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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and among
PEOPLE'S MORTGAGE CORPORATION
as Buyer
and
ALLIED BANCSHARES MORTGAGE GROUP, LLC
as Seller
and
SELLER'S MEMBERS
August 5, 1999
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ASSET PURCHASE AGREEMENT
INDEX
Page
SECTION 1. CERTAIN DEFINITIONS..............................................1
SECTION 2. PURCHASE AND SALE OF ASSETS......................................5
2.1 Sale of Assets.........................................5
2.2 Assumption of Liabilities..............................6
2.3 Purchase Price and Payment.............................7
2.4 Time and Place of Closing..............................7
2.5 Transfer of Subject Assets.............................8
2.6 Delivery of Records and Contracts......................8
2.7 Further Assurances.....................................9
2.8 Allocation of Purchase Price...........................9
2.9 Sales and Transfer Taxes...............................9
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
AND MEMBERS.............................................................9
3.1 Making of Representations and Warranties...............9
3.2 Organization and Qualifications of Seller.............10
3.3 Subsidiaries and Investments..........................10
3.4 Capitalization of Seller; Beneficial Ownership........10
3.5 Authority of Seller and the Members...................11
3.6 Real and Personal Property............................12
3.7 Financial Statements..................................14
3.8 Taxes.................................................15
3.9 Absence of Certain Changes............................16
3.10 Contracts.............................................16
3.11 Intellectual Property.................................17
3.12 Mortgage Business.....................................17
3.13 Compliance with Laws..................................18
3.14 Litigation............................................19
3.15 Powers of Attorney....................................19
3.16 Finder's Fee..........................................19
3.17 Permits; Burdensome Agreements........................19
3.18 Corporate Records; Copies of Documents................19
3.19 Transactions with Interested Persons..................19
3.20 Employee Benefit Programs.............................20
3.21 Employees; Labor Matters..............................21
3.22 Environmental Matters.................................22
3.23 Insurance.............................................23
(i)
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3.24 Year 2000.............................................23
3.25 Suppliers and Customers...............................23
3.26 Disclosure............................................24
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................24
4.1 Making of Representations and Warranties..............24
4.2 Organization of Buyer.................................24
4.3 Authority of Buyer....................................24
4.4 Finder's Fee..........................................24
SECTION 5. COVENANTS AND AGREEMENTS OF SELLER AND MEMBERS..................25
5.1 Making of Covenants and Agreements....................25
5.2 Conduct of Business...................................25
5.3 System Conversions....................................27
5.4 Certain Changes and Adjustments.......................27
5.5 Authorization from Others.............................27
5.6 Notice of Default.....................................27
5.7 Consummation of Agreement.............................28
5.8 Cooperation of Seller.................................28
5.9 Tax Returns...........................................28
5.10 No Solicitation of Other Offers.......................28
5.11 Confidentiality.......................................28
5.12 Seller's 401(k) Plan..................................28
5.13 Seller's Welfare Benefit Plans........................29
SECTION 6. COVENANTS AND AGREEMENTS OF BUYER...............................29
6.1 Making of Covenants and Agreements....................29
6.2 Representations and Warranties........................29
6.3 Confidentiality.......................................29
6.4 Employees, Wages and Benefits.........................30
SECTION 7. CONDITIONS......................................................30
7.1 Conditions to Each Party's Obligations................30
7.2 Conditions to the Obligations of Buyer................31
7.3 Conditions to the Obligations of Seller...............33
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING....................34
8.1 Survival of Warranties................................34
8.2 Collection of Assets..................................34
8.3 Payment of Liabilities; Advances under Warehouse Line.34
8.4 Termination and Liquidation of Operations of Seller...34
(ii)
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8.5 Non-Solicitation of Employees and Customers...........34
8.6 Non-Competition.......................................35
8.7 Tax Returns...........................................35
8.8 Financial Statements..................................35
SECTION 9. INDEMNIFICATION.................................................35
9.1 Indemnification by Seller.............................35
9.2 Limitations on Indemnification by Seller and Members..36
9.3 Indemnification by Buyer..............................36
9.4 Limitations on Indemnification by Buyer...............37
9.5 Notice; Defense of Claims.............................37
SECTION 10. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED....................38
10.1 Termination...........................................38
10.2 Effect of Termination.................................39
10.3 Right to Proceed......................................39
SECTION 11. MISCELLANEOUS..................................................39
11.1 Fees and Expenses.....................................39
11.2 Governing Law.........................................40
11.3 Notices...............................................40
11.4 Entire Agreement......................................41
11.5 Assignability; Binding Effect.........................42
11.6 Amendments and Waivers................................42
11.7 Captions and Gender...................................42
11.8 Execution in Counterparts.............................42
11.9 Publicity and Disclosures.............................42
11.10 Consent to Jurisdiction...............................42
11.11 Severability..........................................43
EXHIBIT A Employment Agreement
DISCLOSURE SCHEDULES
Schedule 2.1 Pipeline Loans
Schedule 2.1(d) Excluded Cash, Securities, and Mortgage Loans
Schedule 2.1(e) Owned Real Property
Schedule 2.2 Liabilities Incurred by Seller since the Date of the Base
Balance Sheet
Schedule 3.4 Members of Seller and Membership Interests
(iii)
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Schedule 3.6(b) Leased Real Property
Schedule 3.6(c) Personal Property
Schedule 3.7(a) Financial Statements
Schedule 3.7(c) Certain Liabilities
Schedules 3.10 Contracts (Investor Commitments)
Schedule 3.11 Marks
Schedule 3.17 Permits and Licenses
Schedule 3.20 Employee Benefit Plans
Schedule 3.23 Insurance
Schedule 6.4(b) Continued Employee Welfare Benefit Plans
(iv)
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT entered into as of August 5, 1999 by and among
People's Mortgage Corporation, a Massachusetts corporation ("BUYER"), Allied
Bancshares Mortgage Group, LLC, a Maryland limited liability company ("SELLER"),
and each of the members of Seller listed on SCHEDULE 3.4 (individually, a
"MEMBER," and collectively, the
"MEMBERS").
W I T N E S S E T H
WHEREAS, subject to the terms and conditions hereof, Seller desires to
sell substantially all of its properties and assets to Buyer;
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said properties and assets of Seller for the consideration specified
herein and the assumption by Buyer of certain specified liabilities and
obligations of Seller; and
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For the purpose of this Agreement, (a) the following terms have the
meanings assigned to them in this Section or in the cross-referenced Sections,
and (b) all accounting terms not otherwise defined herein have the meanings
assigned under generally accepted accounting principles as used in the United
States of America ("GAAP").
APPROVALS -- Defined in Section 3.17.
BASE BALANCE SHEET -- Defined in Section 3.7(a).
BEST KNOWLEDGE -- A matter is to the "best knowledge of Seller" or to
the "best knowledge of the Members" if it is actually known by Seller or a
Member, as applicable.
BUSINESS DAY -- Any day other than Saturday, Sunday or any other day on
which banks are legally permitted to be closed in Massachusetts.
BUYER -- Defined above.
BUYER ANCILLARY DOCUMENTS -- Defined in Section 4.3.
BUYER INDEMNIFIED PARTY OR BUYER INDEMNIFIED PARTIES -- Defined in
Section 9.1.
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CLAIM -- Any action, suit, claim, proceeding, or demand for costs,
losses, liabilities, damages, deficiencies, judgments, fines, assessments and
other costs and expenses, including, without limitation, interest, penalties,
reasonable attorneys' and accountants' fees. A Claim shall include any
third-party action, suit, claim, proceeding or demand related to the foregoing.
CLOSING -- Defined in Section 2.4.
CODE -- Defined in Section 2.2(b).
CORPORATE RECORDS -- Defined in Section 2.1(b).
EMPLOYMENT AGREEMENT -- Defined in Section 7.2(i).
ERISA -- Defined in Section 3.20(a).
EXCLUDED ASSETS -- Defined in Section 2.1.
EXCLUDED LIABILITIES -- Defined in Section 2.2.
FHA -- Defined under definition of "Governmental Entity."
FHLMC -- Defined under definition of "Governmental Entity."
FNMA -- Defined under definition of "Governmental Entity."
GAAP -- Defined above.
GNMA -- Defined under definition of "Governmental Entity."
GOVERNMENTAL ENTITY -- Any:
(a) nation, state, county, city, town, township, village,
district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
instrumentality or entity and any court or other tribunal); or
(d) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
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"Governmental Entity" will specifically include, without limitation,
the Federal Housing Administration ("FHA"), the Veterans Administration ("VA"),
the Federal National Mortgage Association ("FNMA"), the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Government National Mortgage Association
("GNMA") and the Department of Housing and Urban Development ("HUD").
HUD -- Defined under definition of "Governmental Entity."
INDEMNIFICATION CUT-OFF DATE -- Defined in Section 9.2.
INJUNCTION -- Defined in Section 7.1(c).
INVESTOR -- Any Person that is a party to an Investor Commitment.
INVESTOR COMMITMENT -- The valid and binding commitment of a Person to
purchase a Mortgage Loan owned by Seller.
IRS -- United States Internal Revenue Service.
LEASED REAL PROPERTY -- Defined in Section 3.6(b).
LEASES -- Defined in Section 3.6.
LIABILITIES -- Defined in Section 2.2.
LIEN -- Any (i) security interest, mortgage, pledge, lien, Claim,
charge or encumbrance or restriction of any kind or nature whatsoever (including
any conditional sale or other title retention agreement), (ii) any lease in the
nature thereof, or (iii) the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
LOAN -- Defined in Section 3.12(a).
MARKS -- Defined in Section 3.11.
MATERIAL ADVERSE EFFECT -- (a) when used in connection with Seller, any
change, effect, event, occurrence, condition, development or state of facts (i)
that is, or is reasonably likely to be, materially adverse to the business,
assets, prospects, results of operations or condition (financial or otherwise)
of Seller, taken as a whole, or (ii) preventing or delaying the consummation of
any of the transactions contemplated by this Agreement; or (b) when used in
connection with Buyer, any change, effect, event, occurrence, condition,
development or state of facts (i) that is, or is reasonably likely to be,
materially adverse to the business, assets, prospects, results of operations or
condition (financial or otherwise) of Buyer or its subsidiaries
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and affiliate, taken as a whole, or (ii) preventing or delaying the consummation
of any of the transactions contemplated by this Agreement.
MEMBER OR MEMBERS -- Defined above.
MORTGAGE LOAN -- A loan originated, owned, brokered or serviced by
Seller and secured by residential or commercial real estate and documented by,
among other documents, a promissory note and mortgage.
OREO -- Other real estate owned, i.e., real estate (including
capitalized and operating leases) acquired through any means in full or partial
satisfaction of a debt previously contracted.
PCBS -- Defined in Section 3.22(c).
PERSON -- Any individual, corporation, company, partnership, joint
venture, association, trust or other entity.
PIPELINE LOAN -- A loan-in-process that, as of a specified date, (i)
has not yet been funded and closed so as to become a Mortgage Loan, (ii) is
represented by a loan application or loan registration or other appropriate
documentation, and (iii) which has been accepted for underwriting by Seller.
PREPAIDS -- Defined in Section 2.1.
PURCHASE PRICE -- Defined in Section 2.3.
REQUIREMENTS OF LAW -- (i) As to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule or
regulation, or a final and binding determination of an arbitrator or a
determination of a court or other governmental authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject, and (ii) as to any Loan or
mortgage origination activity, all applicable federal, state and local laws,
rules, and regulations (including, without limitation, the requirements of the
Equal Credit Opportunity Act, the Truth in Lending Act, the Real Estate
Settlement Procedures Act and all regulations thereunder) and all requirements
of an Investor, a Governmental Entity, in each case with respect to all
activities, including, without limitation, the origination, insuring, purchase,
sale, servicing or filing of Claims in connection with a Loan. In addition,
"Requirements of Law" include all services and other requirements of a
Governmental Entity, Investors and any private mortgage insurer and all
applicable underwriting standards of such governmental agencies or private
mortgage insurers.
REQUISITE REGULATORY APPROVALS -- Defined in Section 7.1(b).
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RIGHT -- Defined in Section 2.6.
SELLER -- Defined above.
SELLER ANCILLARY DOCUMENTS -- Defined in Section 3.5(a).
SELLER INDEMNIFIED PARTY OR SELLER INDEMNIFIED PARTIES --
Defined in Section 9.3.
SUBJECT ASSETS -- Defined in Section 2.1.
SUBJECT EMPLOYEES -- Defined in Section 6.4(a).
TAXES -- Defined in Section 3.8(a).
VA -- Defined under definition of "Governmental Entity."
WAREHOUSE LINE -- Defined in Section 2.2(e).
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 SALE OF ASSETS. Subject to the provisions of this Agreement,
Seller agrees to sell and deliver and Buyer agrees to purchase and accept, at
the Closing (as defined in Section 2.4 hereof) all of the properties, assets and
business of Seller of every kind and description, tangible and intangible,
personal or mixed, and wherever located, including, without limitation, all
assets shown or reflected in the Base Balance Sheet (as defined in Section 3.7
hereof) of Seller, all Pipeline Loans (as set forth on SCHEDULE 2.1), all
customer information in Seller's possession (for itself or as agent custodian)
relating to any obligor of a Mortgage Loan or Pipeline Loan or any applicant for
a Mortgage Loan, Marks referred to in Section 3.11 and set forth on SCHEDULE
3.11, those deposits prepaid by applicants for appraisals and credit reports
("PREPAIDS"), which deposits have yet to be remitted to the appraising entity or
credit reporting company, all of Seller's goodwill, and the right to use the
name of Seller as all or part of a trade or corporate name; PROVIDED, HOWEVER,
that there shall be excluded from such purchase and sale the following property:
(a) Assets and property disposed of since the date of the
Base Balance Sheet in the ordinary course of business and such other assets as
have been or are disposed of pursuant to this Agreement;
(b) Seller's corporate seals, corporate franchise,
corporate record books containing minutes of meetings of managers and members
and such other records as have to do exclusively with Seller's organization or
capitalization (collectively, the "CORPORATE RECORDS")
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and all tax records and returns; PROVIDED, HOWEVER, that Seller shall provide
Buyer prior to the Closing with copies of each of the foregoing, certified by
Seller to be true and correct copies;
(c) Seller's and any Member's rights or Claims in
connection with the refund of any federal, state or local Taxes (as defined in
Section 3.8), but only for such Taxes as are not assumed by Buyer pursuant to
this Agreement;
(d) Cash, other than Prepaids, and securities and
Mortgage Loans as set forth on SCHEDULE 2.1(d); and
(e) The townhouse located in Owings Mills, Maryland, as
further described on SCHEDULE 2.1(e).
The assets, property and business of Seller to be sold to and purchased by Buyer
under this Agreement are hereinafter sometimes referred to as the "SUBJECT
ASSETS," and the assets, property and business of Seller to be excluded from the
sale to Buyer shall be referred to as the "EXCLUDED ASSETS."
2.2 ASSUMPTION OF LIABILITIES. Upon the sale and purchase of the
Subject Assets, Buyer shall assume and agree to pay or to discharge when due in
accordance with their respective terms, all liabilities of Seller shown or
reflected on the Base Balance Sheet (determined in accordance with GAAP) which
are outstanding at the time of the Closing, all liabilities and obligations
(determined in accordance with GAAP) incurred by Seller since the date of the
Base Balance Sheet in the ordinary course of business and consistent with the
terms of this Agreement which are outstanding at the time of the Closing and
which shall be set forth in SCHEDULE 2.2 delivered to Buyer not less than two
Business Days prior to the Closing, and the Leases as forth on SCHEDULE 3.6(b),
except that Buyer shall not assume and shall not pay any of the following
liabilities or obligations:
(a) liabilities incurred by Seller in connection with
this Agreement and the transactions provided for herein, including, without
limitation, counsel and accountants' fees, and expenses pertaining to the
performance by Seller of its obligations hereunder;
(b) Taxes of Seller, whether relating to periods before
or after the transactions contemplated in this Agreement or incurred by Seller
in connection with this Agreement and the transactions provided for herein,
except for payroll taxes, property taxes and other taxes for which a reserve is
established on the Base Balance Sheet, all of which shall be assumed by Buyer;
PROVIDED, HOWEVER, that Buyer shall in no event assume liability for any Taxes
arising out of the inclusion of Seller in any group filing consolidated,
combined, or unitary tax returns or arising out of any transferee liability or
for any tax arising out of Section 1374 of the Internal Revenue Code of 1986, as
amended (the "CODE") or any taxes triggered solely as a result of the
consummation of the transactions contemplated by this Agreement;
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(c) liabilities of Seller, if any, to its dissenting
members, if any, under the applicable law of its state of organization or any
other liability of Seller to any present or former member in such capacity, or
any liability of Seller to any officer, manager or agent of Seller for
indemnification pursuant to an organizational document, contract or otherwise;
(d) liabilities of Seller with respect to any options,
agreements or other rights to acquire any membership interest in Seller;
(e) liabilities of Seller in connection with the
warehouse line of credit established with PNC Bank, National Association
pursuant to a certain Mortgage Warehousing Loan Agreement, dated as of April 1,
1998, between Seller and PNC Bank, National Association (the "Warehouse Line");
(f) liabilities in connection with or relating to any
Claims against Seller or any of the Members; and
(g) liabilities accruing, occurring or relating to events
before the Closing under any employee benefit plan or arrangement (including,
without limitation, all plans as defined in Section 3(3) of ERISA maintained by
Seller).
The liabilities to be assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "LIABILITIES" and the liabilities which
are not assumed by Buyer under this Agreement are hereinafter sometimes referred
to as the "EXCLUDED LIABILITIES." The assumption of said Liabilities by any
party hereunder shall not enlarge any rights of third parties under contracts or
arrangements with Buyer or Seller and nothing herein shall prevent any party
from contesting in good faith with any third party any of said Liabilities.
2.3 PURCHASE PRICE AND PAYMENT. In consideration of the sale by
Seller to Buyer of the Subject Assets, as well as the execution by Xxxxxxx X.
Xxxxx, Xx. of the Employment Agreement referred to in Section 7.2(i), subject to
the assumption by Buyer of the Liabilities and the satisfaction of all of the
conditions contained in this Agreement, Buyer agrees that at the Closing it will
deliver to Seller the sum of One Million Seven Hundred and Sixty Thousand
Dollars ($1,760,000.00) by bank cashiers check or by wire transfer of
immediately available funds, subject to adjustments based on an updated Schedule
2.1 and balance sheet of Seller, both as of 5 Business Days prior to the Closing
and both of which Seller shall deliver to Buyer at that time (collectively, the
"PURCHASE PRICE").
The Purchase Price represents full payment to Seller by Buyer for the
Subject Assets, and such payment is satisfactory to Seller and each of the
Members.
2.4 TIME AND PLACE OF CLOSING. The closing of the purchase and
sale provided for in this Agreement (the "CLOSING") shall be held at the offices
of Xxxxxxx, Procter & Xxxx LLP at Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx as soon as practical after the
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satisfaction of the Closing conditions set forth in Section 7 or at such other
place or time as may be fixed by mutual agreement of Buyer and Seller. It is
expressly understood and agreed by the parties hereto that Buyer is a regulated
entity and the Closing shall not occur prior to the receipt of any necessary
approvals and the expiration of necessary waiting periods, and Seller and the
Members shall reasonably cooperate with Buyer in timing the Closing in
compliance therewith.
2.5 TRANSFER OF SUBJECT ASSETS. At the Closing, Seller and the
Members shall deliver or cause to be delivered to Buyer good and sufficient
instruments of transfer transferring to Buyer title to all the Subject Assets.
Such instruments of transfer (a) shall be in the form and will contain
provisions not inconsistent with the provisions hereof which are usual and
customary for transferring the type of property involved under the laws of the
jurisdictions applicable to such transfers, (b) shall be in form and substance
satisfactory to Buyer and its counsel, and (c) shall effectively vest in Buyer
good and marketable title to all the Subject Assets free and clear of all liens,
restrictions and encumbrances, except as otherwise provided in this Agreement.
Without limiting the foregoing, any Member or officer or manager who holds any
Subject Asset as record or nominee holder for the benefit of Seller shall upon
request of Buyer take all actions reasonably requested by Buyer in order to vest
Buyer or its nominee with record and beneficial ownership of such Subject Asset.
2.6 DELIVERY OF RECORDS AND CONTRACTS.
(a) At the Closing, Seller shall deliver or cause to be
delivered to Buyer all of Seller's leases, contracts, commitments, agreements
(including, without limitation, non-competition agreements) and rights, with
such assignments thereof and consents to assignments as are necessary to assure
Buyer of the full benefit of the same. Seller shall also deliver to Buyer at the
Closing all of Seller's business records, tax returns, books and other data of
Seller relating to its assets, business and operations (except the Corporate
Records excluded under Section 2.1(b) as to which only copies need be delivered
in accordance with such Section), and Seller shall take all requisite steps to
put Buyer in actual possession and operating control of the Subject Assets and
business of Seller. After the Closing, Buyer shall afford to Seller and its
accountants and attorneys, for the purpose of preparing such tax returns of
Seller or the Members responding to inquiries from Governmental Entities and
Investors as may be required after the Closing, reasonable access to the books
and records delivered to Buyer under this Section and shall permit Seller, at
Seller's expense, to make extracts and copies therefrom.
(b) If an attempted sale, conveyance, assignment,
transfer or delivery of any contracts, Claims, leases, commitments, franchises,
privileges, permits, consents, certificates, licenses or any other assets,
rights or benefits to be sold, conveyed, assigned, transferred and delivered to
Buyer (individually, a "RIGHT") would be ineffective without the consent of any
other Person, and such consent has not been obtained on or before the date of
the Closing, this Agreement shall not constitute an assignment or an attempted
assignment of such Right if such
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assignment or attempted assignment would constitute a breach thereof or be
unlawful. In such case, Seller shall use its best efforts (within commercially
practicable limits) to obtain, as soon as practicable, the consent of each such
or other Person in all cases in which such consent is required, and Seller and
Buyer will cooperate in any reasonable arrangement designed to enable Seller to
perform its obligations hereunder, and to provide for the assumption by Buyer of
the benefits, risks and burdens of, any such agreement.
2.7 FURTHER ASSURANCES. Seller and the Members from time to time
after the Closing at the request of Buyer and without further consideration
shall execute and deliver further instruments of transfer and assignment and
take such other action as Buyer may reasonably require to more effectively
transfer and assign to, and vest in, Buyer each of the Subject Assets. Nothing
herein shall be deemed a waiver by Buyer of its right to receive at the Closing
an effective assignment of each of the leases, contracts, commitments or rights
of Seller set forth in this Agreement.
2.8 ALLOCATION OF PURCHASE PRICE. Within Sixty (60) days after the
Closing, Buyer shall allocate the Purchase Price (and all other capitalized
costs) among the Subject Assets. Such allocation shall be made in accordance
with the provisions of Section 1060 of the Code, and shall be binding upon Buyer
and Seller for all purposes (including financial accounting purposes, financial
and regulatory reporting purposes and tax purposes). Notwithstanding the
foregoing, on the date of the Agreement, Buyer shall provide Seller with an
estimate of such allocation. Buyer and Seller also each agree to file IRS Forms
8594, to the extent necessary or desirable, consistently with the foregoing and
in accordance with Section 1060 of the Code. The parties to this Agreement
hereby agree that the Purchase Price will be treated as a capital gain for tax
purposes.
2.9 SALES AND TRANSFER TAXES. Notwithstanding any other provision
of this Agreement, all sales and transfer taxes, fees and duties under
applicable law incurred in connection with this Agreement or the transactions
contemplated hereby will be borne and paid by Buyer; PROVIDED, HOWEVER, that
Seller or the Members shall promptly reimburse Buyer for any amount by which the
aggregate of any such taxes, fees or duties exceeds Forty Thousand Dollars
($40,000).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND MEMBERS
3.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material
inducement to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, Seller and each of the Members jointly and severally hereby
make to Buyer the representations, warranties and agreements contained in this
Section 3.
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3.2 ORGANIZATION AND QUALIFICATIONS OF SELLER.
(a) Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Maryland
with full corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where its properties are
owned or leased and its business is currently conducted or proposed to be
conducted.
(b) Seller (i) is qualified and licensed to conduct its
residential mortgage activities, including brokering, originating, selling,
purchasing and servicing mortgage loans, as the case may be, whether first or
secondary lien mortgage loans, in every state or jurisdiction in which it
conducts such businesses, as listed in SCHEDULE 3.17, is in good standing in
each such state or jurisdiction, and is not required to be licensed or qualified
to conduct its business or own its property in any other jurisdiction, (ii) is
approved by each federal or state agency (A) to which it sells loans or (B) that
insures or guarantees loans originated, purchased or serviced by such entity,
(iii) meets all applicable FNMA and FHLMC regulations and is approved by FNMA
and FHLMC so as to be entitled to service mortgage loans sold to FNMA and FHLMC,
and (iv) is in good standing and in compliance with all eligibility requirements
under any correspondent or servicing arrangement pursuant to which Seller sells
or services mortgage loans.
(c) The copies of Seller's organizational documents as
amended to date, certified by the Maryland Secretary of State, and heretofore
delivered to Buyer's counsel, are complete and correct, and no amendments
thereto are pending. Seller is not in violation of any term of its
organizational documents.
3.3 SUBSIDIARIES AND INVESTMENTS. Seller does not have any
subsidiaries and does not own any securities issued by any other business
organization or governmental authority, except U.S. Government securities, bank
certificates of deposit and money market accounts acquired as short-term
investments in the ordinary course of its business, nor does Seller own or have
any direct or indirect interest in or control over any corporation, partnership,
joint venture or entity of any kind.
3.4 CAPITALIZATION OF SELLER; BENEFICIAL OWNERSHIP.
(a) All of the membership interests in Seller are owned
beneficially and of record by the Members as set forth in SCHEDULE 3.4, free and
clear of any lien, restrictions or encumbrances, and there are no outstanding
options, warrants, rights, commitments, pre-emptive rights or agreements of any
kind for the transfer, issuance or sale of, or outstanding securities
convertible into, any interest in Seller. None of Seller's membership interests
have been issued in violation of any federal or state law.
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3.5 AUTHORITY OF SELLER AND THE MEMBERS.
(a) Seller and each of the Members has full right,
authority and power to enter into this Agreement and each agreement, document
and instrument to be executed and delivered by Seller pursuant to this Agreement
and to carry out the transactions contemplated hereby and thereby. The
execution, delivery and performance by Seller and each of the Members of this
Agreement and each such other agreement, document and instrument have been duly
authorized by all necessary action of Seller and its Members and no other action
on the part of Seller or its Members is required in connection herewith and
therewith.
This Agreement and each other agreement, document and instrument
executed and delivered by Seller and the Members, as applicable, pursuant to or
in connection with this Agreement (with the Employment Agreement, the "SELLER
ANCILLARY DOCUMENTS") and the consummation of the transactions contemplated
hereby and thereby have been duly and validly executed by Seller and the
Members, as applicable, constitute, or when executed and delivered will
constitute, valid and binding obligations of Seller and the Members, as
applicable, enforceable against Seller and the Members in accordance with their
terms. The execution, delivery and performance by Seller and the Members of this
Agreement and the Seller Ancillary Documents, the consummation by Seller and the
Members of the transactions contemplated hereby and thereby, and compliance by
Seller and the Members, as applicable, with any of the terms or provisions
hereto and thereof, does not and will not:
(i) violate any provision of its organizational
documents of Seller;
(ii) violate any law, rule, regulation, judgment,
order, or injunction applicable to Seller or the Members or any of
Seller's properties or assets; or
(iii) violate, conflict with, result in a breach
of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under,
result in the termination of, accelerate the performance required by,
or result in a right of termination or acceleration or the creation of
any Lien upon any of the properties or assets of Seller under any of
the terms, conditions or provisions of (A) any governmental
authorization, approval, license or permit, (B) any note, bond,
mortgage, indenture, deed of trust, license, permit, lease, agreement
or other instrument, or (C) any other obligation to which Seller or any
Member is a party, or by which any of Seller's properties or assets may
be bound or affected.
(b) Each Member has full right, authority, power and
capacity to enter into this Agreement and the Seller Ancillary Documents
pursuant to this Agreement and to carry out the transactions contemplated hereby
and thereby.
(c) No consents or approvals of, or filings or
registrations with, any Governmental Entity are necessary, and no consents or
approvals of any third parties are
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necessary, in connection with the execution and delivery of this Agreement and
each Seller Ancillary Document or the consummation of the transactions
contemplated hereby or thereby, except (i) those which have been duly obtained
or made, (ii) those referred to in Section 3.17 and listed on SCHEDULE 3.17, or
(iii) those which are required to be obtained or made by Buyer.
3.6 REAL AND PERSONAL PROPERTY.
(a) OWNED REAL PROPERTY. Except for the townhouse
described in SCHEDULE 2.1(e), Seller does not directly or indirectly own, and
has never owned, any real property, including, but not limited to OREO.
(b) LEASED REAL PROPERTY. All of the real property leased
by Seller as tenant or lessee is identified on SCHEDULE 3.6(b) (collectively
referred to herein as the "LEASED REAL PROPERTY"). The following representations
and warranties are made with respect to its Leased Real Property:
(i) LEASES. The copies of the leases of the
Leased Real Property (collectively, the "LEASES") delivered by Seller
to Buyer and the information with respect to each of the Leases set
forth in SCHEDULE 3.6(b) is complete, accurate, true and correct. With
respect to each of the Leases, except as set forth on SCHEDULE 3.6(b):
(A) each of the Leases is in full force
and effect and has not been modified, amended, or altered, in
writing or otherwise;
(B) all obligations of the landlord or
lessor under the Leases which have accrued have been
performed, and Seller is not in default under any Lease, and
no circumstance presently exists which, with notice or the
passage of time or both, would give rise to a default by
Seller; and
(C) the consent of each landlord or
lessor under any Leases whose consent is required to the
transfer of the Leased Real Property to Buyer has been
obtained or will be obtained prior to the Closing, and such
transfer will not give any landlord or lessor under any Lease
any remedy, including, without limitation, any right to
declare a default under any Lease.
(ii) TITLE AND DESCRIPTION. Seller holds a good,
clear, marketable, valid and enforceable leasehold interest in the
Leased Real Property pursuant to the Leases, subject only to the right
of reversion of the landlord or lessor under the Leases, free and clear
of all Liens, except for matters set forth on SCHEDULE 3.6(b).
(iii) CONDITION. Except as set forth on SCHEDULE
3.6(b), there are no material defects in the physical condition of any
improvements constituting a part of the Leased Real Property,
including, without limitation, structural elements, mechanical
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systems, roofs or parking and loading areas, and all of such
improvements are in good operating condition and repair, have been well
maintained and are free from infestation by rodents or insects. Except
as set forth on SCHEDULE 3.6(b), none of the Leased Real Property is
subject to special flood or mudslide hazards or within the 100 year
flood plain. To the best knowledge of Seller and the Members, all
water, sewer, gas, electric, telephone, drainage and other utilities
required by law or necessary for the current or planned operation of
the Leased Real Property have been installed and connected pursuant to
valid permits, and are sufficient to service the Leased Real Property.
(iv) COMPLIANCE WITH LAW; GOVERNMENT APPROVALS.
Neither Seller nor any of the Members has received any notice from any
Governmental Entity of any violation of any law, ordinance, regulation,
license, permit or authorization issued with respect to any of the
Leased Real Property that has not been corrected heretofore, and no
such violation now exists which could have an adverse effect on the
operation or value of any of the Leased Real Property. All improvements
constituting a part of the Leased Real Property are in compliance in
all respects with all applicable laws, ordinances, regulations,
licenses, permits and authorizations, and there are presently in effect
all licenses, permits and authorizations required by law, ordinance, or
regulation. The transfer of the Leased Real Property to Buyer shall
include all rights to the use of any off-site facilities necessary to
ensure compliance with all such laws, ordinances, codes and
regulations. There is at least the minimum access required by
applicable subdivision or similar law to the Leased Real Property.
Neither Seller nor any of the Members has received any notice of any
pending or threatened real estate tax deficiency or reassessment or
condemnation of all or any portion of any of the Leased Real Property.
(v) TAXES AND MAINTENANCE. Except as set forth
in SCHEDULE 3.6(b), or set forth in the Leases, Seller is not
responsible for any Taxes, fees, or maintenance costs or expenses with
respect to the Leased Real Property.
(vi) CONDUCT OF BUSINESS. The Leased Real
Property constitutes all the real property necessary to conduct the
business of Seller.
(c) PERSONAL PROPERTY. A complete description of Seller's
equipment and other tangible personal property, including all leased personal
property, is contained in SCHEDULE 3.6(c). Except as specifically disclosed in
said Schedule or in the Base Balance Sheet, Seller has good and marketable title
to all of such personal property. None of such personal property or assets is
subject to any Lien except as specifically disclosed in said Schedule or in the
Base Balance Sheet. Except as otherwise specified in SCHEDULE 3.6(c), all
personal property of Seller is in good repair, has been well maintained, and
substantially complies with all applicable laws, ordinances and regulations, and
such personal property is in good working order. Neither Seller nor any of the
Members knows of any pending or
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threatened change of any such laws, ordinances or regulations which could
adversely affect Seller or its business.
(d) Seller does not own any asset and is not subject to
any liability except those directly relating to the business of Mortgage Loan
brokerage, origination and sale.
3.7 FINANCIAL STATEMENTS.
(a) Seller has delivered to Buyer the following financial
statements, copies of which are attached hereto as SCHEDULE 3.7(a):
(i) Audited balance sheets of Seller for its
fiscal years ending on December 31, 1998, 1997 and 1996 and statements
of income, retained earnings and cash flows for the three years then
ended, with appropriate footnotes.
(ii) A balance sheet of Seller as of May 31, 1999
(herein the "BASE BALANCE SHEET") and statements of income, retained
earnings and cash flows for the periods then ended, with appropriate
footnotes, certified by Seller's Chief Financial Officer.
Said financial statements have been prepared in accordance with GAAP,
applied consistently during the periods covered thereby, are complete
and correct in all material respects, and present fairly in all
material respects the financial condition of Seller at the dates of
said statements and the results of its operations and its cash flows
for the periods covered thereby.
(b) As of the date of its Base Balance Sheet, Seller had
no liabilities of any nature, whether accrued, absolute, contingent or
otherwise, asserted or unasserted, known or unknown (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others, or liabilities for Taxes due or then accrued or to become due or
contingent or potential liabilities relating to its activities or the conduct of
Seller's business prior to the date of the Base Balance Sheet regardless of
whether claims in respect thereof had been asserted as of such date), except
liabilities stated or adequately reserved against on the Base Balance Sheet or
the notes thereto, (ii) reflected in Schedules furnished to Buyer hereunder as
of the date hereof, or (iii) immaterial liabilities incurred in the ordinary
course of Seller's business which are not required to be reflected in the Base
Balance Sheet or the notes thereto under GAAP.
(c) Except for the Warehouse Line, as of the date hereof
and as of the Closing, Seller had and will have no liabilities of any nature,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations or others, or liabilities for Taxes due or
then accrued or to become due or contingent or potential liabilities
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relating to activities of Seller or the conduct of its business prior to the
date hereof or the Closing, as the case may be, regardless of whether claims in
respect thereof had been asserted as of such date), except liabilities (i)
stated or adequately reserved against on the Base Balance Sheet or the notes
thereto, (ii) reflected in SCHEDULE 3.7(c), or (iii) incurred after the date of
the Base Balance Sheet in the ordinary course of business consistent with the
terms of this Agreement.
3.8 TAXES.
(a) Seller has paid or caused to be paid all federal,
state, local, foreign, and other taxes, including, without limitation, income
taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes,
use taxes, value-added taxes, gross receipts taxes, franchise taxes, capital
stock taxes, employment and payroll-related taxes, withholding taxes, stamp
taxes, transfer taxes windfall profit taxes, environmental taxes and property
taxes, whether or not measured in whole or in part by net income, and all
deficiencies, or other additions to tax, interest, fines and penalties owed by
it (collectively, "TAXES"), required to be paid by it through the date hereof
whether disputed or not.
(b) Seller has in accordance with applicable law filed
all federal, state, local and foreign tax returns required to be filed through
the date hereof, and all such returns correctly and accurately set forth the
amount of any Taxes relating to the applicable period.
(c) Neither the IRS nor any other Governmental Entity is
now asserting or, to the knowledge of Seller or any Member, threatening to
assert against Seller any deficiency or claim for additional Taxes. No claim has
ever been made by an authority in a jurisdiction where Seller does not file
reports and returns that Seller is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of Seller
that arose in connection with any failure (or alleged failure) to pay any Taxes.
Seller has never entered into a closing agreement pursuant to Section 7121 of
the Code.
(d) There has not been any audit of any tax return filed
by Seller, no audit of any tax return of Seller is in progress, and neither
Seller nor any of the Members has been notified by any tax authority that any
such audit is contemplated or pending. No extension of time with respect to any
date on which a tax return was or is to be filed by Seller is in force, and no
waiver or agreement by Seller is in force for the extension of time for the
assessment or payment of any Taxes.
(e) Seller has never been (and has never had any
liability for unpaid Taxes because it once was) a member of an "affiliated
group" (as defined in Section 1504(a) of the Code). Seller has never filed, and
has never been required to file, a consolidated, combined or unitary tax return
with any other entity. Seller does not own and has never owned a direct or
indirect interest in any trust, partnership, corporation or other entity and
therefore Buyer is not
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acquiring from Seller an interest in any entity. Seller is not a party to any
tax sharing agreement.
(f) For purposes of this Agreement, all references to
Sections of the Code shall include any predecessor provisions to such Sections
and any similar provisions of federal, state, local or foreign law.
3.9 ABSENCE OF CERTAIN CHANGES. Since the date of the Base Balance
Sheet, there has not been any: (i) change having or that could have a Seller
Material Adverse Effect, (ii) declaration, setting aside or payment of any
dividend or other distribution with respect to, or any direct or indirect
redemption or acquisition of, any interest in Seller, (iii) waiver of any
material right of Seller or cancellation of any material debt or claim held by
Seller, (iv) loss, destruction or damage to any property which is material to
the assets, liabilities, properties, business or prospects of Seller, whether or
not insured, (v) acquisition or disposition of any assets or other transaction
by Seller other than in the ordinary course of business, (vi) other than in the
ordinary course of business, transaction or agreement involving Seller and any
member, officer, manager, or employee of Seller, (vii) material increase, direct
or indirect, in the compensation paid or payable to any member, officer,
manager, employee or agent of Seller or any establishment or creation of any
material employment or severance agreement or employee benefit plan, (viii)
material loss of personnel of Seller, material change in the terms and
conditions of the employment of Seller's key personnel or any labor trouble
involving Seller, (ix) arrangements relating to any commission, royalty,
dividend or similar payment based on the sales or loan origination volume of
Seller, (x) material agreement with respect to the endorsement of Seller's
products or services, (xi) loss or any development that could result in a loss
of any significant customer, account or employee of Seller, (xii) incurrence of
material indebtedness or lien, (xiii) transaction not occurring in the ordinary
course of business and consistent with Seller's prior practices, or (xiv) any
agreement with respect to any of the foregoing actions.
3.10 CONTRACTS. Except for contracts, commitments, plans,
agreements, leases and licenses described in SCHEDULES 3.10 AND 3.6(b) (true and
complete copies of which have been delivered to or made available to Buyer),
Seller is not a party to or subject to any contract, which is material to its
business, including, without limitation:
(a) any plan or contract providing for bonuses, pensions,
options, purchases of membership interests, deferred compensation, retirement
payments, profit sharing, collective bargaining or the like, or any contract or
agreement with any labor union;
(b) any other contracts or agreements creating any
obligations of Five Thousand Dollars ($5,000) or more individually or Twenty
Five Thousand Dollars ($25,000) or more in the aggregate which are not
specifically disclosed elsewhere under this Agreement or the Schedules hereto;
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(c) any contract containing covenants limiting the
freedom of Seller to compete in any line of business or with any person or
entity;
(d) any contract or agreement for the purchase of any
fixed asset for a price in excess of Five Thousand Dollars ($5,000) whether or
not such purchase is in the ordinary course of business;
(e) any indenture, mortgage, promissory note, loan
agreement (including, without limitation, a line of credit), guaranty or other
agreement or commitment for the borrowing of money; or
(f) any contract or agreement with any officer, employee,
manager or Member of Seller or with any persons or organizations controlled by
or affiliated with any of them.
Seller is not in default under any such contracts, commitments, plans,
agreements or licenses described in said Schedules and neither Seller or any of
the Members has no knowledge of conditions or facts which with notice or passage
of time, or both, would constitute a default.
3.11 INTELLECTUAL PROPERTY. Seller owns or possesses valid and
binding licenses and other rights to use without payment of any material amount
all patents, copyrights, trade secrets, trade names, service marks and
trademarks used in its business (collectively, "MARKS"), and neither Seller nor
any of the Members has received any notice of conflict with respect thereto that
asserts the right of others. Seller has performed all the obligations required
to be performed by Seller and is not in default under any contract, agreement,
arrangement or commitment relating to any of the foregoing. SCHEDULE 3.11 sets
forth an accurate and complete listing of all Marks.
3.12 MORTGAGE BUSINESS.
(a) MORTGAGE LOANS. Seller does not own any Mortgage
Loans except for those loans funded by the Warehouse Line which Seller has
originated and are awaiting purchase by Investors. Each Mortgage Loan that
Seller has originated, previously owned, and as to which Seller has acted as a
mortgage broker or lender, and each Pipeline Loan (each of such Mortgage Loans
or Pipeline Loans, a "LOAN"), was or will be brokered or originated and is or
was administered by Seller in compliance with all Requirements of Law.
Seller has not done or failed to do, or has not caused to be done or
omitted to be done, any act or omission which would invalidate or impair any of
the following, as may be applicable, (i) any approvals of a Governmental Entity,
(ii) any FHA insurance or commitments of the FHA to insure in connection with a
Loan, (iii) any VA guaranty or commitment of the VA to guaranty with respect to
properties secured by mortgages in
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connection with a Loan, (iv) any private mortgage insurance or commitment of any
private mortgage insurer to insure in connection with a Loan, (v) any title
insurance policy in connection with a Loan, (vi) any hazard insurance policy in
connection with a Loan, (vii) any flood insurance policy required by the
National Flood Insurance Act of 1968, as amended, with respect to properties
secured by mortgages related to a Loan, (viii) any fidelity bond, direct surety
bond, or errors and omissions insurance policy required by a Governmental Entity
or any private mortgage insurer, (ix) any surety or guaranty agreement or (x)
any guaranty issued by GNMA to Seller respecting mortgage-backed securities
issued by Seller.
During the last five years, no Investor has claimed that Seller has not
complied with all applicable laws with respect to Mortgage Loans sold by Seller
to such Investor.
(b) SERVICING.
(i) The servicing of each Mortgage Loan now or
previously serviced by Seller complies, in all respects, with the terms
of any governmental agency program, FNMA or FHLMC program, or other
investor program, commitment or arrangement related thereto, including,
without limitation, the terms of any applicable law or regulation or
servicing agreement and all applicable documents relating to such
Mortgage Loan.
(ii) Seller has complied with all obligations
under all applicable insurance contracts with respect to, and which
might affect, any Mortgage Loan. Seller has not taken any action or
failed to take any action which might cause the cancellation or
otherwise affect any of the insurance contracts.
(iii) The selling and origination representations
and warranties made by Seller to investors under any sale or servicing
agreements were true and correct on the date made and such of those
representations and warranties which, under the applicable sale or
servicing agreement, are "continuing" representations and warranties
required to be true on and after the date such representations and
warranties were made continue to be true and correct.
(c) ACCURACY OF PORTFOLIO INFORMATION. The information
provided by Seller to Buyer with respect to the Loans is true and correct,
including, without limitation, the rate, monthly principal and interest
constant, monthly tax and insurance constant, escrow account balances, due date
of next installment payment of principal and interest, amount of unreimbursed
advances to escrow accounts and servicing fee.
3.13 COMPLIANCE WITH LAWS. Seller is in compliance with all
Requirements of Law which apply to Seller or to the conduct of its business, and
Seller has not received notice, and the Members are not aware of the existence
of a notice, of a violation or alleged violation of any Requirement of Laws.
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3.14 LITIGATION. There is no litigation or governmental or
administrative proceeding or investigation pending or, to the knowledge of
Seller or any Member, threatened against Seller or any affiliate of Seller or
any Member which may have any Seller Material Adverse Effect or which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement.
3.15 POWERS OF ATTORNEY. Neither Seller nor any Member has granted
powers of attorney which are presently outstanding other than powers of attorney
granted by Members for estate planning and/or healthcare purposes.
3.16 FINDER'S FEE. Neither Seller nor any Member has incurred or
become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
3.17 PERMITS; BURDENSOME AGREEMENTS. SCHEDULE 3.17 lists all
permits, registrations, licenses, franchises, certifications and other approvals
(collectively, the "APPROVALS") required from federal, state or local
authorities in order for Seller to conduct its business. Seller has obtained all
such Approvals, which are valid and in full force and effect, and Seller is
operating in compliance therewith. Such Approvals include, but are not limited
to, those required under federal, state or local statutes, ordinances, orders,
requirements, rules, regulations, or laws pertaining to environmental
protection, and public health and safety. Except as disclosed in SCHEDULE 3.17,
all such Approvals will be available and assigned to Buyer and remain in full
force and effect upon Buyer's purchase of the Subject Assets, and no further
Approvals will be required in order for Buyer to conduct the business currently
conducted by Seller subsequent to the Closing. Except as disclosed in SCHEDULE
3.17 or in any other Schedule hereto, Seller is not subject to or bound by any
agreement, arrangement, judgment, decree or order which may materially and
adversely affect its business or prospects, its condition, financial or
otherwise, or any of its assets or properties.
3.18 CORPORATE RECORDS; COPIES OF DOCUMENTS. The corporate record
books of Seller accurately reflect and memorialize the corporate action
referenced therein. The copies of the corporate records of Seller, as delivered
to Buyer pursuant to Section 2.1(b), are true and complete copies of the
originals of such documents. Buyer has made available for inspection and copying
by Buyer and its counsel complete and correct copies of all documents referred
to in this Section or in the Schedules delivered to Buyer pursuant to this
Agreement.
3.19 TRANSACTIONS WITH INTERESTED PERSONS. None of Seller, any
Member, or officers, supervisory employees or managers of Seller or, to the
knowledge of Seller or any Member, any of their respective spouses or family
members owns directly or indirectly on an individual or joint basis any material
interest in, or serves as an officer or manager or in another similar capacity
of, any competitor, provider or supplier of Seller, or any organization which
has a material contract or arrangement with Seller.
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3.20 EMPLOYEE BENEFIT PROGRAMS.
(a) SCHEDULE 3.20 sets forth a list of every Employee
Program (as defined below) that has been maintained by Buyer or an Affiliate at
any time during the period starting upon the organization of Seller and ending
on the date of the Closing. Each Employee Program which has ever been maintained
by Buyer or an Affiliate (as defined below) and which has been intended to
qualify under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the IRS regarding its qualification under
such section and has, in fact, been qualified under the applicable section of
the Code from the effective date of such Employee Program through and including
the date of the Closing (or, if earlier, the date that all of such Employee
Program's assets were distributed). No event or omission has occurred which
would cause any such Employee Program to lose its qualification or otherwise
fail to satisfy the relevant requirements to provide tax-favored benefits under
the applicable Code Section (including, without limitation, Code Sections 105,
125, 401(a) and 501(c)(9)). With respect to any Employee Program ever maintained
by Seller or any Affiliate, there has been no (i) "prohibited transaction," as
defined in Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or Code Section 4975, or (ii) failure to comply with any
provision of ERISA, other applicable law, or any agreement which, in the case of
either of (i) or (ii), could subject Seller or any Affiliate to liability either
directly or indirectly (including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties, or taxes, or any
other loss or expense. All payments and/or contributions required to have been
made (under the provisions of any agreements or other governing documents or
applicable law) with respect to all Employee Programs ever maintained by Seller
or any Affiliate, for all periods prior to the date of the Closing, either have
been made or have been accrued (and all such unpaid but accrued amounts are
described on SCHEDULE 3.20). Each Employee Program ever maintained by Seller or
an Affiliate has complied with the applicable notification and other applicable
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985.
(b) Neither Seller nor any Affiliate (i) has ever
maintained any Employee Program which has been subject to title IV of ERISA or
Code Section 412, including, but not limited to, any Multiemployer Plan (as
defined in Section 3(37) of ERISA) or (ii) has ever provided health care or any
other non-pension benefits to any employees after their employment is terminated
(other than as required by part 6 of subtitle B of title I of ERISA) or has ever
promised to provide such post-termination benefits.
(c) For purposes of this Section:
(i) "Employee Program" means all employee
benefit plans within the meaning of ERISA Section 3(3) as well as all
other employee benefit plans, agreements and arrangements of any kind.
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(ii) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides benefits under or
through such Employee Program, or has any obligation (by agreement or
under applicable law) to contribute to or provide benefits under or
through such Employee Program, or if such Employee Program provides
benefits to or otherwise covers employees of such entity (or their
spouses, dependents, or beneficiaries).
(iii) An entity is an "Affiliate" of Seller if it
would have ever been considered a single employer with Seller under
ERISA Section 4001(b) or part of the same "controlled group" as Seller
for purposes of ERISA Section 302(d)(8)(C).
3.21 EMPLOYEES; LABOR MATTERS. Seller employs approximately 150
full-time employees and 2 part-time employees. Seller generally enjoys good
employer-employee relationships. Neither Seller nor any of the Members is aware
of the existence of any criminal record of any of Seller's employees relating to
financial activity, fraud, or sexual behavior or harassment. Seller is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it to the date hereof or amounts required to be reimbursed to such employees.
Upon termination of the employment of any of said employees, Buyer will not by
reason of the acquisition transaction or anything done prior to the Closing be
liable to any of said employees for so-called "severance pay" or any other
payments. Seller does not have any policy, practice, plan or program of paying
severance pay or any form of severance compensation in connection with the
termination of employment, except as set forth in said Schedule. Seller is in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations existing, pending or threatened against or involving Seller. No labor
organization has demanded that Seller recognize it as the collective bargaining
representative of any group of employees of Seller, or petitioned the National
Labor Relations Board for certification as such representative. There are no
grievances, complaints or charges that have been filed against Seller under any
dispute resolution procedure (including, but not limited to, any proceedings
under any dispute resolution procedure under any collective bargaining
agreement) that might have an adverse effect on Seller or the conduct of
Seller's business and no arbitration or similar proceeding is pending and no
Claim therefor has been asserted. No collective bargaining agreement is in
effect or is currently being or is about to be negotiated by Seller. Seller has
not received any information to indicate that any of its employment policies or
practices is currently being audited or investigated by any federal, state or
local government agency. Seller is, and at all times since its formation has
been, in compliance with the requirements of the Immigration Reform Control Act
of 1986.
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3.22 ENVIRONMENTAL MATTERS.
(a) (i) no Hazardous Material (as defined below) has ever
been or is threatened to be spilled, released, or disposed of at any site
presently or formerly owned, operated, leased, or used by Seller, or has ever
come to be located in the soil or groundwater at any such site; (ii) no
Hazardous Material has ever been transported from any site presently or formerly
owned, operated, leased, or used by Seller for treatment, storage, or disposal
at any other place; (iii) Seller does not presently or did not previously own,
operate, lease, or use any site on which underground storage tanks are or were
located; and (iv) no lien has ever been imposed by any governmental agency on
any property or facility owned, operated, leased, or used by Seller in
connection with the presence of any Hazardous Material; PROVIDED, HOWEVER, that
in the case of each of the foregoing, other than with respect to actions taken
or caused to be taken by Seller or any of the Members, such statements are to
the best knowledge of Seller and the Members.
(b) (i) Seller has no liability under, nor has it ever
violated any Environmental Law (as defined below); (ii) Seller, any property
owned, operated, leased, or used by Seller, and any facilities and operations
thereon are presently in compliance in all respects with all applicable
Environmental Laws; PROVIDED, HOWEVER, that other than actions taken, or caused
to be taken, by Seller or any Member, this item (ii) is to the best knowledge of
Seller and the Members; (iii) Seller has never entered into or been subject to
any judgment, consent decree, compliance order, or administrative order with
respect to any environmental or health and safety matter or received any request
for information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (iv) Seller has
no reason to believe that any of the items enumerated in clause (iii) of this
paragraph will be forthcoming.
(c) To the best knowledge of Seller and the Members after
due inquiry of the current landlord, no site owned, operated, leased, or used by
Seller contains any asbestos or asbestos-containing material, any
polychlorinated biphenyls ("PCBS") or equipment containing PCBs, or any urea
formaldehyde foam insulation.
(d) Seller has provided to Buyer copies of all documents,
records, and information available to Seller concerning any environmental or
health and safety matter relevant to Seller or any sites formerly or currently
owned, operated, leased or used by Seller, whether generated by Seller, or
others, including, without limitation, environmental audits, site assessments,
documentation regarding off-site disposal of Hazardous Materials, and reports,
correspondence, permits, licenses, approvals, consents, and other authorizations
related to environmental or health and safety matters issued by any governmental
agency. In addition, Seller has disclosed to Buyer all sites formerly or
currently owned, operated, leased or used by Seller.
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(e) For purposes of this Section 3.22, (i) "Hazardous
Material" shall mean and include any hazardous waste, hazardous material,
hazardous substance, petroleum product, oil, toxic substance, pollutant, or
contaminant, as defined or regulated under any Environmental Law, or any other
substance which may pose a threat to the environment or to human health or
safety; (ii) "Environmental Law" shall mean any environmental or health and
safety-related law, regulation, rule, ordinance, or by-law at the foreign,
national, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iii) "Seller" shall mean and
include Seller and all other entities for whose conduct Seller is or may be held
responsible under any Environmental Law.
3.23 INSURANCE. SCHEDULE 3.23 contains an accurate and complete
description of all policies of fire, liability, workers' compensation and other
forms of insurance owned or held by Seller. Such policies: (i) are in full force
and effect; (ii) are sufficient for compliance with all Requirements of Law;
(iii) are sufficient to insure the assets and business of Seller against all
liabilities, Claims and risks against which mortgage brokers and lenders
customarily insure; and (iv) cover all liabilities, Claims and risks in respect
of events occurring prior to or on the date of the Closing. All such policies
will remain in effect following consummation of the Closing.
3.24 YEAR 2000. Seller has (i) undertaken a comprehensive and
detailed inventory, review and assessment of all areas within its business and
operations to address the "Year 2000 Problem" (i.e., the risk that applications
used by Seller or its suppliers and/or providers may be unable to recognize and
properly perform date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), (ii) developed a detailed plan and timeline
for becoming "Year 2000 Compliant" (all computer-controlled processes,
electronic communications interfaces, software, hardware, machinery, equipment,
programs, and tools operate for all date-sensitive functions before, during and
after the year 2000 consistently, predictably, accurately and unambiguously,
without interruption, and without human intervention) on a timely basis, and
(iii) to date, implemented that plan in accordance with its timetable in all
material respects. Seller's year 2000 program includes feasible contingency
plans to ensure uninterrupted and unimpaired business operation, including
liquidity needs, in the event of its own or a third party's failure to be Year
2000 Compliant. Seller has made written inquiry of each of its key suppliers,
vendors and customers as to whether such persons will, on a timely basis, be
Year 2000 Compliant in all material respects and on the basis of such inquiry
believes that all such persons will be so compliant. For purposes hereof, "key
suppliers, vendors and customers" refers to those suppliers, vendors and
customers of Seller whose business failure would, with reasonable probability,
result in a Seller Material Adverse Effect. Seller reasonably believes that the
Year 2000 Problem will not have any Seller Material Adverse Effect.
3.25 SUPPLIERS AND CUSTOMERS. Since December 31, 1998, no material
Investor, licensor, vendor, supplier or customer of Seller has canceled or
otherwise materially and adversely modified its relationship with Seller and, to
the knowledge of Seller, (i) no such
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Person has expressed any intention to do so, and (ii) the consummation of this
Agreement and the transactions contemplated hereby will not adversely affect any
of such relationships.
3.26 DISCLOSURE. The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits and schedules
delivered by Seller pursuant to this Agreement to Buyer do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made. There are no facts which presently
or may in the future have a Seller Material Adverse Effect which have not been
specifically disclosed herein or in a Schedule furnished herewith, other than
general economic conditions affecting Seller's industry.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material
inducement to Seller to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby makes the representations and
warranties to Seller contained in this Section 4.
4.2 ORGANIZATION OF BUYER. Buyer is a Massachusetts corporation
validly existing under the laws of Massachusetts, with full corporate power to
own or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is conducted
by it.
4.3 AUTHORITY OF BUYER. Buyer has full right, authority and power
to enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement (the "BUYER ANCILLARY
DOCUMENTS") and to carry out the transactions contemplated hereby. The
execution, delivery and performance by Buyer of this Agreement and each such
Buyer Ancillary Document have been duly authorized by all necessary corporate
action of Buyer and no other action on the part of Buyer is required in
connection therewith. This Agreement and each Buyer Ancillary Document
constitute, or when executed and delivered will constitute, valid and binding
obligations of Buyer enforceable in accordance with their terms (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity).
4.4 FINDER'S FEE. Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
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SECTION 5. COVENANTS AND AGREEMENTS OF SELLER AND MEMBERS
5.1 MAKING OF COVENANTS AND AGREEMENTS. Seller and the Members,
jointly and severally, hereby make their respective covenants and agreements set
forth in this Section 5.
5.2 CONDUCT OF BUSINESS. Between the date of this Agreement and
the date of the Closing, Seller will:
(a) Conduct its business only in the ordinary course and
refrain from changing or introducing any method of management or operations
except in the ordinary course of business and consistent with prior practices;
(b) Refrain from making any purchase, sale or disposition
of any asset or property other than in the ordinary course of business, from
purchasing any capital asset and from mortgaging, pledging, subjecting to a lien
or otherwise encumbering any of its properties or assets other than in the
ordinary course of business;
(c) Refrain from incurring any contingent liability as a
guarantor or otherwise with respect to the obligations of others, and from
incurring any other contingent or fixed obligations or liabilities except in the
ordinary course of business;
(d) Use its best efforts (within commercially practicable
limits) to eliminate any liabilities in connection with the Warehouse Line;
(e) Refrain from making any change or incurring any
obligation to make a change in its organizational documents, or authorized or
issued membership interests;
(f) Refrain from declaring, setting aside or making any
distribution in respect of its membership interests or making any direct or
indirect redemption, purchase or other acquisition of its membership interests;
(g) Refrain from making any change in the compensation
payable or to become payable to any of its officers, employees, agents or
independent contractors;
(h) Refrain from prepaying loans (if any) from its
members, officers or managers or making any change in its borrowing
arrangements;
(i) Use its best efforts (within commercially practicable
limits) to prevent any change with respect to its management and supervisory
personnel and banking arrangements;
(j) Use its best efforts (within commercially practicable
limits) to keep intact its business organization, to keep available its present
officers and employees and to preserve
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the goodwill of all suppliers, customers, independent contractors and others
having business relations with it;
(k) Have in effect and maintain at all times all
insurance of the kind, in the amount and with the insurers set forth in SCHEDULE
3.23 hereto or equivalent insurance with any substitute insurers approved in
writing by Buyer;
(l) Furnish Buyer with unaudited monthly balance sheets
and statements of income and retained earnings and cash flows of Seller within
ten (10) days after each month end for each month ending more than ten (10) days
before the Closing;
(m) Permit Buyer and its authorized representatives to
have full access to all its properties, assets, records, tax returns, contracts
and documents and furnish to Buyer or its authorized representatives such
financial and other information with respect to its business or properties as
Buyer may from time to time reasonably request;
(n) Take any action that is intended or reasonably can be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or any of the
conditions to the consummation of this Agreement or the transactions
contemplated hereby set forth in Section 7 hereof not being satisfied in any
material respect, or in any material violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(o) Commit any act or omission which constitutes a
material breach or default by Seller under any agreement with a Governmental
Entity or under any material contract or material license to which any of them
is a party or by which any of them or their respective properties is bound;
(p) Take a deed or title to any commercial real estate;
(q) Enter into or renew, amend or terminate, or give
notice of a proposed renewal, amendment or termination of or make any commitment
with respect to, (i) any contract, agreement or lease for office space,
operations space or branch space to which Seller is a party or by which Seller
or its properties is bound; (ii) any lease, contract or agreement other than in
the ordinary course of business consistent with past practice including renewals
of leases to existing tenants of Seller; (iii) regardless of whether consistent
with past practices, any lease, contract, agreement or commitment;
(r) Change or fail to adhere to in any material respect
its loan policies or procedures, except as required by Governmental Entities or
Requirements of Law, including its interest rate and other risk management
policies, procedures or practices; and its methods or policies of underwriting,
pricing, originating, warehousing, selling and servicing, or buying or selling
rights to service Mortgage Loans; or
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(s) Agree to do any of the foregoing.
5.3 SYSTEM CONVERSIONS. From and after the date hereof, Buyer and
Seller shall meet on a regular basis to discuss and plan for the conversion of
Seller's data processing and related electronic informational systems to those
used by Buyer, which planning shall include, but not be limited to, discussion
of the possible termination by Buyer or Seller of third-party service provider
arrangements effective at Closing or at a date thereafter, non-renewal of
personal property leases and software licenses used by Buyer or Seller in
connection with its systems operations and outsourcing, as appropriate, of
proprietary or self-provided system services, it being understood that Buyer and
Seller shall not be obligated to take any such action prior to the Closing and,
unless Buyer otherwise agrees, no conversion shall take place prior to the
Closing. In the event that Seller takes, at the request of Buyer, any action
relative to third parties to facilitate the conversion that results in the
imposition of any termination fees or charges, Buyer shall indemnify Seller on
terms reasonably satisfactory to Seller for any such fees and expenses, and the
costs of reversing the conversion process, if for any reason the transactions
contemplated by this Agreement are not consummated in accordance with the terms
of this Agreement.
5.4 CERTAIN CHANGES AND ADJUSTMENTS. Prior to the Closing, Buyer
and Seller shall consult and cooperate with each other concerning Seller's and
Buyer's loan, litigation and real estate valuation policies and practices to
reflect Buyer's plans with respect to the conduct of Seller's business;
PROVIDED, HOWEVER, that Seller shall not be obligated to take any action
pursuant to this Section 5.4 which is inconsistent with GAAP and unless and
until Buyer acknowledges, and Seller is satisfied, that all conditions to its
obligations under this Agreement have been satisfied. No action taken by Seller
pursuant to this Section 5.4 or the consequences resulting therefrom shall be
deemed to be a breach of any representation, warranty, agreement or covenant
herein or constitute a Seller Material Adverse Effect.
5.5 AUTHORIZATION FROM OTHERS. Prior to the Closing, Seller will
use its best efforts (within commercially practicable limits) to (a) obtain all
approvals, authorizations, consents and permits of others required to permit the
consummation by Seller of the transactions contemplated by this Agreement
including the Approvals referred to in Section 3.17; and (b) help Buyer obtain
all approvals, authorizations, consents and permits of others required to permit
the consummation by Buyer of the transactions contemplated by this Agreement.
5.6 NOTICE OF DEFAULT. Promptly upon the occurrence of, or
promptly upon Seller becoming aware of the impending or threatened occurrence
of, any event which would cause or constitute a breach or default, or would have
caused or constituted a breach or default had such event occurred or been known
to Seller prior to the date hereof, of any of the representations, warranties or
covenants of Seller contained in or referred to in this Agreement or in any
Schedule or Exhibit referred to in this Agreement, Seller shall give detailed
written notice thereof to Buyer and Seller shall use their best efforts (within
commercially practicable limits) to prevent or promptly remedy the same.
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5.7 CONSUMMATION OF AGREEMENT. Seller and the Members shall use
their best efforts (within commercially practicable limits) to perform and
fulfill all conditions and obligations on its part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out. To this end, Seller will obtain prior to
the Closing all necessary authorizations or approvals of its Members and
managers.
5.8 COOPERATION OF SELLER. Seller shall cooperate with all
reasonable requests of Buyer and Buyer's counsel in connection with the
consummation of the transactions contemplated hereby.
5.9 TAX RETURNS. Seller shall cooperate with Buyer to permit
Seller in accordance with applicable law to promptly prepare and file on or
before the due date or any extension thereof all federal, state and local tax
returns required to be filed by Seller with respect to taxable periods ending on
or before the Closing.
5.10 NO SOLICITATION OF OTHER OFFERS. None of Seller, the Members,
nor any of their representatives will, directly or indirectly, solicit,
encourage, assist, initiate discussions or engage in negotiations with, provide
any information to, or enter into any agreement or transaction with, any person
or persons, other than Buyer, concerning the possible acquisition of Seller or
any of Seller's assets, except for the sale of assets in the ordinary course of
business of Seller consistent with the terms of this Agreement.
5.11 CONFIDENTIALITY. Seller and the Members agree that, unless and
until the Closing has been consummated, Seller, its officers, managers, agents
and representatives, and the Members will hold in strict confidence, and will
not use, any confidential or proprietary data or information obtained from Buyer
with respect to its business or financial condition except for the purpose of
evaluating, negotiating and completing the transaction contemplated hereby.
Information generally known in Buyer's industry or which has been disclosed to
Seller or the Members by third parties which have a right to do so shall not be
deemed confidential or proprietary information for purposes of this agreement.
If the transaction contemplated by this Agreement is not consummated, Seller and
the Members will return to Buyer (or certify that it has destroyed) all copies
of such data and information, including but not limited to financial
information, customer lists, business and corporate records, worksheets, test
reports, tax returns, lists, memoranda, and other documents prepared by or made
available to Seller in connection with the transaction.
5.12 SELLER'S 401(k) PLAN.
Seller will initiate the termination of its 401(k) plan prior to the
Closing and by proper resolution and plan amendments, if necessary, will cease
all contributions to, discontinue the right of any participant to accrue
additional benefits under said plan and establish an effective date of plan
termination prior to the Closing.
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Seller shall pay all costs associated with the termination of its
401(k) plan and any costs associated with bringing such plan into compliance
with legal requirements prior to termination (whether arising prior to or after
the Closing), including, without limitation, all costs (i) associated with the
termination of the plan, (ii) related to contributions to or liabilities of the
plan or the Seller arising with respect to related to the period prior to the
Closing, and/or (iii) arising from or related to the vesting or acceleration of
benefits resulting from such termination.
5.13 SELLER'S WELFARE BENEFIT PLANS. Seller will take all actions
necessary to permit the assignment to Buyer as of the Closing of all insurance
contracts, third party service agreements and related plan documents for the
employee welfare benefit plans listed on SCHEDULE 6.4(B).
SECTION 6. COVENANTS AND AGREEMENTS OF BUYER
6.1 MAKING OF COVENANTS AND AGREEMENTS. Buyer hereby makes the
covenants and agreements set forth in this Section 6.
6.2 REPRESENTATIONS AND WARRANTIES. During the period from the
date of this Agreement and continuing until the Closing, Buyer shall not, and
shall not permit any of its subsidiaries to, take any action that is intended or
which reasonably can be expected to result in any of its representations and
warranties set forth in this Agreement being untrue in any material respect, or
in any of the conditions to the transactions contemplated in this Agreement as
set forth in Section 7 not being satisfied in any material respect, or in a
material violation of any provision of this Agreement, except, in every case, as
may be required by applicable law.
6.3 CONFIDENTIALITY. Buyer agrees that, unless and until the
Closing has been consummated, Buyer and its officers, directors, agents and
representatives will hold in strict confidence, and will not use any
confidential or proprietary data or information obtained from Seller or the
Members with respect to the business or financial condition of Seller except for
the purpose of evaluating, negotiating and completing the transaction
contemplated hereby. Information generally known in Seller's industry or which
has been disclosed to Buyer by third parties which have a right to do so shall
not be deemed confidential or proprietary information for purposes of this
Agreement. If the transaction contemplated by this Agreement is not consummated,
Buyer will return to Seller (or certify that it has destroyed) all copies of
such data and information, including but not limited to financial information,
customer lists, business and corporate records, worksheets, test reports, tax
returns, lists, memoranda, and other documents prepared by or made available to
Buyer in connection with the transaction.
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6.4 EMPLOYEES, WAGES AND BENEFITS.
(a) SUBJECT EMPLOYEES. As of the Closing, Buyer shall
offer employment to such employees of Seller as Buyer shall determine in its
sole discretion (the "SUBJECT EMPLOYEES"). The term Subject Employee does not
include any employee whose term of employment is governed by an Employment
Agreement. Buyer shall not be obligated to continue the employment of any
Subject Employee or to provide any particular compensation and benefit plan
package to Subject Employees after the Closing and the employment of any Subject
Employee and the provision of any benefit plan or arrangement may be terminated
by Buyer in its sole discretion at any time after the Closing. Moreover, Seller
shall be solely responsible for (and shall reimburse promptly Buyer for any
claims paid or incurred by Buyer and its affiliates) all the costs of accrued
vacation, personal and sick days, wages, withholding taxes, and severance
related obligations for Seller's employees accruing or related to the period
prior to and through the Closing.
(b) BENEFIT PLANS. As of the Closing, all Subject
Employees who accept Buyer's offers of employment (and their eligible spouses,
dependents and beneficiaries) shall continue to be covered under the employee
welfare benefit plans listed on SCHEDULE 6.4(b). Buyer's continuation of any
such welfare benefit plan is as of the Closing subject to the condition
precedent that all relevant insurance contracts, third party service contracts
and plan documents are assigned to, and may be assumed by, Buyer.
Notwithstanding the foregoing, Seller shall have sole responsibility for any and
all liabilities accruing, relating to or occurring under any employee welfare
benefit plan prior to the Closing, without regard to whether such liabilities
arise before or after the Closing. As of the Closing, each Subject Employee who
accepts Buyer's offer of employment as of the Closing shall be eligible to
participate in Buyer's qualified 401(k) and defined benefit pension plan,
subject to the completion of the applicable age and service eligibility
requirements in said plans. For this purpose, each Subject Employee who accepts
Buyer's offer of employment as of the Closing will receive credit for his or her
service with Seller for purposes of eligibility to participate in and vesting
under Buyer's 401(k) and defined benefit pension plan. Credit for Subject
Employees' periods of service with Seller shall not be given to the Subject
Employees for purposes of benefit accrual under any employee plan of Buyer.
Buyer shall pay Subject Employees for vacation, personal and sick days accrued
in the 1999 calendar year but not taken as of the Closing, subject to
reimbursement of such costs by Seller to Buyer.
SECTION 7. CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party hereto to consummate this Agreement and the
transactions contemplated hereby shall be subject to the fulfillment, at or
prior to the Closing, of the following conditions precedent:
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(a) MEMBER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative vote
of the Members to the extent required by Maryland law and Seller's Operating
Agreement.
(b) REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of all Governmental Entities required to consummate
any of the transactions contemplated by this Agreement shall have been obtained
and remain in full force and effect, and all waiting periods relating to such
approvals, authorizations and consents shall have expired or been terminated
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "REQUISITE REGULATORY APPROVALS"); and none of the
Requisite Regulatory Approvals shall impose any term, condition or restriction
upon Buyer that Buyer reasonably determines would, individually or in the
aggregate, materially impair the value of Seller to Buyer or to be materially
burdensome.
(c) NO ORDERS, INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
order, injunction or decree (whether temporary, preliminary or permanent) issued
by federal or state governmental authority or other agency or commission or
federal or state court of competent jurisdiction or other legal restraint or
prohibition (an "INJUNCTION") preventing the consummation of any of the
transactions contemplated by this Agreement shall be in effect and no proceeding
initiated by any Governmental Entity seeking an Injunction shall be pending. No
statute, rule, regulation, order, injunction or decree (whether temporary,
preliminary or permanent) shall have been enacted, entered, promulgated or
enforced by any federal or state governmental authority or other agency or
commission or federal or state court of competent jurisdiction, which prohibits,
restricts or makes illegal the consummation of any of the transactions
contemplated by this Agreement.
7.2 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligation of
Buyer to consummate this Agreement and the transactions contemplated hereby are
also are subject to the fulfillment, prior to or at the Closing, of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Seller and the Members in this Agreement which
is qualified as to materiality shall be true and correct and each such
representation or warranty that is not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement, as
applicable, and (except to the extent such representations and warranties speak
as of an earlier date) as of the date of the Closing.
(b) AGREEMENTS AND COVENANTS. Seller and the Members
shall have performed in all material respects all obligations and complied in
all material respects with all agreements or covenants of Seller and the Members
to be performed or complied with by it at or prior to the Closing under this
Agreement.
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(c) NO MATERIAL ADVERSE CHANGE. There shall have been no
change that caused a Seller Material Adverse Effect since the date of this
Agreement, whether or not in the ordinary course of business.
(d) CONSENTS. Seller shall have made all filings with and
notifications of Governmental Entities required to be made by Seller in
connection with the execution and delivery of this Agreement, the performance of
the transactions contemplated hereby and the continued operation of the business
of Seller by Buyer subsequent to the Closing; Seller and Buyer shall have
received all licenses, authorizations, approvals, waivers, consents and permits,
in form and substance reasonably satisfactory to Buyer, from all third parties,
including, without limitation, applicable Governmental Entities, Investors,
lessors, lenders and contract parties, required to permit the continuation of
the business of Seller and the consummation of the transactions contemplated by
this Agreement, and in connection with the transfer of the Subject Assets or
Seller's contracts, permits, leases, licenses and franchises, to avoid a breach,
default, termination, acceleration or modification of any indenture, loan or
credit agreement or any other agreement, contract, instrument, mortgage, Lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award as a result of, or in connection with, the
execution and performance of this Agreement; and all waiting periods of
governmental authorities, regulatory agencies and other entities required to
permit the continuation of the business of Seller and the consummation of the
transactions contemplated by this Agreement, shall have expired.
(e) NO LITIGATION. There shall have been no determination
by Buyer, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of litigation, proceedings or other action against Buyer,
Seller, or any of the Members.
(f) OFFICER'S CERTIFICATE. Seller and each of the Members
shall have furnished Buyer with a certificate dated as of the date of the
Closing signed on its behalf by an executive officer to the effect that the
conditions set forth in Section 7.2(a) through 7.2(e) have been satisfied.
(g) LEASE ASSIGNMENT. The Leases set forth in SCHEDULE
3.6(b) shall have been properly assigned to Buyer in the manner contemplated by
this Agreement.
(h) WAREHOUSE LINE. Evidence satisfactory to Buyer that
the Warehouse Line will be paid off within 45 days.
(i) EMPLOYMENT AGREEMENT. Xxxxxxx X. Xxxxx, Xx. shall
have executed and delivered to Buyer the employment agreement (the "EMPLOYMENT
AGREEMENT") in the form attached hereto as EXHIBIT A.
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(j) APPROVAL OF BUYER'S COUNSEL. All actions,
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this Agreement shall have been approved by Xxxxxxx, Procter & Xxxx LLP as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions, and documents in form satisfactory to such
counsel, as Buyer may reasonably require from Seller and the Members to evidence
compliance with the terms and conditions hereof as of the Closing and the
correctness as of the Closing of the representations and warranties of the
Members and Seller and the fulfillment of their respective covenants.
(k) MARYLAND GOOD STANDING/TAX WAIVERS. At or prior to
the Closing, Buyer shall have received from Seller a certificate of good
standing from the Secretary of State of the State of Maryland, and a tax status
certificate from the Maryland Department of Assessments and Taxation.
(l) DUE DILIGENCE AND BONDING. Buyer shall have completed
its due diligence review of the business of Seller, including background checks,
and shall, in its sole reasonable discretion, be satisfied with the results
thereof. All employees must be bondable and be free and clear of any and all
liens.
(m) EMPLOYEES. Buyer shall be reasonably satisfied that a
sufficient number of Seller's employees intend to join Buyer at Closing, so that
Buyer will have a team in place to achieve its objectives related to the
operation of its business.
(n) EMPLOYEE WELFARE BENEFIT PLANS. Seller shall have
taken all steps necessary to assign to Buyer as of the Closing the insurance
contracts, third party service contracts and documents relating to the employee
welfare benefit plans listed on SCHEDULE 6.4(B).
7.3 CONDITIONS TO THE OBLIGATIONS OF SELLER. Seller's obligation
to consummate this Agreement and the transactions contemplated hereby is subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Buyer in this Agreement which is qualified as
to materiality shall be true and correct and each such representation or
warranty that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the date of the Closing.
(b) AGREEMENTS AND COVENANTS. Buyer shall have performed
in all material respects all obligations and complied in all material respects
with all of the agreements or covenants to be performed or complied by it under
this Agreement.
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(c) OFFICER'S CERTIFICATE. Buyer shall have furnished
Seller with a certificate dated as of the date of the Closing signed on its
behalf by an executive officer to the effect that the conditions set forth in
Section 7.3(a) and 7.3(b) have been satisfied.
(d) EMPLOYMENT AGREEMENT. Buyer shall have executed and
delivered to Seller the Employment Agreement.
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
8.1 SURVIVAL OF WARRANTIES. Each of the representations,
warranties, agreements, covenants and obligations herein or in any schedule,
exhibit, certificate or financial statement delivered by any party to the other
party incident to the transactions contemplated hereby are material, shall be
deemed to have been relied upon by the other parties and shall survive the
Closing regardless of any investigation and shall not merger in the performance
of any obligation by either party hereto.
8.2 COLLECTION OF ASSETS. Subsequent to the Closing, Buyer shall
have the right and authority to collect all receivables and other items
transferred and assigned to it by Seller hereunder and to endorse with the name
of Seller any checks received on account of such receivables or other items, and
Seller agrees that it will promptly transfer or deliver to Buyer from time to
time, any cash or other property that Seller may receive with respect to any
claims, contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items included in the Subject Assets.
8.3 PAYMENT OF LIABILITIES; ADVANCES UNDER WAREHOUSE LINE.
Effective on the date of the Closing, Seller shall not make any advances under
the Warehouse Line. Promptly, and in any event within 45 days, after the
Closing, Seller and the Members shall extinguish any and all of Seller's
liabilities, including, without limitation, the Warehouse Line. Thereafter,
Seller shall not incur any liabilities of any nature other than taxes and
similar liabilities incurred in the ordinary course of business by shell
entities and Seller and the Members shall promptly, and in any event within 30
days, extinguish any and all such liabilities as they arise.
8.4 TERMINATION AND LIQUIDATION OF OPERATIONS OF SELLER.
Immediately after the Closing, Seller shall cease all operations, except that
Seller may perform such functions as are necessary (a) to collect and account
for funds received, or to be received, in connection herewith and (b) to wind up
and dissolve such entities. As soon as reasonably practicable after the Closing,
Seller shall be dissolved and each of the Members shall resign as manager of
Seller.
8.5 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. For five years
after the Closing, neither Seller nor the Members shall solicit or encourage any
employee of Buyer to terminate
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his or her employment by Buyer, shall not hire any such employee, and shall not
solicit or accept business from any customer of Buyer.
8.6 NON-COMPETITION. Except as otherwise provided in an employment
agreement between Buyer and any of the Members, Seller and the Members agree
that for two years after the Closing, neither it nor they will, without the
prior written consent of Buyer, directly or indirectly, engage or participate
in, be engaged by or assist in any manner or in any capacity, or have any
interest in or make any loan to any person, firm, corporation or business which
engages in any activity anywhere in the States of Maryland and Virginia which is
similar to or competitive with any business in which Seller is presently engaged
or proposes to engage, so long as Buyer (or its successor, if any) shall engage
in such activity; provided, however, the foregoing shall not prevent Seller from
owning beneficially or of record up to one percent of the outstanding securities
of a publicly-held corporation which engages in competitive activities.
8.7 TAX RETURNS. Seller, in accordance with applicable law, shall
(i) promptly prepare and file on or before the due date or any extension thereof
all federal, state and local tax returns required to be filed by it with respect
to taxable periods of Seller that include any period ending on or before the
Closing and (ii) pay all Taxes of Seller attributable to periods ending on or
before the Closing.
8.8 FINANCIAL STATEMENTS. Promptly after the Closing, Seller shall
deliver to Buyer a balance sheet of Seller as of the date of the Closing and
statements of income, retained earnings and cash flows for the period then
ended.
SECTION 9. INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. Seller and the Members jointly and
severally agree subsequent to the Closing to indemnify and hold Buyer and its
respective subsidiaries and affiliates and persons serving as officers,
directors, partners or employees thereof (individually a "BUYER INDEMNIFIED
PARTY" and, collectively, the "BUYER INDEMNIFIED PARTIES") harmless from and
against any damages, liabilities, losses, Taxes, fines, penalties, costs, and
expenses (including, without limitation, reasonable fees of counsel) of any kind
or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) which may be sustained or suffered by any of them arising out of or
based upon any of the following matters:
(a) fraud, intentional misrepresentation or a deliberate
or wilful breach by Seller or any Member of any of their representations,
warranties or covenants under this Agreement or in any certificate, schedule or
exhibit delivered pursuant hereto;
(b) any other breach of any representation, warranty or
covenant of Seller or any Member under this Agreement or in any certificate,
schedule or exhibit delivered pursuant
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hereto, or by reason of any Claim asserted or instituted growing out of any
matter or thing constituting a breach of such representations, warranties or
covenants;
(c) Taxes attributable to the Subject Assets for periods
prior to the Closing;
(d) any failure by Seller or the Members to perform and
discharge any of the Excluded Liabilities as set forth in this Agreement;
(e) any liability of Seller or any Member for Taxes which
is not included in the Assumed Liabilities; and
(f) any Claims arising prior to the Closing, including,
without limitation, Claims arising from or relating to events, acts,
circumstances, omissions, conditions or any other state of facts occurring prior
to the Closing, regardless of whether such Claims are made or asserted prior to
or after the Closing, and that relate to (i) Seller's workforce, (ii) compliance
with all governmental obligations, (iii) compliance with applicable laws,
regulations or permitting or licensing requirements, (iv) personal injury and
property damage matters, (v) worker health and safety matters, (vi) employee,
pension and benefit matters, (vii) tax matters; and (viii) any matter,
liability, obligation or alleged liability or obligation of Seller or relating
to the business of Seller.
9.2 LIMITATIONS ON INDEMNIFICATION BY SELLER AND MEMBERS.
Notwithstanding the foregoing, the right of Buyer Indemnified Parties to
indemnification under Section 9.1 shall be subject to the following provisions:
(a) No indemnification shall be payable pursuant to
Section 9.1(b) above to any Buyer Indemnified Party, unless the total of all
claims for indemnification pursuant to Section 9.1 shall exceed $10,000 in the
aggregate, whereupon the full amount of such claims shall be recoverable in
accordance with the terms hereof;
(b) No indemnification shall be payable to a Buyer
Indemnified Party with respect to claims asserted pursuant to Section 9.1(b)
(exclusive of claims for indemnification for Taxes or a breach of any
representation, warranty or covenant with respect to Taxes or tax related
matters) after three years from the date of the Closing (the "INDEMNIFICATION
CUT-OFF DATE").
9.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
Seller and its respective affiliates and persons serving as officers, members or
employees thereof and each of the Members (individually a "SELLER INDEMNIFIED
PARTY" and, collectively, the "SELLER INDEMNIFIED PARTIES") harmless from and
against any damages, liabilities, losses and expenses (including, without
limitation, reasonable fees of counsel) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) which may be sustained
or suffered by any of them arising out of or based upon any of the following
matters:
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(a) a breach of any representation, warranty or covenant
made by Buyer in this Agreement or in any certificate delivered by Buyer
hereunder, or by reason of any Claim, asserted or instituted growing out of any
matter or thing constituting such a breach; and
(b) any failure by Buyer to perform and discharge the
Assumed Liability as set forth in this Agreement.
9.4 LIMITATIONS ON INDEMNIFICATION BY BUYER. Notwithstanding the
foregoing, the right of Seller Indemnified Parties to indemnification under
Section 9.3 shall be subject to the following provisions:
(a) No indemnification pursuant to Section 9.3(a) shall
be payable to any Seller Indemnified Party, unless the total of all claims for
indemnification pursuant to Section 9.3(a) shall exceed $10,000 in the
aggregate, whereupon the full amount of such claims shall be recoverable in
accordance with the terms hereof;
(b) No indemnification shall be payable to a Seller
Indemnified Party with respect to claims asserted pursuant to Section 9.3(a)
after the Indemnification Cut-Off Date.
9.5 NOTICE; DEFENSE OF CLAIMS. An indemnified party may make
claims for indemnification hereunder by giving written notice thereof to the
indemnifying party within the period in which indemnification claims can be made
hereunder. If indemnification is sought for a claim or liability asserted by a
third party, the indemnified party shall also give written notice thereof to the
indemnifying party promptly after it receives notice of the claim or liability
being asserted, but the failure to do so shall not relieve the indemnifying
party from any liability except to the extent that it is prejudiced by the
failure or delay in giving such notice. Such notice shall summarize the bases
for the claim for indemnification and any claim or liability being asserted by a
third party. Within 20 days after receiving such notice the indemnifying party
shall give written notice to the indemnified party stating whether it disputes
the claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within 20 days after
receipt of notice thereof, it shall be deemed to have accepted and agreed to the
claim, which shall become immediately due and payable. The indemnifying party
shall be entitled to direct the defense against a third party claim or liability
with counsel selected by it (subject to the consent of the indemnified party,
which consent shall not be unreasonably withheld) as long as the indemnifying
party is conducting a good faith and diligent defense. The indemnified party
shall at all times have the right to fully participate in the defense of a third
party claim or liability at its own expense directly or through counsel;
provided, however, that if the named parties to the action or proceeding include
both the indemnifying party and the indemnified party and the indemnified party
is advised that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
indemnified party may engage separate counsel at the expense of the indemnifying
party. If no such notice of intent to dispute and defend a third party claim or
liability is given by the indemnifying party, or if such good faith and diligent
defense is not being or ceases to be conducted by the indemnifying party, the
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indemnified party shall have the right, at the expense of the indemnifying
party, to undertake the defense of such claim or liability (with counsel
selected by the indemnified party), and to compromise or settle it, exercising
reasonable business judgment. If the third party claim or liability is one that
by its nature cannot be defended solely by the indemnifying party, then the
indemnified party shall make available such information and assistance as the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.
9.6 SATISFACTION OF SELLER AND MEMBER INDEMNIFICATION OBLIGATIONS.
In order to satisfy the indemnification obligations of Seller and the Members
pursuant to Section 9.1 above, a Buyer Indemnified Party shall have the right
(in addition to collecting directly from Seller and the Members) to set off its
indemnification claim against all payments due the Seller and the Members (a)
pursuant to this Agreement, (b) under any employment agreement, including the
Employment Agreement, or (c) as compensation for services rendered to Buyer;
PROVIDED, HOWEVER, that a Buyer Indemnified Party shall not have the right to
set off its indemnification claim against more than fifty percent (50%) of a
Member's salary.
SECTION 10. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
10.1 TERMINATION.
(a) At any time prior to the Closing, this Agreement may
be terminated as follows:
(i) by mutual written consent of all of the
parties to this Agreement;
(ii) by Buyer, pursuant to written notice by
Buyer to Seller, if any of the conditions set forth in Section 7.2 of
this Agreement have not been satisfied at the Closing, or if it has
become reasonably and objectively certain that any of such conditions,
other than a condition within the control of Buyer, will not be
satisfied at or prior to the Closing, such written notice to set forth
such conditions which have not been or will not be so satisfied;
(iii) by Seller, pursuant to written notice by
Seller to Buyer, if any of the conditions set forth in Section 7.3 of
this Agreement have not been satisfied at the Closing, or if it has
become reasonably and objectively certain that any of such conditions,
other than a condition within the control of Seller, will not be
satisfied at or prior to the Closing, such written notice to set forth
such conditions which have not been or will not be so satisfied; and
(iv) by either Buyer or Seller if the Closing
shall not have occurred on or before August 31, 1999; PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section
10.1(a)(iv) shall not be available to any party whose failure to
fulfill any material obligation under this Agreement has been the cause
of, or
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resulted in, the failure of the Closing to occur on or before such
date; and PROVIDED, FURTHER, that the right to terminate this Agreement
under this Section 10.1(a)(iv) shall not be available to any party if
the principal reason for the Closing not having occurred is the failure
of Buyer to have obtained all necessary regulatory approvals or that
the expiration of all necessary waiting periods has not occurred and
Buyer is seeking in good faith to promptly eliminate all regulatory
impediments to the Closing.
(b) On or prior to the date that is four weeks from the
date of the execution of this Agreement, Buyer may terminate this Agreement if
the results of the compliance audit performed on its behalf with respect to
Seller are not, in Buyer's good faith judgment, satisfactory. In this
connection, Seller and the Members agree to make all books and records and all
necessary information of Seller available to Buyer and to authorize reasonable
visits to Seller's premises with such staff, consultants and experts as Buyer
deems necessary or desirable.
10.2 EFFECT OF TERMINATION. Except as set forth below, all
obligations of the parties hereunder shall cease upon any termination pursuant
to Section 10.1; provided that the parties shall have rights to proceed as
further set forth in Section 10.3 below; and provided further that if such
termination shall result from the willful failure of any party to fulfill a
condition to the performance of the obligations of the other party, willful
failure to perform a covenant of this Agreement or willful breach by any party
hereto of any representation or warranty or agreement contained herein, such
party shall be fully liable for any and all damages and expenses incurred or
suffered by the other party as a result of such failure or breach. The
provisions of this Section 10.2, Section 5.11, Section 6.3, Section 11.1, and
Section 11.9 shall survive any termination hereof pursuant to Section 10.1.
10.3 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Section 10.1(a)(ii)
hereof have not been satisfied, Buyer shall have the right to proceed with the
transactions contemplated hereby without waiving any of its rights hereunder,
and if any of the conditions specified in Section 10.1(a)(iii) hereof have not
been satisfied, Seller shall have the right to proceed with the transactions
contemplated hereby without waiving any of its rights hereunder.
SECTION 11. MISCELLANEOUS
11.1 FEES AND EXPENSES.
(a) Except as expressly set forth herein, each of the
parties will bear its own expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement, and no expenses
of Seller or of any Member relating in any way to the purchase and sale of the
Subject Assets hereunder and the transactions contemplated hereby, including
without limitation legal, accounting or other professional expenses of Seller or
of any Member, shall be charged to or paid by Buyer or included in the Assumed
Liabilities.
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(b) Subject to the provisions of Section 2.9, Seller will
pay all costs incurred, whether at or subsequent to the Closing, in connection
with the transfer of the Subject Assets to Buyer as contemplated by this
Agreement, including, without limitation, all sales, use, excise, and other
transfer taxes and charges applicable to such transfer; all recording charges
and fees applicable to any instruments of transfer; and all costs of obtaining
or transferring permits, registrations, applications and other tangible and
intangible properties. Buyer will pay all premiums, charges and costs of
obtaining and providing Uniform Commercial Code searches and insurance for the
benefit of Buyer with respect to the Subject Assets.
(c) Seller will pay all expenses and costs incurred in
connection with the elimination of the Warehouse Line.
(d) Seller will be responsible for all employment
liabilities as set forth in Section 6.4.
11.2 GOVERNING LAW. This Agreement shall be construed under and
governed by the internal laws of the Commonwealth of Massachusetts without
regard to its conflict of laws provisions.
11.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage prepaid. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO BUYER: People's Mortgage Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxxxxx X. Childress, Esq.
Facsimile Number: (000) 000-0000
TO SELLER: Allied Bancshares Mortgage Group, LLC
000 Xxxxxxx Xxxxxxx
Xxxxx 00
Xxxxxxx Xxxx, XX 00000
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Attn: Xxxxxxx X. Xxxxx, Xx.
Facsimile Number: (000) 000-0000
With a copy to: Royston, Mueller, XxXxxx & Xxxx, LLP
Suite 600
The Royston Building
000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxx, Esq.
Facsimile: (000) 000-0000
TO MEMBERS: Xxxxxxx X. Xxxxx, Xx.
000 Xxxxxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
Xxxxx X. Xxxxx
0000 Xxx Xxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
With a copy to: Royston, Mueller, XxXxxx & Xxxx, LLP
Suite 600
The Royston Building
000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxx, Esq.
Facsimile: (000) 000-0000
Any notice given hereunder may be given on behalf of any party by its counsel or
other authorized representatives.
11.4 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by any party hereto have been expressed herein or in such Schedules or Exhibits
or in such other writings.
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11.5 ASSIGNABILITY; BINDING EFFECT. Prior to the Closing, this
Agreement shall only be assignable by Buyer to a corporation or partnership
controlling, controlled by or under common control with Buyer upon written
notice to Seller. After the Closing, Buyer's rights and obligations hereunder
shall be freely assignable, except that no such assignment shall relieve Buyer
of its obligations under this Agreement. This Agreement may not be assigned by
Seller or any Member without the prior written consent of Buyer. This Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted assigns.
11.6 AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement may be amended or
waived prior to the date of the Closing if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
11.7 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
11.8 EXECUTION IN COUNTERPARTS. For the convenience of the parties
and to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
11.9 PUBLICITY AND DISCLOSURES. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
knowledge and written consent of Buyer and Seller; PROVIDED, HOWEVER, that Buyer
may, without the prior consent of Seller or the Members, issue such press
release or make such public statement as may upon the advice of counsel be
required by law or the rules and regulations of the Nasdaq Stock Market, Inc. if
Buyer has used reasonable efforts to consult with Seller prior thereto.
11.10 CONSENT TO JURISDICTION. Solely for the purpose of allowing a
party to enforce its indemnification and other rights hereunder, each of the
parties hereby consents to personal jurisdiction, service of process and venue
in the federal or state courts of the Commonwealth of Massachusetts, or in the
court in which any claim for which indemnification may be sought hereunder is
brought against an indemnified party.
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11.11 SEVERABILITY. In case any of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, any such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had been
limited or modified (consistent with its general intent) to the extent necessary
to make it valid, legal and enforceable, or if it shall not be possible to so
limit or modify such invalid, illegal or unenforceable provision or part of a
provision, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained in this
Agreement.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
By:________________________________
Title:_____________________________
SELLER:
By:________________________________
Title:_____________________________
MEMBERS:
-----------------------------------
XXXXXXX X. XXXXX, XX.
-----------------------------------
XXXXX X. XXXXX
-----------------------------------
XXXXXXX X. XXXXXXXX
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DISCLOSURE SCHEDULES TO ASSET PURCHASE AGREEMENT
Schedule 2.1 Pipeline Loans
Schedule 2.1(d) Excluded Cash, Securities, and Mortgage Loans
Schedule 2.1(e) Owned Real Property
Schedule 2.2 Liabilities Incurred by Seller since the Date of the Base
Balance Sheet
Schedule 3.4 Members of Seller and Membership Interests
Schedule 3.6(b) Leased Real Property
Schedule 3.6(c) Personal Property
Schedule 3.7(a) Financial Statements
Schedule 3.7(c) Certain Liabilities
Schedules 3.10 Contracts (Investor Commitments)
Schedule 3.11 Marks
Schedule 3.17 Permits and Licenses
Schedule 3.20 Employee Benefit Plans
Schedule 3.23 Insurance
Schedule 6.4(b) Continued Employee Welfare Benefit Plans
