ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), is made and entered into
the lst day of May, 2000, by and between Flamingo Financial Services, Inc., a
Florida corporation, ("Seller" or "Flamingo") and its sole Stockholders, Xxxx
Xxxxxxxx and Xxxxxxxx Xxxxxxxx ("Selling Stockholders"), and CFI Mortgage Inc.,
a Delaware corporation, West Palm Beach, Florida ("Buyer" or "CFIM").
WITNESSETH:
WHEREAS, Seller owns certain properties and operates two office
buildings thereon located at: 0000 X. Xxxxxx Xxx., Xxxxxxxxxx, Xxxxxxx, 00000
and 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx, 00000 as described on Exhibits A and
B attached hereto and made part hereof (The assets listed in Section 2.01,
including Exhibits A and B are hereinafter collectively referred to as the
"Assets"); and
WHEREAS, Buyer desires to purchase the Assets and contribute such
Assets to its newly formed wholly owned subsidiary, First United MortgageBanc,
Inc ("FUMB"); and
WHEREAS, Seller desires to sell and assign such Assets in consideration
for stock of CFIM, upon and in accordance with the terms and conditions
contained herein.
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NOW, THEREFORE, in consideration of the premises and the covenants,
agreements, representations and warranties hereinafter contained, the parties
hereto mutually agree as follows;
ARTICLE I
PRELIMINARY MATTERS
Section 1.01. Recitals. The parties acknowledge the recitals herein
above set forth in the preamble are correct, are, by this reference,
incorporated herein and are made a part of this Agreement.
Section 1.02. Exhibits. Exhibits (which are documents to be executed
and delivered at the Closing by the party identified therein or in the provision
requiring its delivery or statements setting forth information about party
identified in each such Exhibit) referred to herein and annexed hereto are, by
this reference, incorporated herein and made a part of this Agreement, as if set
forth fully herein.
Section 1.03. Use of words and phrases. Natural persons may be
identified by last name, with such additional descriptors as may be desirable.
The words "herein," "hereby," "hereunder," "hereof," "herein before,"
"hereinafter" and any other equivalent words refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision hereof. The
words, terms and phrases defined herein and any pronoun used herein shall
include the singular, plural and all genders. The word "and" shall be construed
as a coordinating conjunction unless the context clearly indicates that it
should be construed as a copulative conjunction.
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Section 1.04. Accounting terms. All accounting terms not otherwise
defined herein shall have the meanings assigned to them under generally accepted
accounting principles unless specifically referenced to regulatory accounting
principles, Specifically, the calculation of net asset value shall be off set by
any and all legal costs, fines, liens, settlements and or judgments,
Section 1.05. Calculation of time lapse or passage; Action required on
holidays. When a provision of this Agreement requires or provides for the
calculation of the lapse or passage of a time period, such period shall be
calculated by treating the event which starts the lapse or passage as zero;
provided, that this provision shall not apply to any provision which specifies a
certain day for action or payment, e.g. the first day of each calendar month.
Unless otherwise provided, the term "month" shall mean a period of thirty days
and the term "year" shall mean a period of 360 days, except that the term
"calendar year" shall mean the actual calendar year period. If any calendar day
on which action is required to be taken or payment is required to be made under
this Agreement is not a Business Day (Business Day being a day on which national
banks are open for business where the actor or payor is located), then such
action or payment shall be taken or made on the next succeeding Business Day.
Section 1.06. Use of titles, headings and captions. The titles,
headings and captions of articles, sections, paragraphs and other subdivisions
contained herein are for the purpose of convenience only and are not intended to
define or limit the contents of said articles, sections, paragraphs and other
subdivisions.
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ARTICLE II: PURCHASE, SALE
AND ASSIGNMENT OF ASSETS
Section 2.01 Purchase, Sale and Assignment of Seller's Assets. Except
as limited below and subject to all of the terms, conditions, covenants,
agreements, representations, warranties and indemnification's set forth in this
Agreement, as of the Closing Date (as defined in Article Two), Buyer shall
purchase, acquire and accept from Seller, and Seller shall sell, transfer,
convey, assign and deliver to Buyer all right, title, interest and benefit in
the Assets as follows:
(a) The property at 0000 X. Xxxxxx Xxx,, Xxxxxxxxxx, Xxxxxxx,
00000 and the property at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx, 00000,
having legal descriptions as is set forth on Exhibit A and Exhibit B
respectively (collectively the "Buildings").
(b) All fixtures located on or attached to the Buildings; and
(c) An assignment of all contract rights and leases, including
specifically the two (2) leases to MG Investments, Inc. for the
Buildings (the "Leases").
All of the Assets shall be transferred to Buyer free and clear of all
liabilities, liens, obligations, security interests, and encumbrances, except as
to liabilities specifically assumed.
2.02 Assumption of Mortgages. Subject to all of the terms, conditions,
covenants, agreements, representations, warranties and indemnification's set
forth in this
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Agreement, as of the Closing Date, Buyer shall execute an Instrument of
Assumption of Mortgages (the "Assumption Instrument") whereby Buyer agrees to
assume liability for and pay in full Sellers two mortgages, aggregating
approximately one million five hundred thousand dollars on the Buildings, as
attached hereto as Exhibit C, guaranteed by the Selling Stockholders, for which
liability is being assumed by Buyer (the "Assumed Mortgages"). (It is understood
that the two mortgages are not legally assumable by Buyer.) With respect to the
Assumed Mortgages, the Buyer agrees to refinance the Assumed Mortgages as soon
as possible (which may take up to two years given the Buyer's financial
position. With respect to the claim against Castle Construction in connection
with the Xxxxxx Xxxx Building, it is agreed that if any monies are recovered by
Flamingo or the Selling Shareholders, such funds shall be remitted to either
Flamingo or selling shareholders; however, if Castle Construction is owed
additional amounts for work on the Xxxxxx Xxxx Building, Flamingo and/or the
Selling Shareholders shall be solely responsible and shall indemnify CFIM
against any claims, and expenses resulting therefrom.
Section 2.03 Transaction. In accordance with the terms of this
Agreement, on the Closing Date, (a) Flamingo will assign, transfer and deliver
to CFIM all of the Assets, including the Buildings as described on Exhibits A
and B; and (b) CFIM will issue and deliver to the one share of preferred stock
of CFIM ("CFIM Preferred Stock") and common stock purchase warrants exercisable
for the purchase of 750,000 shares of CFIM common stock ("Warrants") on the
terms set forth below. Not more than twenty four (24) months after the Closing
(such period being determined by the time required to complete the appropriate
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and necessary accounting), CFIM will deliver to Flamingo a second share of CFIM
Preferred Stock. The cross deliveries at the Closing are referred to herein as
the "Sale".
Section 2.04. The CFIM Stock and Warrants.
(a) One share certificate of CFIM Preferred Stock, which is
delivered at the Closing, will have a stated value equal to the appraised value
of the Assets as set forth in Section 2.01, minus all liens and liabilities.
This share certificate of CFIM Preferred Stock shall be convertible into such
number of shares by dividing the value of the preferred stock by six equal
three-month periods. The number of shares of common stock into which the portion
of the preferred stock which is then convertible can be converted is determined
by dividing of the convertible amount of stated value by the average of the
closing bid quotation or closing price per share, as the case may be, over the 5
trading days preceding the notice of conversion. Any amount not converted in a
previous three-month period may be carried into the next period. (b) The second
share certificate, which is delivered after the Closing, will have a stated
value equal to two and one half (2 and 1/2) times "FUMB's" net income, before
depreciation and amortization ("Net Profits"), during the eighteen month period
commencing with the month following the Closing. In calculating Net Profits,
"FUMB" shall be allocated not more than 50% of holding company expenses and all
other expenses allocated to it shall relate directly to "FUMB". Each issue of
Preferred Shares Certificates will not have any preference to payment of
dividends or distributions except upon liquidation. In the event any dividends
or distributions are paid or made on CFIM's common stock, the number of shares
into which the CFIM Preferred Stock would be convertible on the record date for
such dividend and distribution shall be determined and holders of the CFIM
Preferred Stock
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shall participate in such dividend or distribution as if the CFIM Preferred
Stock had been converted into common stock and will not have any preference to
payment of dividends or distributions except upon liquidation. In the event any
dividends or distributions are paid or made on CFIM's common stock, the number
of shares into which the CFIM Preferred Stock would be convertible on the record
date for such dividend and distribution shall be determined and holders of the
CFIM Preferred Stock shall participate in such dividend or distribution as if
the CFIM Preferred Stock had been converted into common stock.
(b) Each Warrant will entitle the holder to purchase one share
of CFIM's common stock at an exercise price of $.15 for the initial 250,000
shares, then $.35 for the next 250,000 shares and then $.50 for the next 250,000
shares, for a period ending five years after the issue date. The Warrants shall
be non-transferable and shall be adjusted for share divisions, combinations and
recapitalizations. The Warrants will be exercisable as of the date of execution
of this Agreement. The Warrants and/or the underlying shares of common stock
represented by the Warrants and the common shares underlying the first issuance
of preferred stock shall enjoy piggyback registration rights at the next
available registration by CFIM.
Section 2.05 Management and operations following the Sale. Following
the Sale, "FUMB's" sole director and president shall be Xxxxxxx Xxxxxx who shall
report to the Board of Directors of CFIM. FUMB shall be operated totally
separately and independently from the Selling Stockholders and their affiliates.
The selling shareholders have the right to appoint a designee to the board of
directors of CFIM.
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Section 2.06. Press releases. Neither party will issue a press release
regarding the subject matter of this Agreement and the transaction contemplated
hereby without the prior approval thereof by the other party and its counsel;
provided, that the filing of reports pursuant to the Exchange Act by CFIM and
the issue of a press release in connection therewith shall be the entire
responsibility and prerogative of CFIM.
Section 2.07 Transaction costs. Each party shall pay all costs and
expenses which it incurs in connection with this Agreement and the transactions
contemplated hereby.
Section 2.08 Merger Prior to Sale. Prior to the closing of the Sale
contemplated by this Agreement, the Selling Stockholders shall have caused
Premier Realty Corporation ("PMCR"), which is also owned 100% by the Selling
Stockholders, to merge (including all of PMCR's assets and the Buildings) into
Flamingo, a new Florida corporation, pursuant to the separate Agreement and Plan
of Merger ("the Merger Agreement") attached as Exhibit D hereto and incorporated
herein.
ARTICLE III
CLOSING OF THE TRANSACTION
Section 3.01. Location, date and time of the Closing. The Closing of
the Sale shall be take place as soon as practicable on or before May 15, 2000,
unless extended by mutual agreement of the parties (the "Closing").
Section 3.02. The Selling Stockholders' and Flamingo's obligations at
Closing. At the Closing, the Selling Stockholders and Flamingo will deliver to
CFIM:
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(a) Such deeds, bills of sale with covenants of warranty, endorsements,
assignment of leases, assignments, title insurance, and other good and
sufficient instruments of transfer and conveyance, as Buyer may reasonably
request, as shall be effective to vest in Buyer good and marketable title to the
Assets, free of all liens or liabilities, except the Assumed Mortgages; all
books and records pertaining to the Assets and Assumed Mortgages; all such other
certificates, documents, instruments resolutions and consents as are appropriate
for the consummation of the transactions contemplated by this Agreement and as
Buyer may reasonably request.
Section 3.03. Flamingo's obligations at Closing. At the Closing,
Flamingo will deliver to CFIM:
(a) Officers' Certificates and Secretary's Certificates of Flamingo, in
the respective forms of Exhibit "F" and Exhibit "G", together with a copy of a
certificate of merger of PMCR into Flamingo, which shall be the surviving entity
pursuant for the terns of the Merger Agreement.
Section 3.04. CFIM's obligations at Closing. At the Closing, CFIM will
deliver to Flamingo:
(a) Certificates representing the one share of CFIM Preferred Stock
deliverable at Closing and the Warrants, in such names and such denominations as
advised by Selling Stockholders not less than two Business Days prior to the
Closing of the Sale.
(b) Officers' Certificates and Secretary's Certificates of CFIM, in the
respective forms of Exhibit "F" and Exhibit "G"
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(c) Instruments of assumption as the Seller may reasonably request,
with respect to the Assumed Mortgages and, all such other certificates,
documents, instruments, resolutions, consents and papers as are appropriate for
the consummation of the transactions contemplated by this Agreement and as
Seller may reasonably request.
Section 3.05. Closing memorandum and receipts. As evidence that all
parties deem the Closing to have been completed and the transaction contemplated
by this Agreement to have been consummated, the parties jointly will execute and
deliver a Closing memorandum acknowledging such completion and consummation.
Flamingo, upon receiving shares of the CF1M Stock, as set forth above, will
execute and deliver a receipt therefor to CFIM.
Section 3.06. Waiver of conditions. Notwithstanding Section 11.03, any
condition to the Closing which is to the benefit of any party and which is not
satisfied prior to or at the Closing will be deemed to be waived by the
benefited party or otherwise satisfied and waived by virtue of that party
executing the Closing memorandum, except to the extent any such unsatisfied or
unperformed condition is expressly preserved in the Closing memorandum for
satisfaction or performance after the Closing.
Section 3.07. Further assurances. At any time and from time to time
after the Closing of the Sale, at the reasonable request of any party and
without further consideration, any other part(ies) shall execute and deliver
such other instruments and documents as such requesting party may deem
reasonably desirable or necessary to complete the transactions contemplated by
this Agreement.
Section 3.08. Conditions precedent to CFIM's obligations. All
obligations of CFIM hereunder are subject, at the option of CFIM, to the
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fulfillment of each of the following conditions at or prior to the Closing, and
the Selling Stockholders and Flamingo shall exert their best efforts to cause
each such condition to be so fulfilled:
(a) All representations and warranties of the Selling Stockholders and
Flamingo contained herein or in any document delivered pursuant hereto,
specifically including all financial and litigation information with respect to
the Assets, shall be true and correct in all material respects when made and
shall be deemed to have been made again at and as of the date of the Closing of
the Sale, and shall then be true and correct in all material respects except for
changes in the ordinary course of business after the date hereof in conformity
with the covenants and agreements contained herein.
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by the Selling Stockholders and Flamingo, at or
before the Closing shall have been duly and properly performed in all material
respects to CFIM's reasonable satisfaction,
(c) Since the date of this Agreement there shall not have occurred any
material adverse change in the condition of the Assets of Flamingo.
(d) All documents required to be delivered to CFIM at or prior to the
Closing shall have been so delivered, specifically a title insurance commitment
shall be delivered by Flamingo to CFIM showing good and marketable title to the
Buildings and related property which is acceptable to CFIM.
(e) The merger of PMCR into Flamingo shall have occurred with Flamingo
as the surviving entity (holding good title to all Assets previously held by
PMCR) pursuant to the terms of the Merger Agreement between them.
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(f) Flamingo shall have obtained votes or written consents to the Sale
where the vote or consent of any other party (including holders of Flamingo's
equity securities, all of whom shall have waived any statutory appraisal rights)
may, in the view of CFIM's counsel, be required for or as a consequence of the
Sale, including any estoppel letters, consents or similar documents from tenants
of Flamingo.
(g) None of the Assets of Flamingo shall have suffered or incurred any
material damage, destruction or loss (not fully covered by insurance).
Section 3.09. Conditions precedent to the Selling Stockholders' and
Flamingo's obligations. All obligations of the Selling Stockholders and Flamingo
at the Closing are subject, at the option of Flamingo and of the Selling
Shareholders, to the fulfillment of each of the following conditions at or prior
to the Closing, and CFIM shall exert its best efforts to cause each such
condition to be so fulfilled.
(a) All representations and warranties of CFIM contained herein or in
any document delivered pursuant hereto shall be true and correct in all material
respects when made and as of the Closing.
(b) All obligations required by the terms of this Agreement to be
performed by CFIM at or before the Closing shall have been duly and properly
performed in all material respects.
(c) All documents required to be delivered to Selling Shareholders at
or prior to the Closing shall have been so delivered.
(d) CFIM shall have obtained written consents to the transaction
contemplated by this Agreement where the consent of any other party may, in the
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view of Selling Shareholders' counsel, be required for or as a consequence of
the transactions contemplated hereby.
(e) None of the Assets or business of CFIM shall have suffered or
incurred, on a consolidated basis, a material damage, destruction or loss (not
fully covered by insurance) and which has a materially adverse affect on their
respective business and operations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. The Selling Stockholders' and Flamingo's representations
and warranties. The Selling Stockholders and Flamingo, jointly and severally,
represent and warrant to CFIM that:
(a) Flamingo is duly incorporated and existing corporation in good
standing under the laws of Florida, has full corporate power to execute and
deliver this Agreement, is qualified and in good standing as a foreign
corporation in every jurisdiction where the conduct of its business or the
nature of its properties require it to be qualified and has delivered to CFIM
true copies of its Articles of Incorporation, bylaws and the records of
proceedings of its board of directors and stockholders since inception.
(b) Flamingo has the power to conduct its business as it is now being
conducted and to own and lease its properties shown on its most recent balance
sheet and used in the conduct of its business.
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(c) This Agreement has been duly and validly authorized, executed and
delivered by Flamingo and constitutes the legal, valid and binding obligation of
Flamingo enforceable against it in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of,
relating to or affecting stockholders and creditors rights generally and to
general equitable principles.
(d) The execution of this Agreement and consummation of the transaction
contemplated hereby does not conflict with and will not result in any adverse
consequences to or breach of any agreement, mortgage, instrument, judgment,
decree, law or governmental regulation, permit or authorization by Flamingo or
in the loss, forfeiture or waiver of any rights or franchise owned by Flamingo,
from which Flamingo benefits or which is desirable in the conduct of Flamingo's
business or Assets.
(e) As a result of the Merger, Flamingo has acquired all assets and
liabilities of PMCR, including the Assets and, since December 31, 1999 no
material transfers of assets of PMCR has occurred, except by effect of the
Merger.
(f) Except for such actions as may have been taken, no further action
by or before any governmental or quasi-governmental body or authority of the
United States of America or any state or subdivision thereof or any
self-regulatory body to which Flamingo is subject is required in connection with
the execution and delivery of this Agreement by Flamingo and the consummation of
the transactions contemplated hereby.
(h) The information the Selling Stockholders and Flamingo have
delivered to CFIM relating to the Assets of Flamingo and PMCR was, on the date
reflected in each such item of information accurate in all material respects
and, such information at the date hereof taken as a whole provides full and fair
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disclosure of all material information relating to Flamingo and PMCR and does
not omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(i) Flamingo is a newly formed Florida corporation into which PMCR has
recently has recently been merged.
(j) Flamingo and PMCR's financial statements delivered to CFIM have
been prepared in accordance with generally accepted accounting principles
consistently applied and maintained throughout the periods indicated, with
respect to the fiscal years ended 1998, and PMCR's interim financial statements
through December 31, 1999, and fairly present the financial condition of PMCR's
Assets at the dates and indicated.
(k) Flamingo, by reason of the Merger with PMCR, has good, marketable
and insurable title to all of the Assets which currently Flamingo owns,
including, without limitation, those reflected in its books and records and in
the balance sheet. None of the Assets are subject to any mortgage, pledge, lien,
charge, security interest, encumbrance, restriction, lease, license, easement,
liability or adverse claim of any nature whatsoever, direct or indirect, whether
accrued, absolute, contingent or otherwise, except as expressly set forth herein
or part of the Assumed Mortgages. Flamingo's primary Assets are the Buildings at
0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx, and 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxx and, as of March 1, 2000, the Buildings are under leases to MG
Investments, Inc,, an affiliate of the Selling Stockholders. (A copy of the
Leases have been delivered to CFIM.) The Leases are current, valid, in effect
and fully enforceable according to their terms. All of the Assets owned by
Flamingo are in good operating condition and repair.
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(1) All of the contracts, agreements, leases, licenses and commitments
of Flamingo relative to the Assets (other than those which have been fully
performed), copies of all of which have been delivered to CFIM, are valid and
binding, enforceable in accordance with their respective terms, in full force
and effect and there is not thereunder any existing default or event, which
after the giving of notice or lapse of time or both, would constitute a default
or result in a right to accelerate or loss of rights and none of such contracts,
agreements, leases, licenses and commitments is, either when considered singly
or in the aggregate with others, unduly burdensome, onerous or materially
adverse to Flamingo's Assets.
(m) There is no claim, legal action, suit, arbitration, governmental
investigation, or other legal or administrative proceeding, nor any order,
decree or judgment in progress, pending or in effect or to the Selling
Stockholders or Flamingo's knowledge threatened, against or relating to the
Assets.
(n) All taxes, including without limitation, income, property, special
assessments, sales, use, or other taxes, imposed by the United States or any
state, municipality, subdivision, authority, which are due and payable, and all
interest and penalties thereon, unless disputed in good faith in proper
proceedings and reserved for or set aside, relative to the Assets have been paid
in full and all tax returns required to be filed in connection therewith have
been accurately prepared and timely filed.
Section 4.02. CFIM's representations and warranties. CFIM represents
and warrants to Flamingo and to the Selling Stockholders that:
(a) CFIM is a duly incorporated and existing corporation in good
standing under the laws of its state of incorporation, has full corporate power
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to execute and deliver this Agreement, is qualified and in good standing as a
foreign corporation in every jurisdiction where the conduct of its business or
the nature of its properties require it to be qualified.
(b) This Agreement has been duly and validly authorized, executed and
delivered by CFIM and constitutes the legal, valid and binding obligation of
CFIM enforceable against CFIM in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of,
relating to or affecting shareholders and creditors rights generally and to
general equitable principles.
(c) The CFIM Preferred Stock, when issued by CFIM and authenticated and
delivered by its transfer agent, as contemplated by this Agreement, will be duly
and validly authorized, are validly issued and fully paid and non-assessable.
(d) Except for such actions as may have been taken, no further action
by or before any governmental body or authority of the United States of America,
including Federal Bankruptcy Court or any state thereof, is required in
connection with the execution and delivery of this Agreement by CFIM and the
consummation of the transactions contemplated hereby.
(e) The information CFIM has delivered to Flamingo and the Selling
Stockholders was on the date reflected in each such item of information accurate
in all material respects and such information at the date hereof, as a whole,
did not contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; subject in all
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respects to other disclosures made to the Selling Stockholders and to
information and reports filed by CFIM under the Securities Exchange Act and in
U.S. Bankruptcy Court.
Section 4.03. Nature and survival of representation and warranties;
Remedies. All statements of fact contained in this Agreement, any certificate
delivered pursuant to this Agreement, or any letter, document or other
instrument delivered by or on behalf of the Selling Shareholders, Flamingo or
CFIM and their respective officers, pursuant to the terms of this Agreement
shall be deemed representations and warranties made by the Selling Shareholders,
Flamingo and CFIM, respectively as the case may be, to each other under this
Agreement. For purposes of this Section 4.03 and Section 10.01 only, any party
or other person seeking to enforce, or claiming the benefit of, any
representation and warranty under this Agreement is called a Claimant, and any
party or other person against whom a right is claimed is called a Defendant. All
representations and warranties of the parties shall survive the Closing and all
inspections, examinations or audits on behalf of the parties; provided, however,
that all representations and warranties shall terminate and expire, and be
without further force and effect whatever from and after the three years from
the date hereof, and neither CFIM, Flamingo nor the Selling Shareholders shall
have any liability whatsoever on account of any inaccurate representation or
warranty or for any breach of warranty, unless a Claimant shall, on or prior to
the expiration of such period, serve written notice on a Defendant, with a copy
to the Defendant's counsel, setting forth in reasonable detail the breach and
any direct, incidental or consequential damages (including amounts) the Claimant
may have suffered as a result of such breach.
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ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of business prior to Closing.
(a) From the date hereof to the Closing, Flamingo will conduct its
business and affairs only in the ordinary course and consistent with its prior
practice and shall maintain, keep and preserve its Assets in good condition and
repair and maintain insurance thereon in accordance with present practices, it
will use its best efforts to cooperate and use reasonable efforts to obtain the
consent of any lender, landlord, tenant, or other party to any lease or contract
with Flamingo, where the consent of such landlord or other party may be required
by reason of the transactions contemplated hereby.
(b) From the date hereof to the Closing, Flamingo shall not (i) dispose
of any of its Assets, (ii) engage in any extraordinary transactions without
CFIM's prior approval, including but not limited to, directly or indirectly,
soliciting, entertaining, encouraging inquiries or proposals or entering into
negotiation or agreement with any third party for any lease, sale of Assets by
Flamingo,
Section 5.02. Notice of changes in information. Each party shall give
the other party prompt written notice of any change in any of the information
contained in their respective representations and warranties made in Article IV,
or elsewhere in this Agreement, or the exhibits and schedules referred to herein
or any written statements made or given in connection herewith which occurs
prior to the Closing.
Section 5.03. Notice of extraordinary changes. The Selling Stockholders
and/or Flamingo shall advise CFIM with respect to any of the following outside
of ordinary course of business or which are materially adverse business or
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status of the Assets, including, without limitation, any litigation, regulatory
action, or claims, or is likely to result in a breach by the Selling
Shareholders or Flamingo of any representations, warranties or covenants
contained in this Agreement.
Section 5.04. Access to information and documents. Upon reasonable
notice and during regular business hours, each party will give the other party,
its attorneys, accountants and other representatives full access to its
personnel (subject to reasonable approval as to the time thereof) and all
properties, documents, contracts, books and records and will furnish copies of
such documents (certified by officers, if so requested) and with such
information with respect to its business, operations, affairs and prospects
(financial and otherwise) as it may from time to time request, and the party to
whom the information is provided will not improperly disclose the same prior to
the Closing. Each party will afford the other party an opportunity to ask
questions and receive answers thereto for purposes of due diligence. Any such
furnishing of such information or any investigation shall not affect that
party's right to rely on the other party's representations and warranties made
in this Agreement or in connection herewith or pursuant hereto. The Selling
Stockholders acknowledge that information which they receive regarding CFIM and
its subsidiaries may include material non public information, their disclosure
of which to third parties or their purchase or sale of CFIM's common stock in
the public securities markets could result or constitute in violations of the
federal securities laws.
Section 5.05. Cooperation by the parties. Each party hereto shall
cooperate and shall take such further action as may be reasonably requested by
any other party in order to carry out the provisions, and purposes and
transactions contained in this Agreement.
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ARTICLE VI
SECURITIES LAW MATTERS AND STATUS OF CFIM STOCK
Section 6.01. Unregistered CFIM Stock. The Selling Stockholders and
Flamingo acknowledge that the CFIM Preferred Stock delivered as contemplated by
this Agreement, and the underlying CFIM common stock into which it is
convertible, is not being registered under the Federal Securities Act of 1933,
as amended, ("Securities Act") and the securities laws of the Stockholders'
state of residence, and that neither the CFIM Preferred Stock nor CFIM common
stock is transferable, except as permitted under various exemptions contained in
the Securities Act and applicable state securities law. The CFIM Preferred Stock
is not being issued in CFIM's Bankruptcy proceeding, but pursuant to a private
placement of securities. The provisions contained in the following sections are
intended to ensure compliance with the Securities Act and applicable state
securities law. The Selling Stockholders represent and warrant to CFIM that they
are "accredited investors" within the meaning of the Securities Act and
understand that CFIM intends to rely upon this representation.
Section 6.02. No transfers in violation of Securities Act, The Selling
Stockholders and Flamingo agree not to offer, sell, assign, pledge, hypothecate,
transfer or otherwise dispose of the CFIM Preferred Stock and CFIM common stock,
except after full compliance with all of the applicable provisions of the
Securities Act and applicable state securities law.
21
Section 6.03. Investment intent. The Selling Stockholders and Flamingo
represent and warrant to and covenant with CFIM that they are acquiring the CFIM
Preferred Stock for their own account for investment, and not with a view to
resale or other distribution; that they currently have no intention of selling,
assigning, transferring, pledging, hypothecating or otherwise disposing of all
or any part thereof at any particular time, for any particular price, or on the
happening of any particular event or circumstance; and they acknowledge that
CFIM is relying on the truth and accuracy of their covenants, warranties and
representations in issuing the CFIM Preferred Stock without first registering it
under the Securities Act.
Section 6.04. Conditions to sale and investment legend on certificates.
The Selling Stockholders and Flamingo agree not to sell, assign, transfer,
pledge, hypothecate or otherwise dispose of any of the CFIM Preferred Stock (or
CFIM common stock) for eighteen (18) months following the Closing, unless and
until they (i) have delivered to CFIM a written legal opinion in form and
substance satisfactory to counsel for CFIM to the effect that the disposition is
permissible under the terms of the Securities Act; (ii) have complied with the
registration and prospectus delivery requirements of the Securities Act; or
(iii) if more than one year after the Closing, have presented CFIM satisfactory
evidence that the transfer will comply with Rule 144 under the Securities Act.
The Selling Stockholders and Flamingo further agree that the certificates
evidencing the CFIM Stock shall contain the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND IS A "RESTRICTED SECURITY" AS DEFINED UNDER SAID ACT. ACCORDINGLY,
NEITHER THIS SECURITY NOR ANY INTEREST THEREIN MAY BE SOLD, OFFERED FOR
22
SALE, ASSIGNED, TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT BY BONA
FIDE GIFT OR INHERITANCE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS SECURITY UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH REGISTRATION IS NOT REQUIRED.
The Selling Stockholders and Flamingo acknowledge CFIM will also place a "stop
transfer" order against any transfer of the CFIM Preferred Stock (or resulting
CFIM common stock) until one of the conditions set forth in this section has
been met.
Section 6.05. Indemnification by Flamingo and/or the Selling
Stockholders. If at any time in the future, Flamingo or the Selling Stockholders
should offer, sell, assign, pledge, hypothecate, transfer or otherwise dispose
of any of the CFIM Preferred Stock (or resulting CFIM common stock) without
registration under the Securities Act, unless an exemption from registration is
available, the Selling Stockholders and Flamingo, jointly and severally, hereby
agree to indemnify and hold harmless CFIM against and from any and all claims,
liabilities, penalties, costs and expenses which may be asserted against or
suffered by CFIM as a result of the disposition.
Section 6.08. State securities law. The Closing is subject to any and
all requirements of the laws of the Selling Stockholders' and Flamingo's
respective states of residence applying to the offer and sale of securities
therein. In no event shall any party be liable to anyone for failure to sell or
issue its securities pursuant to this Agreement, unless and until all applicable
requirements of the law of the applicable state of the recipient's residence
relating to the offer and sale have been satisfied.
23
ARTICLE VII
FEDERAL INCOME TAX MATTERS AND ELECTIONS
Section 7.01. Responsibility for understanding tax consequences. Each
party shall be solely responsible for obtaining it own tax advice with respect
to and understanding the federal income tax consequences of the transactions and
the federal income tax consequences thereof contemplated by this Agreement.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
Section 8.01. Termination for Default.
(a) CFIM may, by notice to the Selling Stockholders, given in
the manner provided below on or at any time prior to the Closing Date, terminate
this Agreement if default shall be made by the Selling Stockholders or Flamingo
in the observance or in the due and timely performance of any of the covenants
and agreements contained, made by or imposed upon it, in this Agreement, if the
default has not been fully cured within fifteen days after receipt of the notice
specifying the default.
(b) The Selling Stockholders or Flamingo may, by notice to
CFIM, given in the manner provided below on or at any time prior to the Closing
Date, terminate this Agreement if default shall be made by CFIM in the
observance or in the due and timely performance of any of its covenants and
agreements contained in this Agreement, if the default has not been fully cured
within fifteen days after receipt of the notice specifying the default.
24
(c) Notwithstanding Section 2.07, the party giving notice of
the other party's default, if the default is not cured as provided in subsection
(a) or (b), above, will be entitled to recover from the defaulting party its
costs incurred in connection with this Agreement.
Section 8.02. Termination. If the Closing does not occur by May 30,
2000, either CFIM or Flamingo or the Selling Stockholders, if the party is not
then in default in the observance or in the due or timely performance of any
covenants and conditions under this Agreement, may at any time terminate this
Agreement by giving written notice to the other.
Section 8.03. Termination. CFIM may, at its option, terminate this
Agreement prior to the Closing if the Assets of Flamingo have suffered any
material damage, destruction or loss (whether or not covered by insurance) or
Flamingo does not hold good and marketable title to the Assets.
ARTICLE IX
NOTICES
Section 9.01. Procedure for giving notices. Any and all notices or
other communications required or permitted to be given under any of the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered (excluding telephone facsimile and
including receipted express courier and overnight delivery service) or mailed by
first class certified US, mail, return receipt requested showing name of
recipient, addressed to the proper party.
25
Section 9.02. Addresses for notices. For purposes of sending notices
under this Agreement, the addresses of the parties are as follows:
As to Flamingo and the Selling Stockholders: Xxxx Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Copy to: Xxxxxx Xxxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
As to CFIM: Xxxxxxx E, Xxxxxxxx, President
CFI Mortgage, Inc.
Xxxxx 000
000 X.X. Xxxxxxx 0
Xxxxx Xxxx Xxxxx, Xxxxxxx 00000
Copy to: Xxxxx X. Xxxxxxx, Esq.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Section 9.03. Change of address. A party may change its address for
notices by sending a notice of such change to all other parties by the means
provided in Section 9.01.
ARTICLE X
LEGAL AND OTHER COSTS
Section 10.01. Party entitled to recover. In the event that any party
(the "Defaulting Party") defaults in his or its obligation under this Agreement
and, as a result thereof, the other party (the "Non-Defaulting Party") seeks to
legally enforce his or its rights hereunder against the Defaulting Party
(whether in an action at law, in equity or in arbitration), then, in addition to
26
all damages and other remedies to which the Non-Defaulting Party is entitled by
reason of such default, the Defaulting Party shall promptly pay to the
Non-Defaulting Party an amount equal to all costs and expenses (including
reasonable attorneys' fees and expert witness fees) paid or incurred by the
Non-Defaulting Party in connection with such enforcement.
Section 10.02. Interest. In the event the Non-Defaulting Party is
entitled to receive an amount of money by reason of the Defaulting Party's
default hereunder, then, in addition to such amount of money, the Defaulting
Party shall promptly pay to the Non-Defaulting Party a sum equal to interest on
such amount of money accruing at the rate of 1.5% per month during the period
between the date such payment should have been made hereunder and the date of
the actual payments thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Effective date. The effective date of this Agreement
shall for all purposes be the date set forth in the introductory paragraph
hereto, notwithstanding a later actual date of execution by the parties.
Section 11.02. Entire agreement. This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof, superseding
all prior agreements, understandings, representations and warranties.
Section 11.03. Waivers. No waiver of any provision, requirement,
obligation, condition, breach or default hereunder, or consent to any departure
from the provisions hereof, shall be considered valid unless in writing and
27
signed by the party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar nature.
Section 11.04. Amendments. This Agreement may not be modified, amended
or terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto and amendment, modification or
alteration of, addition to or termination of this Agreement or any provision of
this Agreement shall not be effective unless it is made in writing and signed by
the parties.
Section 11.05. Construction. This Agreement has been negotiated by the
parties, section by section, and no provision hereof shall be construed more
strictly against one party than against the another party by reason of such
party having drafted such provision. The order in which the provisions of this
Agreement appear are solely for convenience of organization; and later appearing
provisions shall not be construed to control earlier appearing provisions.
Further, each party acknowledges that it has been represented by counsel.
Section 11.06. Invalidity. It is the intent of the parties that each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision hereof shall be
prohibited, invalid, illegal or unenforceable, in any respect, under applicable
law, such provision shall be ineffective to the extent of such prohibition,
invalidity or non enforceability only, without invalidating the remainder of
such provision or the remaining provisions of this Agreement; and, there shall
be substituted in place of such prohibited, invalid, illegal or unenforceable
provision a provision which nearly as practicable carries out the intent of the
parties with respect thereto and which is not prohibited and is valid, legal and
enforceable.
28
Section 11.07. Multiple counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be an original and, taken
together, shall be deemed one and the same instrument.
Section 11.08. Assignment, parties and binding effect. This Agreement,
and the duties and obligations of any party shall not be assigned without the
prior written consent of the other party(ies). This Agreement shall benefit
solely the named parties and no other person shall claim, directly or
indirectly, benefit hereunder, express or implied, as a third-party
beneficiary, or otherwise. Wherever in this Agreement a party is named or
referred to, the successors (including heirs and personal representative of
individual parties) and permitted assigns of such party shall be deemed to be
included, and all agreements, promises, covenants and stipulations in this
Agreement shall be binding upon and inure to the benefit of their respective
successors and permitted assigns. All references to Flamingo herein shall
include PMCR by virtue of their recent Merger.
Section 11.09. Survival of representations and warranties. The
representations and warranties made herein shall survive the execution and
delivery of this Agreement and full performance hereunder of the obligations of
the representing and warranting party, subject to the provisions of Section
4.03.
Section 11.10. Arbitration. Unless a court of competent jurisdiction
shall find that a particular dispute or controversy cannot, as a matter of law,
be the subject of arbitration, any dispute or controversy arising hereunder,
other than suit for injunctive relief which can be granted only by a court of
competent jurisdiction, shall be settled by binding arbitration in West Palm
Beach, Florida by a panel of three arbitrators in accordance with the rules of
29
the American Arbitration Association; provided, that the rules of discovery of
the U.S. District Court with jurisdiction of the situs of the arbitration shall
apply. Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. The parties may pursue all other remedies
with respect to any claim that is not subject to arbitration.
Section 11.11. Jurisdiction and venue. Any action or proceeding for
enforcement of this Agreement and the instruments and documents executed and
delivered in connection herewith which is determined by a court of competent
jurisdiction not, as a matter of law, to be subject to arbitration as provided
in Section 11.10 or which seeks injunctive relief shall be brought and enforced
in the courts of the State of Florida in and for Palm Beach County and in the
United States District Court for the Southern District of Florida, Palm Beach,
and the parties irrevocably submit to the jurisdiction of each such court in
respect of any such action or proceeding.
Section 11.12 Conflict. It is acknowledged that Xxxxx X. Xxxxxxx, Esq.,
and Xxxxxx Xxxxxxxx, Esq. have represented CFIM and Flamingo and affiliates with
respect to certain legal matters, and each party hereto waives any conflict of
interest and acknowledges that each was represented by their own independent
legal counsel.
Section 11.13. Applicable law. This Agreement and all amendments
thereof shall be governed by and construed in accordance with the law of the
State of Florida applicable to contracts made and to be performed therein (not
including the choice of law rules thereof).
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, the day and year first above
written
(Corporate Seal) CFI Mortgage, Inc., a Delaware corporation
Attest: By: /s/ Xxxxxxx Xxxxxxxx
/s/ Xxxxx X. Xxxxxx -----------------------------------------
----------------------------------------- Xxxxxxx Xxxxxxxx, Chief Executive Officer
Xxxxx X. Xxxxxx, Secretary
Flamingo Financial Services, Inc.,
a Florida corporation
Attest: By: /s/ Xxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxxxx -----------------------------------------
----------------------------------------- Xxxx Xxxxxxxx, sole director and officer
Xxxx Xxxxxxxx, Secretary
The Selling Stockholders
/s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxxxx Xxxxxxxx
31
EXHIBIT "F"
SELLING STOCKHOLDERS AND OFFICERS' CERTIFICATE
Pursuant to Article III of the Asset Purchase Agreement
The undersigned, Xxxx Xxxxxxxx, President and Secretary, of Flamingo
Financial Services, Inc., a Florida corporation (the "Corporation"), hereby
certifies that he is familiar with the Asset Purchase Agreement, dated April 30,
2000 (the "Agreement"), between the Corporation and CFI Mortgage Inc. ("CFIM")
and, to the best of his knowledge, based on reasonable investigation:
(a) All representations and warranties of the Selling
Stockholders (as defined in the Agreement) and the Corporation contained in the
Agreement, and in all Exhibits and Schedules attached thereto containing
information delivered by Selling Stockholders and Flamingo to CFIM were true and
correct in all material respects when made and when deemed to have been made and
32
are true and correct at the date hereof, except for changes in the ordinary
course of business between the date of the Agreement, in conformity with the
covenants and agreements contained in the Agreement.
(b) All covenants, agreements and obligations required by the
terms of the Agreement to be performed by Selling Stockholders and Flamingo at
or before the Closing, including the Merger, have been duly and properly
performed in all material respects.
(c) Since the date of the Agreement there have not occurred
any material adverse change in the condition (financial or otherwise) of the
Assets of Flamingo.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
April 30, 2000.
Flamingo Financial Service Inc.
BY: /s/ Xxxx Xxxxxxxx
--------------------------------------
Xxxx Xxxxxxxx, President and Secretary
Selling Stockholders:
/s/ Xxxx Xxxxxxxx
------------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxxx Xxxxxxxx
33
EXHIBIT "B"
SECRETARY'S CERTIFICATE
Pursuant to Article III of the Asset Purchase Agreement identified
within.
I, Xxxx Xxxxxxxx, the duly elected, qualified and acting Secretary of
Flamingo Financial Services, Inc., a corporation duly organized, existing and in
good standing under the laws of Florida, (the "Corporation") do hereby certify
that:
(i) The following is a true and complete copy of Resolution of the
Board of Directors of the Corporation taken and adopted on April __, 2000,
approving the Asset Purchase Agreement, dated April __, 2000, by and among the
Selling Stockholders, the Corporation and CFIM, and that said Resolution has not
been rescinded, revoked or modified and is in full force and effect at the date
hereof:
"Resolved, that the Asset Purchase Agreement with CFI Mortgage, Inc. is
hereby in all respects ratified and approved; and it is further
Resolved, that the President and Secretary of the Corporation is hereby
authorized to take all actions, and expend all funds necessary or appropriate to
effect the foregoing resolution."
(ii) The persons whose names, titles and signatures appear below are
each the duly elected, qualified and acting officers of the Corporation, hold on
34
the date hereof the offices set forth opposite their respective names and the
signatures appearing opposite said names are the genuine signatures of said
persons:
Name Title Signature
---- ----- ---------
Xxxx Xxxxxxxx President and Secretary /s/ Xxxx Xxxxxxxx
(iii) I am authorized by the Corporation to make the within
certifications. IN WITNESS WHEREOF, I have executed this Certificate on April
__, 2000.
(CORPORATE SEAL)
/s/ Xxxx Xxxxxxxx
------------------------
Xxxx Xxxxxxxx, Secretary
I, Xxxx Xxxxxxxx, President of Flamingo Financial Services, Inc,, a Florida
corporation, hereby certify that Xxxx Xxxxxxxx is the duly elected, qualified
and acting Secretary of Flamingo Financial Services, Inc., and that the
signature appearing above is my genuine signature.
IN WITNESS WHEROF, I have executed this Certificate on April __, 2000.
/s/ Xxxx Xxxxxxxx
------------------------
Xxxx Xxxxxxxx, President
35
EXHIBIT "C"
CLOSING MEMORANDUM
The undersigned parties to that certain Asset Purchase Agreement dated
April __, 2000, ("Agreement") do hereby certify one to the other that;
1. The Closing of the Agreement was completed, as contemplated by the
Agreement, April __, 2000 at 2:00 o'clock p.m.
2. All conditions to each of the parties Closing the Agreement have
been satisfied and, to the extent not specifically satisfied, have been waived
by the party entitled to waive the conditions; except, the following conditions,
if any, are waived only for the purpose of Closing of the transaction
contemplated by the Agreement, and are required to be satisfied after the
Closing by the party required to satisfy such condition: Completion of the legal
transfer of all Assets to CFI Mortgage Inc and issuance of Preferred Stock.
3. Capitalized terms herein have the meaning assigned to them in the
Agreement.
For the purposes herein set forth, the parties have executed this
Memorandum at the date and time written above,
CFI Mortgage , Inc
Attest: By: /s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------------------------
/s/ [IILLEGIBLE] Xxxxxxxxxxx X. Xxxxxxx, Executive Vice President
-------------------------
Secretary
36
Flamingo Financial Services, Inc.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx, President
Selling Stockholders:
/s/ Xxxx Xxxxxxxx
---------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxxx Xxxxxxxx
---------------------------------
Xxxxxxxx Xxxxxxxx
37
EXHIBIT "D"
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATIONS
Board of Directors
CFI Mortgage, Inc.
Xxxxx 000
000 X.X. Xxxxxxx 0
Xxxxx Xxxx Xxxxx, Xxxxxxx 00000
Re: Subscription to Purchase Shares
Gentlemen;
1. Subscription. Pursuant to the terms of, in connection with and for
the purpose of closing the Sale contemplated in that certain Asset Purchase
Agreement, dated April __, 2000, (the "Agreement") by Flamingo Financial
Services, Inc. ("Flamingo") and CFI Mortgage, Inc. (the "Issuer"), I/we hereby
subscribe to purchase two shares of convertible preferred stock of the Issuer
("Shares") as contemplated by said Agreement. I/we understand that the offer and
sale of the Issuer's shares to me/us is being made in reliance upon an exemption
from the registration requirements of the federal Securities Act of 1933, as
amended, and from the registration or qualification requirements of the
securities laws of the state in which I/we reside. I/we tender this subscription
in consideration for the Assets sold by Flamingo to the Issuer pursuant to the
terms of the Agreement.
2. Investment Representations, Warranties and Covenants. The
Subscriber(s) represents and warrants to and covenants with the Issuer as
follows:
38
(a) I/we have been provided with a copy of the Issuer's most
recent annual and quarterly reports filed pursuant to the Securities Exchange
Act of 1934, as amended, together with all bankruptcy filings and schedules,
including the amended plan of disclosure. I/we carefully reviewed these reports.
If I/we have used the services of an investment advisor ("Purchaser's
Representative") in making our decision to subscribe to purchase the Shares,
this representative has also carefully reviewed the reports with me/us.
(b) I/we acknowledge that I/we and my/our representative, if
any, have had the reasonable opportunity to ask questions and to examine such
supplemental documentation as I/we may deem necessary to make an informed
decision concerning investment in the Shares. I/we acknowledge that I/we and
my/our representative, if any, have received satisfactory answers to these
questions from management of the Issuer and have verified to my/our satisfaction
the information in the reports. I/we have relied upon my/our own independent
investigation (or that of my/our Purchaser's Representative, if any) identified
in paragraph 5 in making my/our decision to buy the Shares.
(c) I/we understand the offer and sale of the Shares are not
registered or qualified under federal securities laws or the securities laws of
my/our state of residence; but, the offer and sale is made instead in reliance
upon an exemption from such registration or qualification commonly referred to
as the "private placement exemption" and that the requirements for reliance upon
such exemption include a provision the I/we purchase the Shares for investment
and not with a view toward distribution or resale. I/we understand that the
Issuer is under no obligation, and I/we cannot compel the Issuer, to register or
qualify the Shares for resale under the laws of our state of residence. I/we
39
understand that I/we will be required to bear the economic risk of the
investment for at least one year. I/we understand a notice of these restrictions
will be printed on the common stock certificates for the Shares and the
warrants, if any, and the transfer agent, if any, will be instructed to honor
the notice.
(d) I/we are acquiring the Shares for investment for his own
account and not with a view to or for the purpose of resale, division,
fractionalization or distribution. I/we do not have a present or foreseeable
need for the cash invested in the Shares; and, if 1/we borrowed all or a portion
of the cash so invested, I/we believes I/we will have the ability to repay such
borrowing without selling the Shares. I/we have not predetermined the occurrence
of any event or condition upon which I/we intends to sell the Shares.
(e) I/we understand the Issuer has recently emerged from
Chapter 11 proceedings and has a limited operating history, and investment in
the Shares is speculative, and involves high degree of risk, which could result
in a complete loss of my/our investment.
(f) I/we agree to complete a "Confidential Investor's
Questionnaire" in the event that such a questionnaire is needed to demonstrate
compliance with the Securities Act and the securities law of our state of
residence.
3. Indemnification. I/we acknowledge that I/we understand the meaning
and legal consequences of the representations, warranties and covenants
contained in paragraph 2, and I/we agree to indemnify and hold harmless the
Issuer, its officers and directors, accountants and counsel from and against all
claim, injury, loss, damage and liability due to or arising out of any breach of
the representations, warranties or covenants contained in this Subscription
40
Agreement. The indemnification provided herein shall not expressly, impliedly or
in any other manner be deemed to be a waiver of any rights granted to me/us
under federal or state securities laws. I/we understand the Issuer and its
counsel will rely upon his representations and warranties for the purpose of
complying with the requirements of the Securities Act and the securities laws of
my/our state of residence.
4. This Agreement shall be binding upon me/us and my/our heirs,
estate(s) and legal representative(s). This Agreement shall not be assignable.
This Agreement shall be construed under the laws of the State of Florida.
5. Subscriber Information. (Please print or type):
Number of Shares requested in payment for services and subscribed to hereby:____
Investor's name or names exactly as they are to appear on the certificates and
records of the Issuer:
------------------------------------------
------------------------------------------
------------------------------------------
Title to issue as: individual, joint tenants with right of survivorship, tenants
in common, pursuant to Uniform Gifts to Minors Act (name minor), or as trustee
(name trust).
------------------------------------------
------------------------------------------
41
Mailing address, if different
------------------------------------------
------------------------------------------
------------------------------------------
Social Security or Taxpayer I.D. Number(s)
------------------------------------------
Name of Purchaser's Representative, (If none, write none)
----------------------
Subscribed this ______ day of April, 2000.
Signature(s) of Subscriber(s)
(sign names exactly as stated above)
------------------------------------------
------------------------------------------
------------------------------------------
Please sign name(s) exactly as it is to appear on the stock certificates and the
Issuer's records. All joint owners must sign. When signing in any capacity other
than for personal account, please give title and attach evidence of authority.
42
