Exhibit 10.3
SALE AND EXCHANGE AGREEMENT
SALE AND EXCHANGE AGREEMENT, dated as of the 4th day of June, 1998, by
and among ARBOR NATIONAL COMMERCIAL MORTGAGE, LLC ("ANCM"), a New York
limited liability company organized on January 25, 1995 and operating under a
Restated and Amended Operating Agreement (the "Operating Agreement") dated as
of January 1, 1996; the individuals and entities as set forth in Appendix A
attached hereto (the "Members"), who hold membership interests in ANCM; ARBOR
MANAGEMENT LLC, a New York limited liability company and the Manager of ANCM
("Management"); ARBOR SECURED FUNDING, INC., a New York corporation which is
a subsidiary of ANCM ("ASF"); and ARBOR NATIONAL HOLDINGS, INC., a New York
Corporation, formed on June 12, 1998 ("ANHI").
W I T N E S S E T H:
WHEREAS, the undersigned Members, who constitute all of the Members of ANCM,
desire to irrevocably sell, transfer, assign and convey to ANHI all of the
membership interests of ANCM (each, a "Membership Interest" and, collectively,
the "Membership Interests") in exchange for shares (the "Exchange Shares") of
common stock of ANHI (the "Common Stock"), upon the terms and conditions further
described hereinbelow;
WHEREAS, ANHI desires to acquire the Membership Interests in exchange for
the Exchange Shares, as hereinafter provided;
WHEREAS, the parties intend that, after completion of the transactions
described herein, ANHI will own all of the Membership Interests of ANCM, free
and clear of all Liens (as defined in Section 3(a) hereof); and ANCM will become
a single-member limited liability company and a wholly-owned subsidiary of ANHI;
WHEREAS, certain Members identified on Appendix A (the "Financed Members")
have pledged their Membership Interests (the "Pledged Interests") as collateral
for loans obtained from ASF (the "ASF Loans");
WHEREAS, ASF is prepared to release its security interest in the Pledged
Interests, upon receipt by it of certificates representing the Exchange Shares
issuable to the Financed Members, to be held by ASF as substitute collateral for
the ASF Loans;
WHEREAS, Management and each Member, by execution of this Agreement, are
prepared to consent to the sale, assignment and transfer to ANHI of the
Membership Interests pursuant to the terms and conditions of this Agreement and
the substitution of ANHI as a Substituted Member in satisfaction of the
requirements of the Operating Agreement; and
WHEREAS, the closing of the sale and exchange described in this Agreement is
expressly conditioned upon the closing (the "IPO Closing") of an initial public
offering (the "Initial Public Offering") of Common Stock registered pursuant to
a registration statement (the "IPO Registration Statement") which is expected to
be filed on or about June 15, 1998;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Sale and Exchange. Subject to the terms and conditions set forth herein,
each Member hereby irrevocably and unconditionally agrees to sell, transfer,
assign, convey and set over to ANHI, and ANHI hereby irrevocably and
unconditionally agrees to purchase, all of such Members' right, title and
interest in such Member's Membership Interest; provided, however, that the
closing (the "Exchange Closing") of the transfer of such Member's Membership
Interest and
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the issuance and delivery of the proper number of Shares in exchange therefor
(together, the "Exchange Transaction") shall only take place simultaneously with
the IPO Closing. If the IPO Closing does not occur on or prior to May 31, 1999,
this Agreement shall terminate without further liability or obligation of any
party hereto.
2. Consideration. As consideration for the sale by all Members of 100% of
the Membership Interests, ANHI shall issue to the Members an aggregate of 7.5
million Shares (the "Total Consideration"). ANCM and all Members agree that the
Total Consideration shall be allocated among the Members in the same proportion
which such Member's capital account in ANCM bears to the aggregate capital
accounts of all Members. By execution hereof, each Member acknowledges receipt
from ANCM of the information necessary to calculate such proportion and the
number of Exchange Shares issuable with respect to such Member's Membership
Interest at the Exchange Closing (the "Proration Calculation"). ANCM shall
provide each Member promptly (but in any event prior to the Exchange Closing)
with any information which would result in a modification of the Proration
Calculation.
3. Representations of Members. Each Member hereby represents and warrants to
ANHI for such Member (and not for any other Member) as follows:
(a) Title to Interest. Such Member owns such Member's Membership
Interest free and clear of all liens, claims, options, charges, pledges and
encumbrances ("Liens"), except (as to each Financed Member) for the pledge of
such Financed Member's Membership Interest as collateral for such Member's ASF
Loan (the "ASF Lien").
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(b) Organization and Standing. If an entity, such Member is duly
organized and validly existing under the laws of its state of organization, is
in good standing under such laws and has all requisite power and authority to
execute, deliver and perform its obligations under the terms of this Agreement.
(c) Authorization. (i) If an entity, all action on the part of such
Member, its directors, managers or trustees and its equity owners has been taken
which is necessary for the authorization, execution, delivery, performance by
such Member of this Agreement and the consummation of the transactions
contemplated herein.
(ii) This Agreement is a legal, valid and binding obligation of
such Member, enforceable in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) the availability of equitable remedies as such remedies may be limited by
equitable principles of general applicability (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(d) No Conflict. The execution, delivery and performance by such Member
of this Agreement and such Member's compliance therewith does not and will not
result in any violation of and will not conflict with, or result in a breach of,
any of the terms of, or constitute a default under, any provision of state or
federal or other law to which such Member is subject, such Member's
organizational documents (if an entity), or any mortgage, indenture, agreement,
instrument, judgment, decree, order, rule or regulation or other restriction to
which such Member is a party or by which such Member is bound or to which such
Member's properties are subject.
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(e) Receipt of All Information Requested. In connection with the
issuance of such Member's pro rata share of the Total Consideration, such Member
hereby acknowledges that such Member and such Member's attorney, accountant,
purchaser representative or tax advisor, if any, has received and reviewed a
draft preliminary prospectus represented to be in the form included in the IPO
Registration Statement (the "Draft Preliminary Prospectus"), a copy of which is
attached as Appendix B, and each of them has been afforded the opportunity to
ask questions of and receive answers from duly authorized officers or other
representatives of ANHI concerning the terms and conditions of the Exchange
Transaction and the Public Offering. Such Member understands that, as of the
date hereof, neither the Securities and Exchange Commission ("SEC") nor any
securities commission or regulatory authority of any state of the United States
has approved the issuance of the Exchange Shares or the Public Offering nor has
any of them passed upon or endorsed the merits of the Exchange Transaction or
the Public Offering or confirmed or determined the accuracy or adequacy of this
Agreement or of any information contained in the Draft Preliminary Prospectus.
Such Member further understands that, as of the date hereof, the information
provided to such Member has not been reviewed by any federal, state, foreign or
other regulatory authority. Such Member (together with such Member's advisors,
if any) has such knowledge and experience in financial and business matters that
such Member is capable of evaluating the merits and risks of the Exchange
Transaction.
(f) Restricted Securities. Such Member understands that the Exchange
Shares such Member will be receiving are restricted securities under the
Securities Act of 1933, as amended (the "Securities Act"), and that restricted
securities may not be resold in the absence of registration or an exemption
therefrom. Such Member understands and acknowledges that, as of the date hereof,
the Exchange Shares have not been registered under the Act and there is
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currently no public market for the Exchange Shares in the United States. Such
Member further understands and acknowledges that even if the IPO Registration
Statement is filed with the SEC, there can be no assurance that the IPO
Registration Statement will be declared effective or, if it is declared
effective, that a public market will develop. Even if the IPO Registration
Statement becomes effective and a public market develops, such Member will have
to wait at least one year before selling such Member's Exchange Shares into the
public market, unless ANHI files a separate registration statement covering such
Member's Exchange Shares (as provided in Section 7(b) hereof) or an exemption
from registration is available under the Securities Act. Each Financed Member
acknowledges that such Financed Member will be able to resell such Financed
Member's Exchange Shares to the public only if the Exchange Shares are
registered pursuant to a registration statement or if the sale is one year after
the earlier of (A) the date such Financed Member's ASF Loan is repaid or (B) the
date collateral other than such Financed Member's Exchange Shares is pledged to
secure such Financed Member's ASF Loan. Resales of Exchange Shares by each
Member who is an "affiliate" (as defined under the Securities Act) of ANHI
(generally, directors, officers and holders of over 10% of the outstanding
Common Stock) will be subject indefinitely by the volume limitations of Rule 144
promulgated under the Securities Act so long as such Member remains an
affiliate.
Each Member also understands that the certificates representing
Exchange Shares will be legended to reflect the above restrictions.
(g) No Distribution. Such Member is acquiring the Common Stock to be
issued and sold hereunder for such Member's own account for investment and
(except as contemplated by Section 7(b) hereof) not with a view to distribution
thereof. Any sale, transfer or other disposition of Shares by such Member shall
be made in conformity with this Agreement and all
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applicable requirements of the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC
promulgated thereunder.
(h) No Reliance on Tax Advice. Such Member has been given the
opportunity to review with such member's own tax advisors the federal, state and
local tax consequences of the transactions contemplated by this Agreement.
Except for matters addressed in the tax opinion to be provided to such Member
pursuant to Section 7(d) hereof, such Member is relying solely on such advisors,
if any, and not on any statements or representations of ANHI or any of its
agents. Such Member understands that such Member (and not ANHI) shall be
responsible for such Member's own tax liability that may arise as a result of
the transactions contemplated by this Agreement. In particular, such Member, by
execution of this Agreement, agrees and acknowledges that such Member has been
given the opportunity to discuss with such Member's tax advisors, and
understands, the following:
ANCM is treated as a partnership for federal and most state income tax
purposes. ANHI is a corporation for federal and state income tax purposes.
Consequently, the Members will be exchanging what are in effect partnership
interests for shares of a corporation, and will be taxed differently on the
shares received from that of the interests given up in the exchange.
Partnerships are pass-through entities for tax purposes. Therefore,
partnerships are not subject to tax at the entity level. Rather, all tax
items, including items of income, gain, loss, deduction and credit, pass
through to the individual partners (or members, in the case of a limited
liability company). Members must report such items on their individual
income tax returns, and are taxed annually on their distributive share of
income from the partnership, regardless of whether such income is actually
distributed to the Members.
Under the Internal Revenue Code of 1986, as amended, corporations and
their shareholders are subject to two levels of tax. The corporation itself
pays an annual corporate level tax on its income. If the corporation chooses
to distribute earnings and profits to its shareholders in the form of
dividends, the shareholders who receive such dividends (whether in cash or
property) must include the value of the dividend in their gross income, and
are therefore subject to tax at their individual rates on the value of the
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dividend. If the corporation does not choose to distribute earnings or
profits to its shareholders, no tax would be paid by the shareholders on
such earnings or profits.
(i) Independent Legal Advice. Such Member acknowledges that such Member
has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel. Such Member is
relying solely on such counsel for legal advice with respect to this investment
and the transactions contemplated by this Agreement.
(j) Reliance on Representations. This Agreement is made by ANHI with
such Member in reliance upon such Member's representations and covenants made in
this Section 3, which by its execution of this Agreement such Member hereby
confirms.
4. Representations of ANHI. ANHI hereby represents, warrants and covenants
to each Member, on the date hereof, as follows:
(a) Organization and Standing. ANHI is a corporation duly incorporated
and validly existing under the laws of the State of New York and is in good
standing under such laws. ANHI has furnished such Member and its counsel with
true, correct and complete copies of its Certificate of Incorporation, By-Laws
and all amendments thereto to the date hereof.
(b) Corporate Power. ANHI has all requisite corporate power and
authority to execute, deliver and perform its obligations under the terms of
this Agreement and to issue the Exchange Shares.
(c) Authorization. No shares of ANHI have been, or will be, issued
prior to the Exchange Transaction. All corporate action on the part of ANHI and
its directors necessary for the authorization, execution, delivery and
performance by ANHI of this
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Agreement and the consummation of the transactions contemplated herein, and for
the authorization, issuance and delivery of the Exchange Shares, has been taken.
The Agreement is a legal, valid and binding obligation of ANHI, enforceable in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally and (ii) the availability
of equitable remedies as such remedies may be limited by equitable principles of
general applicability (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Validity of Exchange Shares. The Exchange Shares have been duly
authorized for issuance and, when issued to such Member for the consideration
set forth herein, will be duly and validly issued, fully paid, non-assessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. At the Closing, such Member will acquire good and valid title
to the number of Exchange Shares determined by the Proration Calculation, in
each case free and clear of any and all liens, claims, charges and encumbrances,
restrictions on voting or alienation or otherwise, or adverse interests.
(e) No Conflict. The execution, delivery and performance by ANHI of
this Agreement and ANHI's compliance therewith and the issuance and sale of the
Exchange Shares in accordance with the terms of this Agreement does not and will
not result in any violation of and will not conflict with, or result in a breach
of, any of the terms of, or constitute a default under, any provision of state
or federal or other law to which ANHI is subject, ANHI's Certificate of
Incorporation or By-laws, or any mortgage, indenture, agreement, instrument,
judgment, decree, order, rule or regulation or other restriction to which ANHI
is a party or by which it is bound or to which its properties are subject.
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(f) Governmental Approvals. Except for any of the following required by
applicable federal and State securities laws, all of which have been or will be
obtained or made in a timely manner, no authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality is or will be
necessary for (i) the execution and delivery by ANHI of this Agreement, (ii) the
offer, issue, sale and delivery of the Exchange Shares, or (iii) the performance
by ANHI of its obligations under this Agreement or with respect to the Exchange
Shares.
(g) No Business Conducted. Except for preparation and filing of the IPO
Registration Statement and the authorization, execution and performance of this
Agreement, ANHI has conducted no business, owns no assets and has incurred no
liabilities.
(h) Reliance on Representations. This Agreement is made by such Member
with ANHI in reliance upon ANHI's representations and covenants made in this
Section 4, which by execution of this Agreement ANHI hereby confirms.
5. Members' Conditions of Closing. The transfer of a Member's Membership
Interest to ANHI is subject to the completion of the IPO Closing and to the
delivery to such Member (or, as to the Financed Members, to ASF pursuant to
Section 7(g) hereof) of stock certificates representing the Exchange Shares
issuable to such Member under this Agreement.
6. ANHI's Conditions of Closing. The issuance by ANHI of Exchange Shares to
a Member is subject to the completion of the IPO Closing.
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7. Certain Covenants of the Parties. (a) No Violation of Representations.
Neither ANHI nor any Member shall hereafter take any action which would cause
any representation or warranty of such party made herein to be untrue on or as
of the Effective Date.
(b) Registration of Exchange Shares. (i) As soon as practicable after
ANHI satisfies the requirements to register Common Stock on Form S-3 promulgated
under the Securities Act (expected to be 12 months after the IPO Closing), ANHI
shall file a registration statement on Form S-3 (the "Resale Registration
Statement") covering any and all Exchange Shares owned by all Class B Members
for which ANHI receives Registration Requests (as defined below). ANHI shall, at
least thirty (30) days prior to such filing, notify each Member in writing of
its intention so to do at such Member's address as it appears in the stock
records of ANHI (the "Filing Notice"). If a Member desires to include any or all
of such Member's Exchange Shares in the Resale Registration Statement, it shall
(within ten (10) days after delivery of the Filing Notice) provide ANHI with a
notice specifying the number of Exchange Shares, if any, it wishes to include in
such registration statement ("Registration Request"). Upon receipt of a
Registration Request, ANHI shall include such Exchange Shares among the
securities covered by the Resale Registration Statement. To the extent permitted
by law, ANHI agrees to pay all costs and expenses in connection with the
preparation and filing of the Resale Registration Statement, except underwriting
discounts and commissions attributable to the Exchange Shares registered by such
Member.
(ii) When ANHI files the Resale Registration Statement, the Resale
Registration Statement shall comply with the Securities Act and the rules and
regulations thereunder, and ANHI shall: (A) use its best efforts to cause the
Resale Registration Statement
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to become effective and remain effective for the period required to permit the
public offering and sale of the Exchange Shares covered by the Resale
Registration Statement (but not for more than 180 days following the effective
date of the Resale Registration Statement), and, for such period of time, and as
permitted by applicable rules and regulations, file amendments or supplements to
the Resale Registration Statement or related prospectus covering the Exchange
Shares as shall be necessary so that neither the Resale Registration Statement,
nor any related prospectus, nor any amendment or supplement to either thereof,
shall contain any material misstatement or omission and so that the Resale
Registration Statement, prospectus, amendment and supplement will otherwise
comply with all applicable legal requirements, (B) furnish to each Member such
reasonable number of copies of the Resale Registration Statement and any related
preliminary and final prospectuses, and any such amendments or supplements, as
each Member may request, (C) use its best efforts to register or qualify the
Exchange Shares of each Member included in the Resale Registration Statement
under the securities or "blue sky" laws of such states as each Member may
reasonably designate, to the extent that such registration or qualification
shall be required; provided, however, that ANHI shall not be required to
undertake such registration or qualification in any jurisdiction where it shall
be necessary for ANHI to execute a general consent to service or to qualify to
do business or otherwise subject itself to taxation by virtue of such
registration or qualification, and (D) indemnify and hold harmless each Member
and each underwriter (within the meaning of the Securities Act) acting in
connection with the offering or sale of securities by each Member, and each
person, if any, who controls (within the meaning of the Securities Act) each
Member or such underwriter, against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which each Member, such
underwriter or controlling person may become subject under the Securities Act or
under any federal or state
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securities law, or at common law, or otherwise, insofar as such losses, claims,
damages, expenses or liabilities arise out of or based upon an untrue statement
or an alleged untrue statement of a material fact contained in the Resale
Registration Statement, in any related prospectus or in any amendment, or
supplement to, either thereof, or arise out of or are based upon an omission or
an alleged omission to state in any thereof a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, provided, however, that the indemnity contained in this clause (D)
shall not apply to any such loss, claim, damage, expense or liability arising
out of or based upon any such untrue statement or omission made in reliance upon
and in conformity with written information furnished to ANHI by each Member or
by such underwriter or controlling person expressly for use in the preparation
of such registration statement, related prospectus, amendment or supplement.
(iii) Each Member whose Exchange Shares are included in the Resale
Registration Statement will indemnify ANHI, each of its directors, each of its
officers who has signed the Resale Registration Statement and each person, if
any, who controls (within the meaning of the Securities Act) ANHI against any
and all losses, claims, damages, expenses or liabilities to which ANHI, such
director, officer or controlling person may become subject under the Securities
Act or under any federal or state securities law, or at common law, or
otherwise, insofar as such losses, claims, damages, expenses or liabilities
arise out of or are based upon an untrue statement or an alleged untrue
statement of a material fact contained in the Resale Registration Statement, in
any related prospectus or in any amendment of, or supplement to, either thereof,
or arise out of or are based upon an omission or an alleged omission to state in
any thereof a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue
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statement or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in conformity with written information furnished to
ANHI by such Member expressly for use in the preparation of the Resale
Registration Statement, or any related prospectus, amendment or supplement.
(iv) Each Member whose Exchange Shares are included in the Resale
Registration Statement hereby agrees to cooperate to any reasonable extent with
ANHI in the preparation of the Resale Registration Statement, any related
prospectus, or any amendment or supplement to either thereof, referred to in
this Section 7(b), and to the extent such Member's Shares are to be included in
the Resale Registration Statement, to supply ANHI with such information relating
to such Member and to the proposed terms of the public offering concerning such
Member's Shares as is customarily required of a selling shareholder in a
registration statement such as the Resale Registration Statement.
(c) Effect of the Exchange Closing on ANCM. Effective on the Exchange
Closing:
(i) ANHI shall become the sole Member of ANCM;
(ii) All Schedules in the Operating Agreement referring to Members
shall be deemed amended to reflect the substitution of ANHI as the sole Class A
Member and the sole Class B Member of ANCM;
(iii) Management shall withdraw as Manager of ANCM;
(iv) ANHI, as holder of all of the Membership Interests in ANCM, will
vote to continue the business of the ANCM pursuant to the terms and conditions
of the Operating Agreement; and
(v) ANHI will be substituted as the new Manager of ANCM.
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(d) Tax Opinion. On or before June 30, 1998, ANHI shall furnish to each
Member an opinion of Xxxxxxx, Lippe, Goldstein, Wolf & Xxxxxxxxx, P.C., counsel
to ANHI, that the Exchange Transaction contemplated hereby will not be a taxable
event to such Member.
(e) Further Assurances. (i) The Members agree that they will at their
own expense do, execute and deliver, or will cause to be done, executed and
delivered, all such further acts, documents or instruments which shall be
necessary and appropriate to vest in or confirm as belonging to ANHI, its
successors and assigns, the Membership Interests assigned hereunder or which
ANHI may reasonably request from time to time to carry our the purposes and
intent of this Agreement.
(ii) ANHI agrees that it will at its expense do, execute and deliver,
or will cause to be done, executed and delivered, all such further acts,
documents or instruments which shall be necessary and appropriate to vest in or
confirm as belonging to each Member, such Member successors and assigns, the
Exchange Shares issuable to such Member hereunder or which such Member may
reasonably request from time to time to carry out the purposes and intent of
this Agreement.
(f) Determination of Value of Total Consideration. Each Member
acknowledges that the number of shares of Common Stock to be issued in the
Public Offering (the "Public Shares") and the price per share of the Public
Shares have not yet been determined and that the determination of such number
and price will affect the aggregate percentage of ANHI owned by all Members and
the market value of the Total Consideration but should not affect the amount of
the Total Consideration which such Member receives relative to the amounts
received by the other Members. Each Member further acknowledges and agrees that
the
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Class A Members will make the final determinations of such number and price,
that such determinations will be final and binding on all Members and that such
determinations shall not modify, limit or otherwise affect the obligations of
any Member under this Agreement, provided, that such determinations shall not
change the number (or the basis for calculating the number) of Shares issuable
to such Member pursuant to the Proration Calculation.
(g) Covenants Regarding Pledged Interests. Each Financed Member hereby
authorizes and directs ANCM to deliver to ASF copies of all information
pertaining to such Member's Proration Calculation and authorizes and directs
ANHI, upon issuance of such Financed Member's Exchange Shares, to deliver the
certificates representing such Exchange Shares to ASF. ASF agrees to accept and
hold such Exchange Shares as collateral to secure repayment of such Financed
Member's ASF Loan in substitution for such Financed Member's Pledged Interests.
Upon delivery to ASF of the certificates representing such Exchange Shares, the
ASF Lien on such Financed Member's Pledged Interest shall be deemed released,
terminated and of no further force and effect. Each Financed Member, ANHI and
ASF shall at its own expense do, execute and deliver, or will cause to be done,
executed or delivered, all such further acts, documents or instruments as shall
be necessary and appropriate, or which may reasonably be requested, to carry out
the purposes and intent of this paragraph (g).
(h) Lock-up Agreement. Each Member agrees to execute, upon request by
XXX, a lock-up agreement restricting sale of such Member's Exchange Sales for a
period of six months after the IPO Closing, substantially in the form annexed
hereto as Appendix C.
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8. Miscellaneous
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
(b) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof.
(c) Succession, Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of such
party's rights, interests, or obligations hereunder without the prior written
approval of the other parties.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then five
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient at the
addresses set forth on Appendix A hereto. Any party may send any
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notice, request, demand, claim, or other communication hereunder to the intended
recipient at the address set forth on Appendix A hereto using any other means
(including personal delivery, expedited courier messenger service, telecopier,
telex, ordinary mail or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient or actual delivery is
refused by the addressee upon presentation. Any party may change the address to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other parties notice in the manner herein set
forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(h) Amendments And Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
party alleged to be bound thereby. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. If in any jurisdiction, any provision of this
Agreement or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability without invalidating the remaining provisions hereof and
without affecting the
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validity or enforceability of such provision in any other jurisdiction or its
application to other parties or circumstances.
(j) Construction. Any reference to any federal, state or local statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. The parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant.
(k) Incorporation of Appendices. The Appendices identified in this
Agreement are incorporated herein by reference and made a part hereof.
(l) Specific Performance. Each of the Parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
sections or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter (subject to the provisions set forth in paragraph (m) of
this Section 8), in addition to any other remedy to which they may be entitled
at law or in equity.
19
(m) Submission to Jurisdiction. Each of the parties submits to the
jurisdiction of any state or federal court sitting in Nassau County, New York,
in any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court. Subject to paragraph (l) of this Section 8, each
party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other party with respect thereto. Parties expressly and irrevocably agree
(i) that they each waive any objection to venue in the Federal or state courts
located in the State of New York so that any action in law or equity in respect
of this Agreement and the transactions contemplated hereby may be brought and
maintained in any such court; and (ii) that service of process in any such
action may be effected against either party by certified or registered mail or
as may otherwise be permitted by applicable federal Rules of Civil Procedure or
rules of the Courts of the State of New York. In addition, each of the parties
hereto hereby expressly and irrevocably (x) waives in respect of any action in
any federal or State court located in the State of New York or any resulting
judgment any objection to the jurisdiction of any such court and (y) agrees not
to attempt to change the situs of such action on the ground that any other court
in any other jurisdiction is more suitable forum for the hearing and
adjudication of any claim or dispute raised in such action.
9. Revision Rights. Each Member acknowledges that ANCM has offered to such
Member the opportunity to rescind such Members' purchase of such Member's
Membership Interest and to recover the consideration paid or contributed by such
Member for such
20
Membership Interest with interest thereon, less the amount of any income
received thereon. By EXECUTION OF THIS AGREEMENT, SUCH MEMBER ELECTS NOT TO
RESCIND AND TO CONFIRM SUCH MEMBER'S PURCHASE OF SUCH MEMBERSHIP INTEREST.
[Remainder of this page intentionally left blank.]
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ARBOR NATIONAL HOLDINGS, INC. ARBOR NATIONAL COMMERCIAL
MORTGAGE, LLC
By: Arbor Management, LLC
By: /s/ Xxxx Xxxxxxx
----------------------------
Xxxx Xxxxxxx, President
By: /s/ Xxxx Xxxxxxx
------------------------------
Xxxx Xxxxxxx, President
ARBOR SECURED FUNDING, INC.
By: /s/ Xxxx Xxxxxxx
----------------------------
Xxxx Xxxxxxx, President
CLASS A MEMBERS:
/s/ Xxxx Xxxxxxx
------------------------------- XXXX XXXXXXX GRANTOR RETAINED ANNUITY TRUST
Xxxx Xxxxxxx
Trust pursuant to the TRUST By: /s/ Xxxx Xxxxxxx
AGREEMENT dated as of the 22nd day of -------------------------------
MARCH, 1994, made by XXXX Xxxx Xxxxxxx, Trustee
XXXXXXX and XXXX XXXXXXX, as
Grantors and XXXXXXX X. XXXXX as
Trustee. ARBOR MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx Xxxxxxx
---------------------------- -------------------------------
Xxxxxxx X. Xxxxx, Trustee Xxxx Xxxxxxx, President
22
CLASS B MEMBERS:
/s/ Xxxxxx X. Xxxx /s/ Xxxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxxx X. Xxxx Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
------------------------------- -------------------------------
Xxxxxx Xxxxxxxx Xxxxxx Xxxxxxxx
/s/ R. Xxxxxx Xxxxxx /s/ Xxxx Xxxxxx
------------------------------- -------------------------------
R. Xxxxxx Xxxxxx Xxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxxxx X. Xxxxxx Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxxxx
------------------------------- -------------------------------
Xxxx Xxxxxxxxx Xxxxxx Xxxxxxxxx
/s/ Xxxx Xxxxxxxx /s/ Xxxxx Xxxxx
------------------------------- -------------------------------
Xxxx Xxxxxxxx Xxxxx Xxxxx
/s/ Xxxxx Xxxxx /s/ Xxxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxx Xxxxx Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxx /s/ Xxxxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxxx Xxxxxx Xxxxxxx Xxxxxxx
/s/ Xxxx X. Xxxxxxxxx, Xx.
-------------------------------
Xxxx X. Xxxxxxxxx, Xx.
/s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx
23
/s/ Xxxxxx Xxxxxxx /s/ Xxxxx Xxxxx
------------------------------- -------------------------------
Xxxxxx Xxxxxxx Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxx /s/ X. Xxx Xxxxxxxx
------------------------------- -------------------------------
Xxxxxx X. Xxxx X. Xxx Xxxxxxxx
24
APPENDIX A
Names and Addresses of Members
------------------------------
Name Address/Telephone/Telecopier Financed (Y/N)
---- ---------------------------- --------------
CLASS A MEMBERS:
Arbor Management, LLC 000 Xxxxx Xxxxxxxx Xxxx. Xx
Xxxxxxxxx, XX 00000
000 000-0000
000 000-0000 Fax
Xxxx and Xxxx Xxxxxxx 000 Xxxxx Xxxxxxxx Xxxx. No
Family Trust Xxxxxxxxx, XX 00000
000 000-0000
000 000-0000 Fax
Xxxx Xxxxxxx Grantor 333 Xxxxx Xxxxxxxx Blvd. No
Retained Annuity Trust Xxxxxxxxx, XX 00000
000 000-0000
000 000-0000 Fax
Xxxx Xxxxxxx 00 Xxxxxx Xxxx Xx
Xxxxx Xxxxx, XX 00000
000 000-0000
000 000-0000 Fax
CLASS B MEMBERS:
Xxxxxx X. Xxxx 000 Xxxxxxx Xxxxxxx Xx
Xxxxxx Xxxx, XX 00000
000 000-0000
000 000-0000 Fax
Xxxxxx Xxxxxxxx 00 Xxxxxx Xxxxx Xxx
Xxxxxxxxx, XX 00000
000 000-0000
000 000-0000 Fax
R. Xxxxxx Xxxxxx 56 Xxxxxx Place Yes
Xxxxxxxxx, XX 00000
000 000-0000
Name Address/Telephone/Telecopier Financed (Y/N)
---- ---------------------------- --------------
Xxxxxxx Xxxxxx 000 Xxxx Xxxx Xxxxxx Xxx
Xxxx Xxxxx, XX 00000
000 000-0000
Xxxx Xxxxxxxx 00 Xxxxxx Xxxxx Xx
Xx. Xxxxx, XX 00000
000 000-0000
Xxxx Xxxxxxxx 00 Xxxxxx Xxxx Xxx
Xx. Xxxxx, XX 00000
000 000-0000
Xxxxx Xxxxx 00 Xxxxxxx Xxxx Xx
Xxxxxx, XX 00000
000 000-0000
Xxxxxx Xxxxxx 0000 Xxxxxxx Xxxx Yes
X.X. Xxx 000
Xxxxxx, XX 00000
000 000-0000
Xxxx X. Xxxxxxxxx, Xx. 0 Xxxxxxx Xxxx Yes
Xxxxxx, XX 00000
000 000-0000
Xxxxx Xxxxxxx 0000 Xxxxxxxxxxx Xxxxx Xx
Xxxxxx, XX 00000
000 000-0000
Xxxxx Xxxxxx 4943 Stony Ford Yes
Xxxxxx, XX 00000
000 000-0000
Xxxxxx Xxxxxxx 00 Xxxxxx Xxxx. Xxx
Xxxxxxxx, XX 00000
000 000-0000
000 000-0000 Fax
Xxxxxx Xxxxxxxx 000 Xxxxxxx Xxxxxx Xxx
Xxx Xxxxxxxxx, XX 00000
000 000-0000
Name Address/Telephone/Telecopier Financed (Y/N)
---- ---------------------------- --------------
Xxxx Xxxxxx 00 Xxxxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
000 000-0000
Xxxx Xxxxxxx 000 Xxxxxx Xxxxxxx Xx
Xx. Xxxxx, XX 00000
000 000-0000
000 000-0000 Fax
Xxxxxx Xxxxxxxxx 00 Xxxxxxxxx Xxxx Xxxx Xxx
Xx. Xxxxx, XX 00000
000 000-0000
000 000-0000
Xxxxx X. Xxxxx III 77 Trent Court Yes
Xxxx Xxxxx, XX 00000
000 000-0000
Xxxxxx Xxxxxxx 000 Xxxxx Xxxxx Xxxxxx Xxx
Xxx Xxxxxxxxx, XX 00000
000 000-0000
Xxxxxxx Xxxxxxx 00 Xxxxxx Xxxx Xxx
Xxxxxxxxx Xxxxxx, XX 00000
000 000-0000
Xxxxxx Xxxxxxx 000 Xxxxxxxx Xxx
Xxxxxx Xxxxxx, XX 00000
000 000-0000
Xxxxxx X. Xxxx 00 Xxxx Xxxxxx Xxx
Xxxxx Xxxxxxx, XX 00000
000 000-0000
Xxxxx Xxxxx 0 Xxxxx Xxxx Xxx
Xxxxxxxxxx, XX 00000
000 000-0000
X. Xxx Xxxxxxxx 0000 Xxxxxxxxxx Xxxxx Xxxx Xx
Xxxxxxx, XX 00000
000 000-0000
APPENDIX B
Draft Preliminary Prospectus
APPENDIX C
FORM OF LOCK-UP LETTER AGREEMENT
Xxxxxx Brothers Inc.
Friedman, Billings, Ramsay & Co., Inc.
As Representatives of the
several underwriters
c/x Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, XX 00000
Dear Sirs:
The undersigned understands that Xxxxxx Brothers Inc. and Friedman,
Billings, Xxxxxx & Co., Inc., as representatives (the "Representatives") of the
several underwriters (the "Underwriters") propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") providing for the purchase by the
Underwriters, including the Representatives, of shares (the "Shares") of Common
Stock, par value $__ per share (the "Common Stock"), of Arbor National Holdings,
Inc. (the "Company"), and that the Underwriters propose to reoffer the Shares to
the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Representatives, the undersigned will not,
directly or indirectly, (1)* offer for sale, sell, pledge, or otherwise dispose
of (or enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock (including, without limitation, shares of Common
Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock (other than the Shares) owned by the undersigned on the date of execution
of this Lock-Up Letter Agreement or on the date of the completion of the
Offering, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 180 days after
the date of the final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement does not become
effective, or if the Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares, we
will be released from our obligations under this Look-Up Letter Agreement.
The undersigned understands that the Company, the Underwriters and the
stockholders selling shares in the Offering will proceed with the Offering in
reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
Very truly yours,
------------------------------------------
Name of Holder
------------------------------------------
Signature
Dated:
----------------------------
* except for shares of Common Stock pledgd to Arbor Secured Funding, Inc. as
of the date hereof.
