatsoever, except that the iCat
Shares are restricted securities under the Securities Act of 1933
and are subject to the terms and conditions of a Shareholders
Agreement and a Registration Rights Agreement, both dated as of
January 11, 1994, as amended,
22
among iCat Corporation and its shareholders listed on the
signature pages to the agreements, as amended, (iii) Buyer's
assignment of the iCat Shares will vest in Seller valid title to
such iCat Shares without the approval, agreement, consent,
authorization, or similar action of any party which has not been
obtained (assuming Seller executes and delivers an investment
representation required by iCat Corporation at the Closing), (iv)
the assignment of the iCat Shares will not violate any applicable
law, ordinance, rule, regulation, or iCat Corporation bylaw, and
(v) all expenses imposed by third parties to register the transfer
of the iCat Shares from Buyer to Seller will be paid by Buyer.
1.2.2.2 Seller represents, warrants and covenants that
(i) the iCat Shares will be acquired for investment for Seller's
own account, not as a nominee or agent, and not with a view to
distributing all or any part of such iCat Shares, (ii) Seller has
no present intention of selling, granting any participation in or
otherwise distributing any of the iCat Shares in any manner
contrary to the Securities Act of 1933 or any applicable state
securities law, (iii) Seller does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third
person with respect to any of the iCat Shares, (iv) Seller is
solely responsible for his own due diligence investigation of iCat
Corporation and its business, and his analysis of the merits and
risks of the investment in the iCat Shares, (v) Seller is a
current shareholder of iCat Corporation, has access to full and
complete information regarding iCat Corporation and has used such
access to his satisfaction for the purpose of obtaining
information about iCat Corporation, (vi) Seller, either alone or
with the assistance of his professional advisor, is a
sophisticated investor, is able to fend for himself in the
acquisition of the iCat Shares pursuant to this Agreement, and has
such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the
prospective investment in the iCat Shares, and (vii) Seller is a
natural person whose individual net worth at the time of the
acquisition of the iCat Shares exceeds $1,000,000; and
"1.2.3 delivery to Seller at the Closing of a promissory
note in the principal amount equal to (i) $4,242,500, minus (ii)
(A) $2,000,000, (B) an amount equal to all indebtedness,
including, without limitation, all accrued interest, of Seller to
the Company as of the Closing Date, and (C) $499,999.50. The
promissory note shall mature one year after the Closing Date, bear
interest at the annual rate of 9%, payable quarterly, and be in
substantially the form attached as Exhibit 1.2.3."
2. Repayment of Loans. Section 3.2 of the Agreement is deleted and
restated to read as follows:
"3.2 Repayment of Loans from the Company. On the Closing
Date, Seller shall repay, or cause to be repaid, all indebtedness,
including, without
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limitation, all accrued interest, of Seller to the Company
(collectively, the "Indebtedness"), including without limitation,
(i) the officer loan from the Company to Seller in the original
principal amount of $545,000, plus accrued interest, and (ii) any
loans made pursuant to Section 3.1 and all accrued interest with
respect to such loans. If any of the Indebtedness is not repaid
before the purchase price for the Shares is paid, Seller
authorizes Buyer to pay to the Company, on behalf of Seller, that
portion of the purchase price for the Shares equal to all
remaining unpaid Indebtedness to the Company (but not more than
the entire purchase price). Such payment shall be credited to the
purchase price for the Shares, and Buyer's obligations under
Section 1.2 shall be reduced by the amount of such payment."
3. Rock Insurance. The first paragraph of Section 3.9 of the
Agreement is deleted and restated to read as follows:
"3.9 Rock Insurance Interest. Buyer hereby grants Seller an
option to purchase, at any time within 90 days after a time chosen
by Buyer, but the time chosen by Buyer must be on or before March
31, 1997 (because Buyer intends to address the capitalization of
Rock Insurance Company during the first quarter of 1997),
sufficient shares of Buyer's Rock Insurance Company stock so that
Seller would own 30% of the combined Rock Insurance Company shares
owned by Seller and Buyer on the date of the exercise of such
option. The exercise price of such option is payable by Seller to
Buyer, in cash at the time of such exercise, and equals the same
average cost per share paid by Buyer for his equity interest in
Rock Insurance Company through the first date such option is
exercisable. This option is not transferrable by Seller without
Buyer's consent. It is a condition to the exercise of such option
that Seller enter into a shareholders agreement among Rock
Insurance Company's shareholders with respect to their interests
in Rock Insurance Company on the same terms and conditions as the
agreement among the Company's shareholders as of the date of such
exercise, except as modified by mutual agreement of the parties to
such shareholders agreement."
4. Promissory Note. Exhibit 1.2.2 to the Agreement is deleted and
restated to read as follows:
EXHIBIT 1.2.3
PROMISSORY NOTE
$
------------
Date of Note: February 26, 0000 Xxxxxxx Xxxxx, Xxxxxxxx
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24
FOR VALUE RECEIVED, Xxxxxx X. Xxxxxxx ("Buyer"), promises to pay to
Xxxx Xxxxxxx (the "Seller"), (i) the principal sum of ___________________
($____________) on or before [February 28, 1998] (the "Maturity Date"), and (ii)
accrued, but unpaid, interest on the unpaid principal from time to time
outstanding from and including the date of this Promissory Note (the "Note")
until the full amount of principal has been paid, all as specified below, and
all subject to the prepayment provisions specified below.
Buyer will pay interest on the indebtedness outstanding under this Note
from time to time (calculated on the basis of a year of 365 or 366 days, as
applicable, for the actual number of days elapsed) at an annual interest rate of
nine percent (9%) until paid; provided that such annual interest rate shall be
twelve percent (12%) on any installment of principal or interest due (including
by acceleration) and not paid by 10 days after its due date, from the date the
installment was due until the date it is paid. All accrued interest shall be
payable on May 31, 1997, August 31, 1997, November 30, 1997 and the Maturity
Date, but not at the date of any prepayment under this Note.
This Note may also be prepaid, in whole or in part, at any time and
from time to time at Buyer's discretion without any prepayment charge, premium
or penalty, except that this Note may not be prepaid in any amount without
Seller's consent before January 1, 1998. Any partial prepayment shall be applied
first against the principal amount outstanding under this Note and then against
the accrued interest under this Note.
If any payment of interest made under this Note or made in connection
with the indebtedness evidenced by this Note, or if any law that applies to this
loan and which sets maximum loan charges, shall at any time be determined by a
competent court to be in excess of the amount which can lawfully be charged
under applicable law, then any such payment, to the extent of such excess, shall
be credited to the payment of principal, or, at the election of the Seller,
returned to Buyer. Any such amounts credited to the payment of principal shall
be treated as a partial prepayment.
Both principal and interest shall be payable in lawful money of the
United States of America at the Seller's address set forth in the Stock Purchase
Agreement, dated as of January 17, 1997, between Buyer and Seller (the "Stock
Purchase Agreement"), or at such other place as the Seller may from time to time
designate in writing.
Buyer will be in default under this Note if he does not pay the full
amount of each payment (principal, interest or both) within 10 days after the
date it is due or if Buyer breaches the Stock Purchase Agreement and fails to
cure such breach within 10 days after notice of such breach from Seller to
Buyer. If Buyer is in default, unless such default is remedied, Seller may
require Buyer to pay immediately the full amount of principal under this Note
which has not been paid and all interest that Buyer owes on that amount.
Seller's exercise of this right shall be by written notice to Buyer. Even if, at
a time when Buyer is in default, Seller does not require Buyer to pay
immediately in full as described above, Seller will still have the right to do
so if Buyer is in default at a later time. Seller will also have all rights and
remedies afforded by law
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25
or available under this Note upon any default under this Note. The Seller shall
not, by any act or omission, be deemed to waive any of his rights, remedies or
powers under this Note or otherwise, unless such waiver is in writing signed by
the Seller. Any written waiver of a default shall not be construed as a waiver
of such default in the future or of any other default.
Buyer agrees to pay all costs of enforcement of this Note, including
reasonable attorneys' fees and court costs.
Unless applicable law requires a different method, any notice that must
be given under this Note will be given in the manner described in Section 8.9 of
the Stock Purchase Agreement.
This Note shall not be transferable or assignable by Buyer or Seller
without the prior written consent of the other party.
No party shall be deemed, by an act or omission to have waived any
right or remedy under this Note, unless the waiver is in writing and signed by
such party, and then only to the extent specifically set forth in that writing.
A waiver with reference to one event shall not be construed as continuing, or as
a bar or waiver to any right or remedy as to a subsequent event.
This Note is executed and delivered in the State of Michigan, and the
laws of the State of Michigan shall govern this Note, its construction, and the
determination of any rights, duties or remedies of the parties arising out of or
relating to this Note. Buyer and Seller acknowledge that the United States
District Court for the Eastern District of Michigan or the Michigan Circuit
Court of the County of Oakland shall have exclusive jurisdiction over any case
or controversy arising out of or relating to this Note and that all litigation
arising out of or relating to this Note shall be commenced in the United States
District Court for the Eastern District of Michigan or in the Oakland County
(Michigan) Circuit Court.
Buyer waives presentment, notice of dishonor and nonpayment of this
Note.
All references in this Note to the Seller or the Buyer shall apply to
their respective successors and assigns.
-------------------------------
Xxxxxx X. Xxxxxxx
5. No Other Change. Except as modified by this Amendment, the Agreement
shall continue in full force according to its terms and is ratified.
6. Counterparts. This Amendment may be signed in counterparts, both of
which together will be deemed an original of this Amendment. This Amendment will
also be effective if evidenced by signed copies transmitted by telecopier or
facsimile transmission.
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26
IN WITNESS WHEREOF, Buyer and Seller have executed this Amendment as of
the date set forth in the introductory paragraph of this Amendment.
/s/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
"Buyer"
/s/ Xxxx Xxxxxxx
----------------------------
Xxxx Xxxxxxx
"Seller"
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SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT (the "Amendment") is
made as of April 1997 between Xxxx Xxxxxxx ("Seller") and Xxxxxx X. Xxxxxxx
("Buyer").
R E C I T A L S
A. Seller and Buyer have entered into the Stock Purchase Agreement,
dated as of January 17, 1997, as amended by the Amendment to Stock Purchase
Agreement, dated as of February 26, 1997 (as amended, the "Agreement").
B. Buyer does not currently intend to change the capitalization of Rock
Insurance Company, and neither Buyer nor Seller currently owns any interest in
Rock Insurance Company. Therefore, Buyer and Seller desire to eliminate the
provisions of the Agreement concerning Rock Insurance Company.
THEREFORE, the parties agree as follows:
1. Rock Insurance. Section 3.9 of the Agreement, as amended, is
deleted and restated to read as follows:
"3.9 [RESERVED]."
2. No Other Change. Except as modified by this Amendment, the
Agreement shall continue in full force according to its terms and is ratified.
3. Counterparts. This Amendment may be signed in counterparts, both
of which together will be deemed an original of this Amendment. This Amendment
will also be effective if evidenced by signed copies transmitted by telecopier
or facsimile transmission.
IN WITNESS WHEREOF, Buyer and Seller have executed this Amendment as of
the date set forth in the introductory paragraph of this Amendment.
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
"Buyer"
/s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx
"Seller"
