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Exhibit 2
MORTGAGE BANKERS HOLDING CORP.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered into
this 8th day of December, 1998 by and among MORTGAGE BANKERS HOLDING CORP., a
publicly-held and traded (OTC:BB:MBHC) New York corporation having its
principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxx
00000 (hereinafter "MBHC") and Xxxxx X. Xxxxxxxxxx, an individual residing in
the State of Texas, (hereinafter "Seller") of National Institute Companies of
America, Inc., a privately-held Texas corporation having its principal place of
business at 00000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx, 00000 (hereinafter
"Target" or "NICA").
RECITALS
A. Seller owns or has rights to all of the capital stock, and
interests therein, of Target, and
B. MBHC wishes to buy, and Seller wishes to sell, subject to the
provisions of this Agreement, all right, title and interest in such capital
stock.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the parties agree as follows:
1. Purchase and Sale and License
1.01. Purchase and Sale of TargetShares. MBHC agrees to acquire
from Seller and Seller agrees to transfer, assign, convey and deliver to MBHC
at the Closing, all right, title and interest in and to an aggregate of One
Million (1,000,000) authorized shares of capital stock of Target, being all of
the authorized shares of capital stock of Target, i.e. 100% of Target's stock,
of which One Thousand (1,000) shares have been issued (hereinafter the
"TargetShares"), in exchange for an aggregate of One Million Three Hundred
Thousand (1,300,000) shares of Series A Preferred Stock of MBHC (hereinafter
the "MBHCShares").
1.02. Proprietary Rights. In addition to the shares exchanged
pursuant to Section 1.01, effective at the Closing, Seller hereby grants to
MBHC a royalty-free, irrevocable, nonexclusive license (assignable by MBHC or
any successor in interest to any of its business) to use all other intangible
assets
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of Seller, including patents, patent applications, copyrights, inventions,
trade secrets, and other technical know-how, which at or prior to Closing,
Target uses or has used in connection with its business or operations. Such
license, with respect to copyrighted works heretofore published by the Seller,
is limited to a right to use consistent with such copyrights.
2. Closing
Unless extended by MBHC, the Closing of the transactions contemplated
hereby shall be held on December 8, 1998, via teleconference and facsimile
transmission of documents with duplicate originals to be immediately forwarded
via U.S. Mail, First Class, Postage Pre-Paid, to the above-named parties, or at
such other place or on such other date as shall mutually agreed to in writing
by the parties. The date on which the Closing occurs is herein referred to
variously as the "Closing Date" and the "Closing." At the Closing:
2.01. Seller. Seller shall deliver or cause to be delivered to MBHC:
(a) certificates representing the TargetShares duly endorsed for
transfer and conveyance to MBHC, subject to contingency outlined in Section
7.05 below.
(b) a corporate resolution of the Board of Directors and stockholders
of Target approving the transactions contemplated by this Agreement.
(c) a list of all accounts in which the funds or other assets of
Target are deposited, and
(d) the corporate records, including the charter documents, minutes of
meetings and actions of the board of directors and minutes of meetings and
actions of the stockholders, the corporate seal and all books of accounts of
Target.
2.02. MBHC. MBHC shall instruct ChaseMellon Shareholder Services,
LLC, the Stock Transfer Agent of record for MBHC, to issue deliver to the
Seller a stock certificate in the name of such Seller representing the number
of MBHCShares described in Section 1.01.
3. Representations and Warranties of Target and Seller.
Except as set forth in the disclosure schedule delivered to MBHC on
the date hereof, and signed by the Chairman and Secretary of Target (the
"Target Disclosure Schedule"), the sections of which are numbered to correspond
to the subsection numbers of this Agreement, Target and the Seller hereby
represents and warrants to
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3.01. Organization, Qualification.
(a) Target is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. Target has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly qualified and in good
standing to do business as a foreign corporation in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
have such power and authority or to be so duly qualified and in good standing
would not, in the aggregate, have a material adverse effect on the business,
operations or financial condition of Target.
(b) Target has delivered to MBHC complete and accurate copies of its
Articles of Incorporation and Bylaws, each as amended, minutes of all its
directors' and shareholder meetings, and a shareholder list correctly setting
forth the record ownership as of the date of this Agreement of all outstanding
shares and all outstanding rights to purchase or convert into shares of the
stock of Target.
3.02. Capitalization. As of the Closing Date, Target shall have
authorized capital stock of One Million (1,000,000) shares of Common Stock,
without par value, of which One Thousand (1,000) shares will be issued and
outstanding as of such date. All such outstanding shares of Target capital stock
have been duly authorized, validly issued, fully paid and nonassessable and are
not be subject to preemptive rights created by statute, the Articles of
Incorporation or Bylaws of Target or any agreement to which Target is a party
or by which it is bound. As of the Closing Date there will be no outstanding
rights, warrants, options, agreements or commitments giving anyone any right to
require Target to sell or issue any capital stock or other securities. Between
the date hereof and the Closing, Target will not, without the prior written
consent of MBHC, issue any additional shares of stock, stock options, warrants,
convertible notes or other securities exercisable for or convertible into
shares of equity securities of Target. The Target Disclosure contains a listing
of all outstanding shareholders and persons holding rights to acquire any
equity interest in Target.
3.03. Subsidiaries. Target has five wholly-owned subsidiaries as
follows: "National Institute for Estate Planning, Inc.", NIEP Agency Inc.",
National Institute for Financial Services, Inc.", National Institute for
Employee Benefits, Inc.", and "National Institute for Insurance Services, Inc.".
3.04. Authority Relative to this Agreement. Target has full
corporate power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and thereby. The
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execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors, and as of the Closing Date will have been
duly and validly authorized by the shareholders of Target, and no other
corporate proceedings on the part of Target are necessary for Target to
authorize this Agreement or to consummate the transactions contemplated hereby
and thereby. This Agreement has been duly and validly executed and delivered by
Target. This Agreement constitutes the valid and binding agreement of Target,
enforceable against Target in accordance with its terms.
3.05. No Filings and Approvals; No Violation. Except as may be
required by the Securities Act of 1933, as amended (the "Securities Act"),
state securities laws, and applicable corporate law, there is no requirement
applicable to Target to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
as a condition to the lawful consummation by Target of the transactions
contemplated by this Agreement. Target does not know of any reason why any
required permit, authorization, consent or approval could not be obtained.
Neither the execution and delivery of this Agreement by Target nor the
consummation by Target of the transactions contemplated by this Agreement will
(a) conflict with or result in any breach of any provision of the Articles of
Incorporation or Bylaws of Target, (b) result in a material breach or default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license agreement, lease or other material contract, instrument or
obligation to which Target is a party or by which Target or any of its assets
may be bound, (c) or violate in any material respect any statute, rule,
regulation, order, writ, injunction or decree applicable to Target or any of
its assets, or (d) result in the creation of any material (individually or in
the aggregate) liens, charges or encumbrances on any of the material assets of
Target.
3.06. Financial Statements of Target. Target has delivered to MBHC
(i) an unaudited balance sheet of Target at December 31, 1997, and an unaudited
statement of operations, stockholders' equity and cash flows for the fiscal
years ended December 31, 1997 (the "Target Financials"). The Target Financials
have been prepared in accordance with generally accepted accounting principles,
applied on a consistent basis throughout the periods covered by such
statements. The Target Financials, with any notes thereto, are in accordance
with the books and records of Target and present fairly Target's financial
position and results of operations and cash flows as of the dates and for the
periods indicated therein.
3.07. Undisclosed Liabilities.
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(a) Target does not have any material liabilities, whether absolute,
accrued, contingent or otherwise, and whether due or to become due, except for
those liabilities which (i) are accrued or fully reserved against in the balance
sheet of the Target Financials; or (ii) are of a normally recurring nature and
were incurred after December 31, 1997 in the ordinary course of business
consistent with past practice. Section 3.07 of the Target Disclosure Schedule
lists all liabilities of Target incurred after December 31, 1997 which are of a
type required to be disclosed or reflected in financial statements and which
either (A) are not in the ordinary course of business, or (B) exceed Five
Thousand and No/100 Dollars ($5,000) with respect to any single transaction or
single series of related transactions.
(b) The amounts accrued for sales returns and allowances in the Target
Financials are adequate to meet all foreseeable returns of products and other
adjustments (including, but not limited to, price protection and inventory
rotation).
(c) Upon the execution hereof, MBHC shall hold harmless Seller from
personal liability regarding any and all disclosed Target liabilities and MBHC
shall assume said liabilities.
(d) Upon capitalization MBHC shall make payable $400,000 for the
payment of debt reduction of Seller.
3.08. Absence of Changes. Since December 31, 1997, there has not
been:
(a) any material adverse change in the business, assets, liabilities,
financial condition, results of operations or prospects of Target taken as a
whole;
(b) any material damage, destruction or casualty loss, whether or not
covered by insurance, to any assets or properties of Target that amounts to
more than Five Thousand and No/100 Dollars ($5,000) in the aggregate;
(c) any increase in the compensation payable or to become payable by
Target to its employees (other than adjustments consistent with prior practice)
or any increase in any bonus, insurance, pension or other employee benefit plan
or program, payment or arrangement (other than adjustments consistent with
prior practice) made to, for or with any such directors, officers or employees
except as contemplated by this Agreement;
(d) any termination or notification of intended termination of a
relationship with any material customer or supplier of Target;
(e) any entry by Target into any commitment or transaction exceeding
Five Thousand and No/100 Dollars ($5,000) in any instance
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including, without limitation, any borrowing or capital expenditure;
(f) any material change by Target in accounting methods, principles or
practices;
(g) any repurchase or retirement of any securities of Target, or any
declaration, payment or setting aside for payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the capital
stock of Target;
(h) any act, omission or event which would be prohibited after the
date of this Agreement under Section 4.1 hereof;
(i) any sales returns or allowances not adequately provided for by the
reserve in the Unaudited Financial Statements;
(j) recognition of revenue on any transaction where a substantial or
contingent right of return exists; or
(k) any agreement, whether in writing or otherwise, to take any action
described in this Section 3.08.
3.09. Properties and Inventories. Target has good and marketable
title to, valid leasehold interests in or other valid right to use all of the
material assets used in its operations or necessary for the conduct of its
business, subject to no security interests, licenses, encumbrances,
restrictions or adverse claims, except as disclosed in the notes of the Target
Financials and except for any lien for taxes not yet due and payable and except
for any statutory liens for which payment is not delinquent. All of such assets
are in good operating condition, normal wear and tear excepted, and are
adequate and suitable for the purposes for which they are presently being used.
Target is not aware of any need to replace or substantially modify any material
physical asset of Target in order to use such asset in the manner in which it
is currently being used in Target's business as presently conducted. Target's
inventory of finished goods, work in progress, materials and supplies is
salable and is usable in the ordinary course of business.
3.10. Real Property. Section 3.10 of the Target Disclosure Schedule
contains a list and description of all real property owned and all real
property leased by Target. Prior to the Closing, Target will provide MBHC with
copies of all of the referenced leases. Target has either fee simple title or
enforceable leasehold interests in all property shown in the Target Disclosure
Schedule.
3.11. Insurance. Target has fire and casualty insurance policies,
with extended coverage (subject to deductibles) covering the material assets,
properties and business of Target. All such policies, together with any life
insurance policies maintained by
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Target, are identified in Section 3.11 of the Target Disclosure Schedule. Prior
to the Closing, Target will make copies of each of such policies available to
MBHC. Target has not, to its knowledge, done anything by way of action or
inaction which might invalidate any of such policies in whole or in part.
3.12. Litigation. Except as set forth in Section 3.12 of the Target
Disclosure Schedule, Target is not engaged in, nor has it been threatened with,
any material litigation (which for this purpose shall mean a potential
liability in excess of Five Thousand and No/100 Dollars ($5,000) or potential
liabilities in the aggregate in excess of Five Thousand and No/100 Dollars
($5,000)), arbitration, investigation or other legal proceeding relating to
Target or its business, property or employee benefit plans or policies, nor, to
the knowledge of Target, is there any valid basis for any such proceeding.
3.13. Purchase, Sale and Other Agreements.
(a) All of the following (whether written or oral) to which Target is
a party or to which Target is subject are identified in Section 3.13 of the
Target Disclosure Schedule:
(i) every contract or agreement for the purchase by Target of
inventory, supplies, equipment or other real or personal property, or the
procurement of services, except individual purchase orders, or aggregate
purchase orders to a single vendor, involving payments of less than Five
Thousand and No/100 Dollars ($5,000);
(ii) lease of equipment, machinery or other personal property involving
aggregate annual payments in excess of One Thousand and No/100 Dollars ($1,000);
(iii) contract or agreements for the sale or lease of products or
furnishing of services by Target, except individual purchase orders, or
aggregate purchase orders from a single customer, involving payments of less
than One Thousand and No/100 Dollars ($1,000);
(iv) joint venture, partnership or other contract or arrangement
involving the sharing of profits;
(v) contract or agreement, other than in the ordinary course of
business, relating to the purchase or acquisition, by merger or otherwise, of a
significant portion of the business, assets or securities of Target by any
other person or of any other person by Target;
(vi) contract or agreement containing a covenant or covenants which
purport to limit to a material extent the ability or right of Target to engage
in any lawful business activity or compete with any person or entity; or
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(vii) material contract or agreement not otherwise described in this
Section 3.13 which is not terminable by and without penalty to Target within
six months after the date of this Agreement.
(b) A complete and accurate copy of each written contract, agreement
and other document identified in Section 3.13 of the Target Disclosure Schedule
will be made available to MBHC on or before December 31, 1996. Each contract,
agreement or arrangement identified in Section 3.13 of the Target Disclosure
Schedule is, except to the extent fully performed at the date hereof, in full
force and effect and valid and binding in accordance with its terms in all
material respects; there is no material default under any such material
contract, agreement, or arrangement; and no party to any such contract,
agreement or arrangement has notified Target that it intends to cancel,
withdraw, modify or amend such contract, agreement or arrangement.
3.14. Licenses, Trademarks, Patents and Other Rights. To the best
of Target's knowledge, Target owns, is licensed or otherwise entitled to use,
or can obtain the right to use on a basis which is commercially reasonable, all
patents, trademarks, trade names, service marks, copyrights, and other
proprietary rights, and necessary to the business of Target as currently
conducted or as contemplated by its current business plan. Section 3.14(a) of
the Target Disclosure Schedule lists all Target patents and registered
trademarks, trade names and service marks and copyrights, and applications for
any of the foregoing, and all licenses, the subject matter of which is
incorporated into any Target product, to which Target is a party (the "Target
Intellectual Property"), other than licenses to readily available commercial
software. Except as set forth in Section 3.14(b) of the Target Disclosure
Schedule, no claims (including any request to enter into a license agreement)
have been asserted or threatened by any person (i) to the effect that any
activity in which Target is engaged infringes on any patents or other
proprietary rights, (ii) against the use by Target of any trademarks, trade
names, technology, know-how or processes necessary for the operation of the
business of Target as currently conducted or presently contemplated, or (iii)
challenging or questioning the validity or effectiveness of any of the Target
Intellectual Property; and Target is not aware of any valid basis for any such
claim. To the best of its knowledge, no party is infringing the Target
Intellectual Property.
3.15. Employees.
(a) Section 3.15(a) of the Target Disclosure Schedule identifies all
consulting or employment agreements and other agreements with individual
consultants or employees to which Target is a party and which are either
currently effective or will become effective at the Closing, as well as any
employee handbooks, policy manuals and job application forms used by Target.
Copies of all such written agreements will be delivered to MBHC prior to the
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effective at the Closing, as well as any employee handbooks, policy manuals and
job application forms used by Target. Copies of all such written agreements
will be delivered to MBHC prior to the Closing. Also shown on Section 3.15(a)
of the Target Disclosure Schedule are the names and dates of hire of each
full-time employee of Target and as of December 31, 1997, each such person's
base salary (excluding sales commissions and bonuses) and accrued vacation pay.
No officer, manager or other key employee of Target has notified Target of an
intention to terminate employment or to seek a material change in his terms of
employment, except as identified in the Target Disclosure Schedule. In
accordance with Target company handbook, as of December 31, 1997, there are no
bonuses and/or carryovers.
(b) Section 3.15(b) of the Target Disclosure Schedule contains a
complete list of "Plans" consisting of each employment, severance or other
similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for insurance coverage, workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits or deferred compensation, profit sharing, bonuses,
stock options, stock appreciation rights, stock purchases or other forms of
incentive compensation or post-retirement insurance, compensation or benefits
which is maintained or administered by Target, or to which Target contributes,
and which covers any employee or former employee of Target or under which Target
has any liability, including "employee welfare benefit plan", "employee benefit
plan" and "employee pension benefit plan" as defined under ERISA;
(c) With respect to the Plans, Target shall deliver to MBHC prior to
the Closing, a copy of each Plan and any amendment(s) thereto, together with
(i) any written descriptions or summaries thereof, (ii) all trust agreements,
insurance contracts, annuity contracts or other funding instruments, and (iii)
the last two annual reports (IRS Form 5500 Series, together with all required
schedules) prepared in connection with any such Plan. The Plans comply, to the
extent applicable, with the requirements of ERISA and the Code, and any Plan
intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service (the "IRS") to be so qualified;
(d) To Target's knowledge, no employee of Target is obligated under
any agreement or judgment that would conflict with such employee's obligation
to use his best efforts to promote the interests of Target or would conflict
with Target's business as conducted or proposed to be conducted. To Target's
knowledge, no employee of Target is in violation of the terms of any employment
agreement or any other agreement relating to such employee's relationship with
any previous employer and no litigation is pending or threatened with regard
thereto.
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to the obligations of any person. Complete and accurate copies of all such
written agreements will be delivered to MBHC prior to the Closing.
3.17. Bank Accounts and Powers of Attorney. Section 3.17 of the
Target Disclosure Schedule identifies all bank and credit card accounts used in
connection with the operations of Target whether or not such accounts are held
in the name of Target and lists their respective signatories, and lists the
names of all persons holding a power of attorney from Target and summarizes the
terms thereof.
3.18. Compliance with Contracts. Target has performed all material
obligations required to be performed by it as of the date of this Agreement
under each material contract, obligation, commitment, agreement, undertaking,
arrangement or lease referred to in this Agreement or the Target Disclosure
Schedule and has not received any notice that it is in default thereunder. To
its knowledge no other party is in default under such material agreements. The
Merger and the actions contemplated thereby will not conflict with or result in
a breach of the terms, conditions or provisions of any such material agreement
or cause any acceleration of maturity of any such material agreements.
3.19. Compliance with Laws. Target has substantially complied with
all laws, regulations, judgments, decrees or orders of any court or
governmental agency or entity applicable in any material respect to the conduct
of its business.
3.20. Taxes. All United States, foreign, state and local tax
returns and reports (collectively "Returns") required to be filed to date with
respect to the operations of Target have been accurately prepared in all
material respects and duly filed, or an extension therefrom has been duly
obtained, and, except for Taxes contested in good faith and disclosed in
Section 2.20 of the Target Disclosure Schedule, all Taxes payable have been
paid when due; there is no examination or audit known to Target or any claim,
asserted deficiency or assessment for additional Taxes in progress, pending, or
threatened, nor to the knowledge of Target is there any reasonable basis for
the assertion of any such claim, deficiency or assessment; no material special
charges, penalties, fines, liens, or similar encumbrances have been asserted
against Target with respect to payment of or failure to pay any Taxes which
have not been paid or resolved without further liability to Target. Target has
not executed or filed with any taxing authority any agreements extending the
period for assessment or collection of any Taxes. Proper amounts have been
withheld by Target from its employees' compensation payments for all periods in
compliance with the tax withholding provisions of applicable federal and state
laws. Target is not a party to any tax-sharing or tax-allocation agreement, nor
does Target owe any amounts under any tax-sharing or tax-allocation agreement.
As used in this Agreement, "Taxes" means all taxes, however denominated,
imposed by any federal, territorial, state,
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local or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including but not limited to, federal
income taxes and state income taxes), payroll and employee withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected.
3.21. Transactions with Associates of Management. No executive
officer or director of Target has, either directly or indirectly through
another entity, any material interest in any property or assets of Target
(except as a shareholder).
3.22. Accounts Receivable and Commissions. All accounts receivable
and commissions reflected on the balance sheet of Target at December 31, 1997
are bona fide, arose in the ordinary course of business in the aggregate amount
thereof and, to the best of Target's knowledge, are collectible (less any
reserve for doubtful accounts and normal discounts) in the ordinary course of
business.
3.23. Investment Banking and Finder Fees. Target has not incurred
nor will incur any obligation for investment banking or finder fees in
connection with this Agreement or the transactions contemplated hereby.
3.24. Transaction Expenses. No fees or bonuses shall be due and
owing by Target to any third party as a result of this transaction.
3.25. Investment Representations. Seller understands and
acknowledges that the MBHCShares will not be registered under the Securities
Act nor qualified under the securities law of the State of New York, by virtue
of exemptions thereto. Seller (either alone or in conjunction with his
professional adviser) has such experience and knowledge in investment,
financial and business matters in investments similar to the stock of the MBHC
that he is capable of protecting his own interest in connection therewith and
qualifying for such exemptions. Further, Seller is acquiring the MBHCShares for
investment purposes only for Seller's own account and not on behalf of any
other person nor with a view to, or for resale in connection with any
distribution thereof. Notwithstanding the foregoing, Seller represents that he
shall divide the total number of shares received hereunder, i.e. 1,300,000
shares of Series A Preferred Stock of MBHC. Seller understands that the
certificates representing the MBHCShares will be stamped with a legend
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substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION IS NOT REQUIRED.
3.26. State Securities Laws. If state of domicile of principal
office of Target is different than state of domicile or principal office of
MBHC based in part on the representations of MBHC, the transfer and conveyance
of the TargetShares and the issuance and delivery of the MBHCShares as provided
for in this Agreement is exempt from registration or qualification under any
"Blue Sky," securities or similar laws of the State of New York and/or Texas by
virtue of exemptions available thereunder.
3.27. Value of MBHCShares. Seller has received and reviewed to
Seller's satisfaction such documents and corporate and financial records of
MBHC, and has had answered all questions with regard thereto that Seller deemed
necessary or appropriate to evaluate the business, operations and assets of
MBHC and the value of its common stock. Seller is relying solely on his own
evaluation and analysis in determining the value of the MBHCShares and not on
any representation of value or worth made by MBHC, its directors, officers,
employees, agents, and/or shareholders.
3.28. Tax Consequences. Although the exchange of shares and
subsequent liquidation of Target contemplated by this Agreement, which
liquidation shall be completed as promptly as commercially feasible following
the Closing, is intended to be a "tax free reorganization" pursuant to Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended, and in reliance
in part on Revenue Ruling 67-274, Seller understands that no assurance is given
by MBHC that such transaction shall be deemed by the Internal Revenue Service
to be a transaction upon which no gain or loss is recognized. Seller assumes
the obligation for the payment of taxes, if any, related to any gain or loss to
Seller as a result of the transactions contemplated by this Agreement.
Additionally, the key executives of NICA to whom Seller shall distribute the
MBHCShares shall assume the obligation for the payment of taxes, if any,
related to any gain or loss to said key executive as a result of the
transactions contemplated by this Agreement and the distribution transaction
contemplated by Seller.
4. Representations and Warranties of MBHC.
MBHC hereby represents and warrants to the Sellers as
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distribution transaction contemplated by Seller.
4. Representations and Warranties of MBHC.
MBHC hereby represents and warrants to the Sellers as follows:
4.01 Capitalization.
COMMON STOCK. - HAVING CORPORATE CUSIP NO. 618915 10 2 ISSUED BY
STANDARD & POOR'S CUSIP SERVICE BUREAU.
The Company's outstanding shares of Common Stock are fully paid and
nonassessable. As of the date of this Stock Purchase Agreement there were
14,795,500 shares of Common Stock issued and outstanding, as of December 2, 1998
per MBHC's stock transfer agent of record, ChaseMellon Shareholder Services,
LLC, having a $.0001 par value.
The holders of shares of Common Stock are entitled to one vote per
share and do not have cumulative voting rights on the election of directors.
Upon any liquidation, dissolution or winding up of the Company, holders of
shares of Common Stock are entitled to receive pro rata all of the assets of the
Company available for distribution to holders of shares of the Company's Common
Stock. Shareholders of the Company do not have any preemptive rights to
subscribe for or purchase any stock, obligations, warrants or other securities
of the Company. The Company's Common Stock is publicly traded CTC:BB at symbol
"MBHC".
SERIES A PREFERRED STOCK. - HAVING CORPORATE CUSIP NO. 618915 20 1
ISSUED BY STANDARD & POOR'S CUSIP SERVICE BUREAU.
As of the date of this Stock Purchase Agreement there were 5,000,000
shares of Series A Preferred Stock authorized and 841,667 shares of Series A
Preferred Stock, as of December 2, 1998 per MBHC's stock transfer agent of
record, ChaseMellon Shareholder Services, LLC, $.0001 par value, issued and
outstanding ("Preferred").
The rights, privileges and limitations of each Preferred Share are as
follows: Preferred Shares are restricted in accordance with Rule 144 of the SEC
code, for a period of 12 months. The conversion of Preferred Stock to Common
Stock is not restricted as to the conversion itself or the effective date of the
conversion thereto. One share of Convertible Preferred Stock shall be equal to
Ten (10) shares of Common Stock, and at all times prior to conversion, shall
carry ten votes per share effective at the time
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The Company previously offered for sale, up to a maximum of 2,000,000
Units of its securities on a "best efforts basis" (the "Offering"). Each Unit
(the "Units") was sold at $10.00 per Unit ("Unit Price") and consisted of one
(1) share of 9.75% Series A(1) Convertible Preferred Stock (the "Shares") and
one warrant to acquire one share (the "Warrant"). The offering terminated August
1998 after $170,000.00 was raised thereunder.
Each share of Series A(1) Convertible Preferred Stock shall be
automatically converted into ten shares of common stock of Mortgage Bankers
Holding Corp. at such time as the inside bid price of its common stock closes at
$3.00 or higher for five consecutive trading days.
Each share of Series A(1) Convertible Preferred Stock will have a
cumulative preferential dividend of 9.75% of purchase price per Preferred Share
per annum, payable in cash, semi-annually each June 30 and December 31,
commencing December 31, 1998, in arrears, out of funds legally available
therefor, to each holder of record of Series A(1) Convertible Preferred Stock
on the Company's books as of the day preceding the dividend payment date. At the
time of conversion, the 9.75% dividend shall cease.
In addition, each share of Series A(1) Convertible Preferred Stock will
have one warrant attached entitling the holder to purchase one additional share
of common stock of MBHC at the $1.00 per share. The warrants will expire five
years following the date of subscription agreement executed by an investor.
SERIES B PREFERRED STOCK. - HAVING CORPORATE CUSIP NO. 618915 40 9
ISSUED BY STANDARD & POOR'S CUSIP SERVICE BUREAU.
As of the date of this Memorandum there were 500,000 shares of Series B
Preferred Stock authorized and 200,000 shares of Series B Preferred Stock,
$.0001 par value, issued and outstanding. Series B Preferred Stock is
non-voting, non-convertible, and shall not qualify for a dividend.
4.02. Issuance and Delivery of MBHCShares. The issuance and delivery
of the MBHCShares has been duly authorized, and such shares, when issued and
delivered in accordance with the terms of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable.
4.03. Organization. MBHC (a) is a corporation (i) duly organized,
validly existing and in good standing under the laws of the State of New York,
and (ii) duly qualified and in good standing as a foreign corporation in each
state in which it does business, except where the failure to so qualify would
not have a materially
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adverse effect on its business or assets, and (b) has the corporate power and
authority to own its properties and to carry on its business as now being
conducted.
4.04. Authority, Binding Agreement. This Agreement has been approved
by the Board of Directors of MBHC. No consents, authorizations or approvals,
whether of a governmental agency or instrumentality or otherwise, are necessary
in order to enable MBHC to enter into and perform this Agreement. This Agreement
constitutes legal, valid and binding obligations of MBHC and is enforceable
against MBHC in accordance with its terms.
4.05. Financial Condition. The business, assets, liabilities and
financial condition of MBHC are, in all material respects, as set forth in the
financial statements and other representations attached hereto as Schedule 4.05,
which financial statements (i) have been prepared in conformity with generally
accepted accounting principles, consistently applied, and (ii) do not fail to
state any material fact necessary to make the information therein not
misleading.
4.06 Litigation. Except as set forth in Section 4.06 of the MBHC
Disclosure Schedule There is no suit, action or other legal or administrative
proceedings pending or threatened against MBHC, and to its knowledge, no
circumstances exist or have occurred which may lead to any suit, action,
proceeding or investigation which could materially and adversely affect its
business, assets or financial condition. MBHC has received no notice from any
federal, state or local governmental agency asserting any violation by MBHC of
any law, ordinance or regulation. Notwithstanding the foregoing, MBHC attaches
hereto and sets forth in Section 4.06 that certain Memorandum as prepared by
MBHC's Securities Attorney F. Xxxxxx Xxx, III. Also notwithstanding the
foregoing, MBHC hereby discloses, warrants, and represents, that the former
Chairman of the Board of Directors of MBHC, who resigned effective November 5,
1998, may have obligated MBHC and/or its subsidiaries in a manner which could
materially and adversely affect its business, assets, or financial condition,
without the knowledge and/or approval of the full Board of Directors of MBHC.
5. Conditions to the Closing
The obligations of the parties hereunder are subject to the
satisfaction at or by the Closing of each of the conditions set forth below. Any
of such conditions may be waived by the other party but only in writing.
5.01. Compliance with Terms. On the Closing Date, all the terms,
conditions and covenants of this Agreement to be complied with and performed by
the respective parties shall have been complied with and performed in all
material respects.
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5.02. No Material Change in Target. There shall be no material
change in the business, assets, liabilities or financial condition of Target
from that set forth in Schedule A hereto; and there shall be no significant
change in the personnel of Target, except for the hiring of such personnel by
MBHC and such other actions as MBHC shall have consented to in writing.
5.03. Consent. Target shall have obtained the consent to
assignment of contract from all third parties to any contracts, agreements or
contractual rights with Target to the extent such consent is required by such
agreement or by applicable law as a result of the transactions contemplated
hereby, unless MBHC shall have in writing consented to the termination of
such contract, agreement or right or waived the consent with respect thereto.
5.04. No Material Change in MBHC. There shall be no material
change in the business, assets, liabilities or financial condition of MBHC from
that set forth in Schedule 4.05 hereto.
5.05. Employment Agreements. MBHC shall offer and deliver Executive
Employment Agreements on or before December 31, 1998, with effective dates of
December 3, 1998, to the following individuals: Xxxxx X. Xxxxxxxxxx, Xxxxxx X.
Xxxxxxxxx, and Xxxxx X. Xxxxxxx.
5.06. Opinions of Counsel. At or before the Closing:
a) MBHC shall have received an opinion of counsel for Target, dated as
of the Closing, to the effect that:
(i) Target is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas, and has the corporate power
and authority to own its properties and to carry on its business as now being
conducted. To the knowledge of such counsel, Target is duly qualified and in
good standing as a foreign corporation in each sate in which it does business,
except where the failure to so qualify would not have a materially adverse
effect on its business or assets.
(ii) No consents, authorizations or approvals, whether of Target (other
than the approvals provided for herein), governmental agencies or
instrumentalities or otherwise, are necessary in order to enable Seller to enter
into and perform this Agreement. This Agreement constitutes legal, valid and
binding obligations of the Seller and is enforceable against the Seller in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting enforcement of creditors' rights generally or by principles
governing the availability of equitable remedies.
(iii) Based in part on the representations of MBHC, the transfer and
conveyance of the TargetShares and the issuance and
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delivery of the MBHCShares, in each case pursuant to the terms of this
Agreement, is exempt from registration or qualification under any "Blue Sky,"
securities or similar laws of the states of New York and Texas by virtue of
exemptions thereto.
b) Target shall have received an opinion of counsel for MBHC, dated as
of the Closing, to the effect that:
(i) MBHC is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York, and has the corporate power
and authority to own its properties and to carry on its business as now being
conducted. To the knowledge of such counsel, MBHC is duly qualified and in good
standing as a foreign corporation in each state in which it does business,
except where the failure to failure to so qualify would not have a materially
adverse effect on its business or assets.
(ii) All corporate and other actions required to be taken by or on the
part of MBHC to authorize it to enter into and perform this Agreement have been
duly taken. No consents, authorizations or approvals, whether of governmental
agencies or instrumentalities or otherwise, are necessary in order to enable
MBHC to enter into and perform this Agreement. This Agreement constitutes legal,
valid and binding obligations of MBHC and is enforceable against MBHC in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting enforcement of creditors' rights generally or by principles governing
the availability of equitable remedies.
(iii) Based in part on the representations of the Seller, the transfer
and conveyance of the TargetShares and the issuance and delivery of the
MBHCShares, in each case pursuant to the terms of this Agreement, is exempt
from registration under the Securities Act of 1933, as amended, by virtue of
Section 4(2) thereof and from the qualification requirements of the securities
laws of the states of New York and Texas.
6. Covenants.
6.01. Stock Options. As part of their employment by MBHC, MBHC
agrees to grant Incentive Stock Options under its stock option plan and Section
422 of the Internal Revenue Code of 1986, as amended, to Xxxxx X. Xxxxxxxxxx,
Xxxxxx X. Xxxxxxxxx, and Xxxxx X. Xxxxxxx. The exact number of shares to be
granted to the respective employees shall be 500,000 shares of Common Stock of
MBHC. Each option shall become exercisable as per the terms and conditions of
that certain Stock Option Plan dated July 31, 1996 as adopted by MBHC. A copy of
said Stock Option Plan shall be included herewith in Section 6.01 of MBHC
Disclosure Schedule. In addition to the foregoing, an incentive stock option
bonus plan will be negotiated and made a part of Messrs. Burmeister, Rushovich,
and Xxxxxxx'x
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Executive Employment Agreements.
6.02. Waiver. Seller hereby waives any claim or cause of action
Seller may have against the representative for Seller, if any, based on a
claim that the consideration for the MBHCShares, as initially negotiated by
such representative, if any, on behalf of Seller, was insufficient or otherwise
inadequate.
7. Miscellaneous.
7.01. Other Documents. Seller shall, at any time after the Closing
upon the request of MBHC, execute and deliver to MBHC such documents or
instruments of conveyance, license or assignment or take such other action as is
reasonably necessary to complete the transfer of the TargetShares or other
transactions contemplated by this Agreement or to perfect the interest of MBHC
therein. Further, the parties agree to take all actions and file such documents
required to comply with New York securities laws, including the filing any
notices as contemplated by Section 1.01.
7.02. Costs. Except as otherwise specifically provided herein, MBHC
shall pay the Closing costs and transfer cost applicable to this Agreement and
the transfer of MBHCShares hereunder. Each party hereto shall bear the costs of
their respective counsel and all other legal fees and costs related thereto.
Both MBHC and Seller each hold the other harmless from any obligation for the
payment of any finders fees or commissions, if any, in connection with the
transactions contemplated by this Agreement as a result of any action of the
indemnifying party.
7.03. Invalidity Modification and Waiver. If any provision of this
Agreement shall be held to be invalid or void, the remaining provisions shall
nevertheless remain in effect. No provision of this Agreement may be modified
and the performance or observance thereof may not be waived except by written
agreement of the parties affected thereby. No waiver of any violation or
nonperformance of any provision of this Agreement shall be deemed to be a waiver
of any subsequent violation or nonperformance of the same or any other
provision of this Agreement.
7.04. Disputes, Choice of Law. This Agreement, the performance of
the parties hereunder and any disputes related hereto shall be governed by the
laws of the state of New York and subject to the exclusive jurisdiction of the
courts therein. If either party shall initiate a legal proceeding to enforce its
rights hereunder, the prevailing party in such legal proceedings shall be
entitled to recover from the other party all costs, expenses and reasonable
attorney's fees incurred in connection with such proceedings.
7.05. Entire Agreement. This Agreement is and represents the
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subject to the exclusive jurisdiction of the courts therein. If either party
shall initiate a legal proceeding to enforce its rights hereunder, the
prevailing party in such legal proceedings shall be entitled to recover from the
other party all costs, expenses and reasonable attorney's fees incurred in
connection with such proceedings.
7.05. Entire Agreement. This Agreement is and represents the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any prior or contemporaneous discussions or agreements related
thereof.
7.06. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be originals and enforceable, and together
shall constitute a single agreement.
IN WITNESS WHEREOF, with the intent of being legally bound hereby, the
parties hereto have caused this Agreement to be duly executed by their
respective authorized representative as of the date first written above.
MORTGAGE BANKERS HOLDING CORP. NATIONAL INSTITUTE COMPANIES OF
AMERICA, INC.
by /s/ XXXXX X. XXXX by /s/ XXXXX X. XXXXXXXXXX
---------------------------- -----------------------------
Xxxxx X. Xxxx, Chairman Xxxxx X. Xxxxxxxxxx, Chairman
ATTEST: ATTEST:
by /s/ XXXX X. X'XXXXXXX by /s/ ??????????????
---------------------------- -----------------------------
Xxxx X. X'Xxxxxxx, Secretary
SELLER:
/s/ XXXXX X. XXXXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxxxx
20
NICA Disclosure Schedule
The following items are attached hereto, incorporated herein, and made a part
hereof for all purposes:
NICA-2.01.a NICA Stock Certificate(s)
NICA-2.01.b Corporate Resolution of NICA Authorizing Transaction
NICA-2.01.c List of all Bank and Brokerage Accounts of NICA
NICA-2.01.d Corporate Records of NICA - including Bylaws, Articles of
Incorporation, Corporate Minutes, and Corporate Seal
NICA-3.06 NICA Financial Statements
NICA-3.07 List of NICA Current Liabilities
NICA-3.10 List of all Real Property Owned or Leased by NICA
NICA-3.11 List of all Insurance Policies Owned by NICA
NICA-3.12 Itemization of ALL Litigation to Which NICA is a Party, if
ANY
NICA-3.13 Copies of all Equipment Leases, Purchase Orders, and
Insurance Contracts to Which NICA is a Party
NICA-3.15.a List of NICA Employees and Copies of Employee Contracts and
Consulting Agreements
NICA-3.15.b Copy of NICA's Employee Benefits Plan
NICA-3.17.a List of all Bank, Brokerage, and Credit Accounts of NICA
NICA-3.17.b List of all Authorized Individuals to Accounts Listed in
NICA-3.17.a
NICA-5.06 NICA Opinion of Counsel
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MBHC Disclosure Schedule
The following items are attached hereto, incorporated herein, and made a part
hereof for all purposes:
MBHC-4.05 MBHC's Audited Financial Statements
MBHC-4.06.a Itemization of All Litigation to Which MBHC is a Party
MBHC-4.06.b Memorandum Prepared by Attorney F. Xxxxxx Xxx, III
MBHC-5.05 MBHC Employment Agreements to Xxxxxxxxxx, Rushovich and
Xxxxxxx
MBHC-5.06 MBHC Opinion of Counsel
MBHC-6.01 MBHC Stock Option Plan Dated July 31, 1996
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ADDENDUM
MBHC-NICA STOCK PURCHASE AGREEMENT
The following items are attached hereto, incorporated herein, and made a part
hereof for all purposes:
NICA request changes and/or adjustments to the following Sections:
1.01 PURCHASE AND SALE OF TARGET SHARES:
Lines: 8,9 and 10 "in exchange for an aggregate of One Million (1,000,000)
shares of Series A Preferred Stock of MBHC (hereinafter the "MBHC Shares")" to;
in exchange for an aggregate of One Million Three Hundred Thousand (1,300,000)
shares of Series A Preferred Stock of MBHC (hereinafter the "MBHC Shares")
2.02 MBHC:
"DELETED" Line: 5 "subject to contingency outlined in Section 7.05 below,"
3.07 UNDISCLOSED LIABILITIES:
(d): "DELETED" Line: 1-to-2 "as set further described in Section 7.05 below,"
3.25 INVESTMENT REPRESENTATIONS:
Line 14-to-15 "i.e. 1,000,000 share of Series A Preferred Stock of MBHC,
amongst key executives of NICA as part of this transaction. To;
Line 14 "i.e. 1,300,000 share of Series A Preferred Stock of MBHC.
Line 15 (DELETED) "amongst key executives of NICA as part of this transaction."
6.01 STOCK OPTIONS:
NICA's associates or assigns will individually have their council prepare
appropriate employment contracts to include Stock Options.
7.05 ENTIRE AGREEMENT:
"DELETED" Lines: 4-through-10 "Notwithstanding the above, the terms and
conditions of this Agreement shall be contingent upon MBHC capitalizing itself
with approximately $2,400,000 to $5,000,000 with 90 days of the date hereof. As
such, any and all Target Shares and any and all MBHC Shares outlined and
described in section 1.01 above shall be transferred upon satisfaction of
contingency.
23
NICA DISCLOSURE UNDERSTANDING
4.06 LITIGATION:
NICA acknowledges that MBHC has suits, actions, proceeding and threatening
against MBHC.
Signed with the intent of being legally bound hereby, the parties hereto have
caused this Agreement to be duly executed by their respective authorized
representative as of this date.
MORTGAGE BANKERS HOLDING CORP.
By: /s/ XXXXX X. XXXX This 15th day of March 1999
-----------------------------------
Xxxxx X. Xxxx, Acting Chairman
ATTEST:
By: This day of March 1999
----------------------------------- ---
Xxxx X. X'Xxxxxxx, Acting Secretary
NATIONAL INSTITUTE COMPANIES OF AMERICA, INC.
By: /s/ XXXXX X. XXXXXXXXXX This 15th day of March 1999
-----------------------------------
Xxxxx X. Xxxxxxxxxx, Chairman
ATTEST:
By: /s/ ?????????????? This 15th day of March 1999
-----------------------------------
SELLER:
/s/ XXXXX X. XXXXXXXXXX This 15th day of March 1999
-----------------------------------
Xxxxx X. Xxxxxxxxxx
