EXHIBIT 10.1
PURCHASE AND ASSUMPTION AGREEMENT
THIS PURCHASE AND ASSUMPTION AGREEMENT entered into with effect as of
February 28, 2003, between MATRIX FINANCIAL SERVICES CORPORATION, an Arizona
corporation ("Seller"), MATRIX CAPITAL BANK, a federal savings bank ("Parent"),
and AMPRO MORTGAGE CORPORATION, a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is a mortgage banking corporation that is engaged in
the business of originating, buying and servicing mortgage loans, and is an
operating subsidiary of a federally chartered savings bank; and
WHEREAS, Seller desires to sell and transfer to Purchaser, and
Purchaser desires to purchase and otherwise acquire from Seller, all right,
title and interest in and to the Production Assets (as hereinafter defined) in
accordance with the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, warranties, conditions and
promises hereinafter contained, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Purchaser, Seller and Parent
hereby agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions. Throughout this Agreement, and any
amendments hereto, whenever capitalized the following terms shall have the
meanings ascribed to them in this Article I:
"Accrued Consideration and Benefits": All amounts due and
payable, or that have accrued with respect to the period, prior to the Initial
Closing Date, to Seller's employees under all incentive, bonus, commission or
other compensation arrangements or any Employee Benefit Plan applicable to such
employees, plus amounts that would have been payable by Seller for taxes and
other similar payments related thereto. The Accrued Consideration and Benefits
are listed on Schedules 6.8(a)-1 on an employee-by-employee basis.
"Acquired Division": The newly formed division of Seller
containing only the Production Assets and Existing Pipeline Applications, as
described in Section 2.1(a).
"Affiliate": Any Person who directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified. For purposes of this definition, the term
"control" (including, with correlative meaning, the terms "controlled by" and
"under common control with") shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agencies" or "Agency": GNMA, FNMA, FHLMC, HUD, FHA, VA, RHS
and/or a State Agency, as applicable.
"Aggregate Locked Loan Profitability Amount": The sum of the
Locked Loan Profitability Amount for the First Month and the Locked Loan
Profitability Amount for the Second Month, determined as follows:
Locked Loan Profitability Amount for the
First Month. With respect to Mortgage Loans originated out of
the Leased Premises and closed and funded during the thirty
(30) day period beginning on the Initial Closing Date (such
thirty day period, the "First Month") by and in the name of
Seller that result from Existing Pipeline Applications for
which an interest rate lock was registered with Seller as of
the Initial Closing Date, an amount determined as follows: (i)
the Monthly Anticipated Purchase Price Adjustment Payment for
the First Month shall be divided by the aggregate original
principal balance of all Mortgage Loans that are closed and
funded by Seller in the First Month, which amount shall be
expressed in basis points; and (ii) if the amount determined
in clause (i) is greater than thirty basis points (0.30%),
then the Locked Loan Profitability Amount for the First Month
shall equal one-half of the difference between the amount
determined under clause (i) and thirty basis points (0.30%)
multiplied by the original principal balance of all Mortgage
Loans originated out of the Leased Premises and closed and
funded in the First Month by and in the name of Seller that
result from Existing Pipeline Applications for which an
interest rate lock was registered with Seller as of the
Initial Closing Date. In the event that the Monthly
Anticipated Purchase Price Adjustment Payment does not
indicate a gain for the First Month, then no Locked Loan
Profitability Amount for the First Month shall be payable.
Locked Loan Profitability Amount for the
Second Month. With respect to Mortgage Loans originated out of
the Leased Premises and closed and funded during the
thirty-first (31st) through and including the sixtieth (60th)
day following the Initial Closing Date (the "Second Month") by
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and in the name of Seller that result from Existing Pipeline
Applications for which an interest rate lock was registered
with Seller as of the Initial Closing Date, an amount
determined as follows: (i) the Monthly Anticipated Purchase
Price Adjustment Payment for the Second Month shall be divided
by the aggregate original principal balance of all Mortgage
Loans that are closed and funded by Seller in the Second
Month, which amount shall be expressed in basis points; and
(ii) if the amount determined in clause (i) is greater than
thirty basis points (0.30%), then the Locked Loan
Profitability Amount for the Second Month shall equal one-half
of the difference between the amount determined under clause
(i) and thirty basis points (0.30%) multiplied by the original
principal balance of all Mortgage Loans originated out of the
Leased Premises and closed and funded in the Second Month by
and in the name of Seller that result from Existing Pipeline
Applications for which an interest rate lock was registered
with Seller as of the Initial Closing Date. In the event that
the Monthly Anticipated Purchase Price Adjustment Payment does
not indicate a gain for the Second Month, then no Locked Loan
Profitability Amount for the Second Month shall be payable.
"Agreement": This Purchase and Assumption Agreement, including
all Exhibits and Schedules attached hereto or delivered pursuant hereto, and all
amendments hereof and supplements hereto.
"Asset Payment Amount": Three Million Three Hundred Forty-One
Thousand Seven Hundred Thirty-Eight Dollars ($3,341,738), the dollar amount that
the Parties agree represents the value of the Tangible Assets and the Intangible
Assets, as of the Initial Closing Date.
"Assumed Obligations": As defined in Section 2.1(c).
"Business Day": Any day other than a Saturday, Sunday, federal
holiday or any other day on which banking institutions in either the State of
Texas, Arizona or Colorado are authorized or obligated by law to be closed.
"Consent": The affirmative written consent or approval of any
Person that is required to consent to or approve the transfer to Purchaser by
Seller of the Production Assets at or after the Initial Closing Date, the
conduct by Purchaser of business with the Production Assets at and after the
Initial Closing Date, or the consummation by either Seller or Purchaser of the
transactions consummated hereby, which consents and approvals shall be given
without material adverse modification to the rights of, and without cost or
expense to, the lessee or the contracting party thereunder (other than the costs
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and expenses (including without limitation professionals' fees and expenses)
incurred by such lessee or contracting party in reviewing the Consent).
"Contract Rights": Those rights of Seller under agreements
relating specifically to the Production Assets (other than the Leases, the
Equipment Leases, the New and Existing Pipeline Applications and the Final
Closing Date Sales Commitments), including without limitation service contracts
and data processing contracts. The agreements giving rise to Contract Rights as
of the relevant date are listed on Schedule 4.2(g).
"Deficit Draw": The amount, as of the Initial Closing Date, of
all unearned draws paid to Seller's employees listed on Schedule 6.8 as of the
Initial Closing Date that exceed the commissions owed to such employees. The
Deficit Draws as of the Initial Closing Date is or will be listed on Schedule
6.8(a)-2 on a loan officer-by-loan officer basis.
"Employee Benefit Plans": As defined in Section 6.8(a).
"Employee-Related Matters": As defined in Section 4.1(g).
"Equipment Leases": All leases for the use of any furniture,
fixtures or equipment now located and used in the Leased Premises and otherwise
related to the Acquired Division. The Equipment Leases as of the relevant date
are listed on Schedule 4.2(f)-2.
"Escrow": An interest bearing escrow account maintained at
U.S. Bank in St. Xxxx, MN, in which will be held the advance against the
Production Premium pursuant to Section 2.3(a)(i), all Monthly Anticipated
Purchase Price Adjustment Payments that are required to be made by Seller and
Purchaser pursuant to Section 2.3(c)(i), and all interest and earnings thereon.
All funds held in Escrow shall be subject to the disbursement formulae in
Section 2.3(c).
"Executive Committee": As defined in the Operating Plan.
"Exhibit": An exhibit attached hereto or delivered or to be
delivered pursuant to this Agreement.
"Existing Pipeline Applications": Applications for Mortgage
Loans taken by employees of Seller or approved brokers of Seller and entered
onto Seller's pipeline tracking system prior to the Initial Closing Date, which
are active and have not yet closed on the Initial Closing Date.
"FHA": The Federal Housing Administration, or any successor
thereof.
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"FHLMC": The Federal Home Loan Mortgage Corporation, or any
successor thereof.
"Final Closing Date": The date on which the Transition Period
ends, which date shall be six (6) months after the Initial Closing Date, or such
other date as is agreed upon in writing by Purchaser and Seller.
"Final Closing Date Sales Commitments": Commitments to sell
Mortgage Loans that have not closed on or before the Final Closing Date, which
commitments are entered into by Seller in the ordinary course of business on or
before, and which are in existence as of, the Final Closing Date.
"FNMA": The Federal National Mortgage Association, or any
successor thereof.
"GAAP": Generally accepted accounting principles, as
established by the Financial Accounting Standards Board for use in the United
States, consistently applied and maintained throughout the period indicated.
"GNMA": The Government National Mortgage Association, or any
successor thereof.
"Hired Employees": As defined in Section 6.8(a).
"HUD": The U.S. Department of Housing and Urban Development,
or any successor thereto.
"Indemnified Events": The events set forth in Article VII with
respect to which Losses are indemnified by a Party.
"Indemnified Party": A Party that benefits from
indemnification from the other Party pursuant to Article VII.
"Initial Closing Date": February 28, 2003.
"Initial Closing Date Sales Commitments": Commitments to sell
Mortgage Loans that have not closed on or before the Initial Closing Date, which
commitments are entered into by Seller in the ordinary course of business on or
before, and which are in existence as of, the Initial Closing Date.
"Insurer": FHA, VA, RHS or any private mortgage insurer that
insures or guarantees all or any portion of the risk of loss upon default by a
Mortgagor under any Mortgage Loan or any other insurer that provides policies of
life, hazard, disability, title or other insurance with respect to any of the
Mortgage Loans or the collateral securing a Mortgage Loan.
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"Intangible Assets": The computer software and other
intangible assets owned or licensed by Seller as of the Initial Closing Date,
which are located and used in the Leased Premises and related to the Acquired
Division, and which are listed on Schedule 4.1(h)-2. Schedule 4.1(h)-2 is
referred to herein as the "Initial Closing Date Intangible Assets Schedule."
"Investor": FNMA, FHLMC or GNMA, or any other Person having
the beneficial interest in a Mortgage Loan that is the subject of a New or
Existing Pipeline Application, or any purchaser or prospective purchaser of a
Mortgage Loan that is the subject of a New or Existing Pipeline Application.
"Lease-Back Charge": As defined in Section 2.4 hereof.
"Leased Premises": The locations referred to on attached
Schedule 4.2(f) (or the portions of such locations, as indicated on such
Schedule) and leased by Seller under the Leases as of the Initial Closing Date
(or any other loan production office established (i) by Seller, with the consent
of Purchaser, during the Transition Period, or (ii) by Purchaser after the Final
Closing Date but before the first anniversary of the Initial Closing Date,
which, in either case, is established in connection with the relocation of a
Leased Premises). It is understood that Seller's offices and facilities (or
portions of Seller's offices and facilities) not referred to on Schedule 4.2(f)
(other than a relocated office, as described in the immediately preceding
sentence) will not be considered "Leased Premises" and will not be acquired by
Purchaser hereunder.
"Leases": The real property leases listed on attached Schedule
4.2(f)-1.
"Loan Files": All documents, whether on hard copy, computer
record, microfiche or any other format, evidencing and pertaining or relating to
the processing and origination of the New or Existing Pipeline Applications, as
the case may be, including without limitation all documents in Seller's
possession that are necessary to comply with or close a Mortgage Loan in
accordance with applicable Mortgage Loan Requirements.
"Losses": Any claims, damages, liabilities, expenses,
penalties, fines, forfeitures, actions, causes of action and judgments of any
kind or nature whatsoever, including without limitation attorney's fees and
costs, costs of investigation, defense, settlement and appeal, and
disbursements. A "Loss" must be actual and out-of-pocket, and must not relate to
indirect, consequential, administrative or overhead damages, liabilities,
expenses and other amounts.
"Management Consultant": Purchaser.
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"Monthly Anticipated Purchase Price Adjustment Payment": Any
net gain or loss attributable to the operations of the Acquired Division
reflected on the Monthly Transition P&L Statement for the relevant month (or
portion thereof) during the Transition Period without taking into account the
Lease-Back Charges. In calculating the Monthly Anticipated Purchase Price
Adjustment Payment, the Monthly Transition P&L Statement shall include and take
into account the items set forth on attached Exhibit A-1, and shall not include
nor take into account the items set forth on Exhibit A-2.
"Monthly Transition P&L Statement": An income statement for
the Acquired Division with respect to the relevant month (or portion thereof)
during the Transition Period. In the event that the Initial Closing Date does
not occur as of the first day of a calendar month, a Monthly Transition P&L
Statement shall be prepared with respect to the partial months in which the
Initial Closing Date and Final Closing Date occur in addition to each full
calendar month between the Initial Closing Date and Final Closing Date.
"Mortgage": The mortgage, deed of trust, security deed and/or
other instrument that creates a first lien on real property which serves as
collateral for a Note.
"Mortgage Loan": A loan made to a Mortgagor, evidenced by a
Note, and secured by a Mortgage on a one-to-four family residential real
property.
"Mortgage Loan Requirements": The (i) federal, state, local or
foreign laws, statutes, rules, regulations, ordinances, standards, requirements,
administrative rulings, orders or processes applicable to the processing,
origination and servicing of the New and Existing Pipeline Applications, (ii)
responsibilities and obligations set forth in any agreement between Seller and
an Agency, Investor or Insurer, and (iii) requirements of an Investor, Agency or
Insurer with respect to the processing or origination of the New and Existing
Pipeline Applications.
"Mortgagor": The obligor(s) on a Note.
"New Pipeline Applications": Applications for Mortgage Loans
taken by employees of Seller employed within the Acquired Division or approved
brokers of Seller and entered onto Seller's pipeline tracking system during the
Transition Period.
"Note": A written promise to pay a sum of money at a stated
interest rate, which rate may be fixed or adjustable during the term of the
obligation, executed by a Mortgagor and secured by a Mortgage.
"Operating Plan": The written plan attached hereto as Exhibit
B setting forth the intended operations and activities of the Acquired Division
during the Transition Period.
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"Parent": As defined in the preamble to this Agreement.
"Parties": Purchaser and Seller.
"Person": An individual or individuals, or a partnership,
joint venture, corporation, limited liability company, unincorporated
association, government (or any agency or political subdivision thereof) or
other entity.
"PMI": The default insurance provided by private mortgage
insurance companies (otherwise known as private mortgage insurance) on a
Mortgage Loan, if any.
"Production Assets": Collectively, the Tangible Assets, the
Intangible Assets, the Subsequently Acquired Tangible Assets, the Subsequently
Acquired Intangible Assets, the Contract Rights, the Leases, the Equipment
Leases, the New Pipeline Applications, the Final Closing Date Sales Commitments
and the Loan Files.
"Production Premium": An amount equal to twenty basis points
(0.20%) multiplied by the original principal balance of all Mortgage Loans
originated out of the Leased Premises and closed and funded from the Initial
Closing Date up to (but not including) the first anniversary of the Initial
Closing Date by and in the name of Seller (during the Transition Period) or by
and in the name of Purchaser (after the Final Closing Date but before the first
anniversary of the Initial Closing Date). The Production Premium will not take
into account Mortgage Loans: (1) originated and registered as part of a state
housing agency program; (2) originated at any of Seller's retail loan production
offices that are not acquired by Purchaser hereunder; or (3) that are or
historically have been purchased by one or more of Seller's Affiliates.
"Production Premium Cap": $9,100,000.00, representing twenty
basis points (0.20%) multiplied by $4,550,000,000.00.
"Production Premium Floor": $4,900,000.00, representing twenty
basis points (0.20%) multiplied by $2,450,000,000.00.
"Purchase Price": The amount payable by Purchaser to
Seller as specified in Section 2.2 hereof and subject to adjustment as provided
in Section 2.5 of this Agreement.
"Purchaser": As defined in the preamble to this Agreement.
"RHS": The Rural Housing Service of the U.S. Department of
Agriculture, or any successor thereto.
"Sales Commitments": Initial Closing Date Sales Commitments
and Final Closing Date Sales Commitments, collectively.
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"Schedule": A schedule attached hereto or delivered or to be
delivered pursuant to this Agreement. A Schedule may be provided in written or
electronic format.
"Seller": As defined in the preamble to this Agreement.
"State Agency": Any state agency with authority to (i)
regulate the businesses of Purchaser or Seller, as the case may be, including
without limitation any state agency with authority to determine the investment,
origination, lending or servicing requirements with regard to mortgage loans
originated, purchased or serviced by Purchaser or Seller, as the case may be, or
(ii) originate, purchase, or service mortgage loans, or otherwise promote
mortgage lending, including without limitation state and local housing finance
authorities.
"Subsequently Acquired Assets Payment Amount": The book value
or other amount, as determined by the Parties, that represents the value of the
Subsequently Acquired Tangible Assets and the Subsequently Acquired Intangible
Assets, as of the Final Closing Date.
"Subsequently Acquired Intangible Assets": All of the computer
software and other intangible assets owned or licensed by Seller as of the Final
Closing Date that: (a) are located and used in the Leased Premises and related
to the Acquired Division, (b) are not listed on the Initial Closing Date
Intangible Assets Schedule, and (c) are listed on Schedule 4.1(h)-4 (which will
be prepared by the Parties on or before the Final Closing Date and attached
hereto). It is the intention of the Parties that the Subsequently Acquired
Intangible Assets shall include relevant assets that inadvertently were left off
of the Initial Closing Date Intangible Assets Schedule and that were acquired by
the Acquired Division during the Transition Period in the ordinary course of
business and in accordance with the Operating Plan.
"Subsequently Acquired Tangible Assets": All of the tangible
personal property owned by Seller as of the Final Closing Date that: (a) are
located and used in the Leased Premises and related to the Acquired Division,
(b) are not listed on the Initial Closing Date Tangible Assets Schedule, and (c)
are listed on Schedule 4.1(h)-3 (which will be prepared by the Parties on or
before the Final Closing Date and attached hereto). It is the intention of the
Parties that the Subsequently Acquired Tangible Assets shall include relevant
assets that inadvertently were left off of the Initial Closing Date Tangible
Assets Schedule and that were acquired by the Acquired Division during the
Transition Period in the ordinary course of business and in accordance with the
Operating Plan.
"Tangible Assets": All of the tangible personal property owned
by Seller as of the Initial Closing Date, which are located and used in the
Leased Premises and related to the Acquired Division, and which are listed on
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Schedule 4.1(h)-1. Schedule 4.1(h)-1 hereafter referred to as the "Initial
Closing Date Tangible Assets Schedule."
"Transition Employees": As defined in Section 6.8(a).
"Transition Period": The period of time from the Initial
Closing Date up to but not including the Final Closing Date.
"Transition Period Gain or Loss": The net gain or loss
attributable to the operations of the Acquired Division reflected on the
Transition P&L Statement for the entire Transition Period without taking into
account the Lease-Back Charges. In calculating the Transition Period Gain or
Loss, the Transition P&L Statement shall include and take into account the items
set forth on attached Exhibit A-1, and shall not include nor take into account
the items set forth on Exhibit A-2.
"Transition P&L Statement": An income statement for the
Acquired Division with respect to the entire Transition Period.
"Transition Services Agreement": As described in Exhibit C.
"VA": The United States Department of Veterans Affairs, or any
successor thereof.
"Warehouse Agreement": The agreement by and between Seller and
Parent setting forth the terms and conditions of the warehouse financing
facility provided by Parent to the Acquired Division, which agreement is
attached as Appendix A to the Operating Plan.
"WARN": As defined in Section 6.12.
Section 1.2 General Interpretive Principles. For purposes of
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) The use of the singular form includes the plural, and the
use of the plural form includes the singular.
(b) The use of any gender herein shall be deemed to include
the other gender.
(c) The captions used in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define or
limit the scope or content of this Agreement or any provision hereof.
(d) The words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision.
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(e) The term "include" or "including" shall mean without
limitation by reason of enumeration.
(f) Each reference to an "Article" of this Agreement shall
include all Sections of such Article. Similarly, each reference to a Section
shall include all subsections of such Section.
(g) Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder.
ARTICLE II
ACQUISITION; PURCHASE PRICE
Section 2.1 Acquisition; Assumption.
(a) New Production Division of Seller. As of the Initial
Closing Date, Seller will cause all of the Production Assets that are acquired
or to be acquired by Purchaser hereunder to be segregated in a newly formed
division of Seller (the "Acquired Division"). The Parties agree that, from and
after the Initial Closing Date, the books and records of Seller shall be
maintained in a manner that (i) will accurately reflect the net gains and losses
and other results of operations of the Acquired Division during the Transition
Period, and (ii) is separate and apart from any and all other activities and
operations of Seller. Utilizing such books and records, the Parties, within
fifteen (15) days after the end of each month during the Transition Period,
utilizing appropriate personnel of the Parties, jointly shall prepare and
approve a Monthly Transition P&L Statement that will set forth the net gains and
losses of the Acquired Division with respect to such month. In the event of a
dispute regarding a Monthly Transition P&L Statement, the Parties shall work
diligently to resolve such dispute as quickly as possible either by themselves
or, if necessary, pursuant to the procedures set forth in Section 2.6 hereof.
(b) Production Assets. Upon the terms and subject to the
conditions of this Agreement, the Production Assets shall be transferred from
Seller to Purchaser as follows:
(i) On the Initial Closing Date, Seller shall sell,
transfer and assign to Purchaser, and Purchaser
shall purchase and accept from Seller, all right, title and interest in and to
the Tangible Assets and the Intangible Assets.
(ii) As promptly after the Initial Closing Date as is
reasonably practicable, Seller shall sell,
transfer and assign to Purchaser, and Purchaser shall purchase and accept from
Seller, all right, title and interest in and to the Contract Rights, the Leases
and the Equipment Leases.
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(iii) On the Final Closing Date, Seller shall sell,
transfer and assign to Purchaser, and Purchaser shall purchase and accept from
Seller, all right, title and interest in and to the New Pipeline Applications,
the Loan Files related thereto, the Final Closing Date Sales Commitments, the
Subsequently Acquired Tangible Assets and the Subsequently Acquired Intangible
Assets.
(iv) Upon each sale, transfer and assignments of the
Production Assets hereunder, such Production Asset shall be free and clear of
all liens, charges and encumbrances other than the Assumed Obligations.
(c) Assumptions. Other than as expressly set forth in Schedule
2.1(c) (the "Assumed Obligations"), Purchaser is not assuming, and shall not be
responsible or liable for, in any way whatsoever, any liability or obligation of
Seller.
Section 2.2 Calculation of Purchase Price. In full
consideration for the purchase or other acquisition of the Production Assets,
and upon the terms and subject to the conditions of this Agreement, Purchaser
shall pay to Seller, subject to adjustment as provided in Section 2.5 below, the
purchase price (the "Purchase Price"), which shall be calculated as follows:
(a) The Asset Payment Amount,
PLUS (b) The Subsequently Acquired Assets Payment Amount,
PLUS (c) The Production Premium, which must be at least equal
to the Production Premium Floor but not more than the Production Premium Cap,
PLUS (d) The Aggregate Locked Loan Profitability Amount,
PLUS/MINUS (e) The Transition Period Gain or Loss.
Section 2.3 Payment of Purchase Price. The Purchase Price
shall be paid as follows:
(a) Initial Closing Date Payment. On the Initial Closing Date,
Purchaser shall:
(i) Deposit into Escrow Three Million Five Hundred
Thousand Dollars ($3,500,000.00) as an advance
against the Production Premium, and
(ii) Pay to Seller One Million Six Hundred Seventy
Thousand Eight Hundred Sixty-Nine Dollars
($1,670,869.00), representing one-half of the Asset Payment Amount.
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(b) Aggregate Locked Loan Profitability Amount. On the
ninetieth (90th) day after the Initial Closing Date, Purchaser shall pay to
Seller an amount equal to the Aggregate Locked Loan Profitability Amount. Prior
to any such payment being required pursuant to this Section 2.3(b), Purchaser
shall have delivered to Seller, and Seller shall have reviewed and approved, the
applicable Monthly Transition P&L Statements for the relevant time periods.
(c) Escrow Payments.
(i) Transition Period Escrow Deposits. Within thirty
(30) days following the last day of each month during the Transition Period,
Seller shall deposit into Escrow the Monthly Anticipated Purchase Price
Adjustment Payment associated with any net gain attributable to the Acquired
Division for the relevant month, and Purchaser shall deposit into Escrow the
Monthly Anticipated Purchase Price Adjustment Payment associated with any net
loss attributable to the Acquired Division for the relevant month. Prior to any
such deposit being required pursuant to this Section 2.3(c)(i), Purchaser shall
have delivered to Seller, and Seller shall have reviewed and approved, the
Monthly Transition P&L Statement for the relevant month as described in Section
2.1(a) above.
(ii) Production Premium Payments and Final
Disbursement. On the thirtieth (30th) day following the last day of each of the
first twelve (12) months following the Initial Closing Date, the Parties shall
cause to be disbursed from the Escrow an amount equal to the Production Premium
for such month. After the final monthly payment is made under this Section
2.3(c)(ii), if the total payments made under this Section 2.3(c)(ii) to Seller
do not equal or exceed the Production Premium Floor, then the Parties shall
cause such shortfall (up to but not exceeding the Production Premium Floor) to
be disbursed from Escrow to Seller on the forty-fifth (45th) day after the first
anniversary of the Initial Closing Date. If the Escrow does not contain enough
money to make the payment required under this Section in any month, such
shortfall shall be paid to the Seller by the Purchaser. If, at any time, the
total payments made under this Section 2.3(c)(ii) plus the amount held in the
Escrow equal or exceed the Production Premium Floor, then all such excess (and
all additional amounts subsequently deposited into the Escrow) shall be paid to
Purchaser. Notwithstanding anything in this Agreement to the contrary, no
disbursement from Escrow (or other payment by Purchaser) shall be made under
this Section 2.3(c)(ii) in excess of the Production Premium Cap.
(iii) Transition Period Settle Up. On the forty-fifth
(45th) day following the Final Closing Date, Purchaser shall present to Seller
the Transition P&L Statement. Seller shall have ten (10) days following delivery
of such statement by Purchaser to review and approve or object to the Transition
P&L Statement. Based on Transition P&L Statement (and assuming Seller's approval
thereof), (a) if all of the Monthly Anticipated Purchase Price Adjustment
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Payments paid into Escrow by Seller were, in the aggregate, more than required
to be paid as stated in the Transition P&L Statement, then the Parties shall
cause such excess to be disbursed to Seller from the Escrow, (b) if all of the
Monthly Anticipated Purchase Price Adjustment Payments paid into Escrow by
Seller were, in the aggregate, less than required to be paid as stated in the
Transition P&L Statement, then Seller shall cause such shortfall to be deposited
into the Escrow, (c) if all of the Monthly Anticipated Purchase Price Adjustment
Payments paid into Escrow by Purchaser were, in the aggregate, more than
required to be paid as stated in the Transition P&L Statement, then the Parties
shall cause such excess to be disbursed to Purchaser from the Escrow, and (d) if
all of the Monthly Anticipated Purchase Price Adjustment Payments paid into
Escrow by Purchaser were, in the aggregate, less than required to be paid as
stated in the Transition P&L Statement, then Purchaser shall cause such
shortfall to be deposited into the Escrow.
(iv) Interest. All interest and other earnings that
accrue under the Escrow shall be deposited in the Escrow, and disbursed in
accordance with this Section 2.3(c).
(v) Closing. No later than five (5) Business Days
following the forty-fifth (45th) day after the first anniversary of the Initial
Closing Date, the Parties shall take all appropriate action to close the Escrow
and to cause to be disbursed to Purchaser all amounts, if any, in Escrow not
required to be disbursed to Seller under this Section 2.3(c).
(vi) Benefit of Parties. All funds in the Escrow
shall be deemed held for the benefit of Purchaser and Seller subject to the
disbursement requirements stated in this Section 2.3(c).
(d) Final Closing Date Payment. On the Final Closing Date,
Purchaser shall pay to Seller:
(i) One Million Six Hundred Seventy Thousand Eight
Hundred Sixty-Nine Dollars ($1,670,869.00), representing the remaining one-half
of the Asset Payment Amount, and
(ii) An amount equal to the Subsequently Acquired
Assets Payment Amount. Prior to Purchaser being required to make any payment
pursuant to this Section 2.3(d)(ii), and prior to any sale and transfer of the
Subsequently Acquired Assets, Seller shall have delivered to Purchaser, and each
Party shall have reviewed and approved (which approval process shall take no
longer than fifteen (15) days following the Final Closing Date), the
Subsequently Acquired Tangible Assets Schedule and the Subsequently Acquired
Intangible Assets Schedule.
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Section 2.4 Asset Lease-Back. Upon acquisition by Purchaser
and transfer and assignment by Seller, all Tangible Assets, Intangible Assets,
Contract Rights, Leases and Equipment Leases shall be leased back to Seller by
Purchaser on a monthly basis for the remainder of the Transition Period for an
amount determined as follows (such amount the "Lease-Back Charge"): (a) with
regard to the Tangible Assets and Intangible Assets, Seller shall lease such
items from Purchaser for the amount of their monthly depreciation, (b) with
regard to the Contract Rights, Seller shall lease such items from Purchaser for
the amount of all fees and charges (or allocated portions thereof) actually
incurred by Purchaser in such month, and (c) with regard to the Leases and
Equipment Leases, Seller shall lease such items from Purchaser for the amount of
all Lease costs (or allocated portions thereof) actually incurred by Purchaser
in such month.
Section 2.5 Adjustments.
(a) Correction of Errors. If any of the information used in
calculating the Purchase Price shall be found by a Party to have been incorrect
or incorrectly computed or the Purchase Price shall be found by a Party to have
been otherwise calculated improperly, the Purchase Price shall be promptly and
appropriately adjusted on the basis of the correct and proper information.
Payment or reimbursement shall be promptly made by the appropriate Party after
notice from the other Party hereto setting forth in reasonable detail the amount
of such adjustment claimed and the basis for such adjustment.
(b) Interest on Post-Closing Adjustments. Any payments by any
Party to the other Party pursuant to Section 2.5(a) shall bear interest at the
federal funds rate published in The Wall Street Journal as in effect on the date
such payment was initially due hereunder from such date to the date of payment.
Section 2.6 Dispute Resolution. The Parties agree to attempt
in good faith to resolve any dispute between the Parties hereunder. If,
notwithstanding such efforts, within thirty (30) days after one Party gives the
other Party notice of the dispute (or ten (10) days if such dispute involves a
Monthly Transition P&L Statement under Section 2.1(a) hereof), the Parties
cannot resolve such dispute, the matter shall be submitted to an independent
consulting, accounting or brokerage firm reasonably acceptable to both Parties
that is knowledgeable in the area in which the dispute arises (the "Firm") whose
determination shall be final and binding on the Parties. The Firm's
determination may be entered as a judgment in any court having jurisdiction,
subject only to challenges on the grounds set forth in the appropriate
jurisdiction's statutes relating to the enforceability or appealability of
binding arbitration, or the Firm's incorrect application of the substantive laws
of the State of Texas. If the Firm is at any time unable or unwilling to serve
in such capacity, the Parties shall in good faith select another firm which the
Parties reasonably agree is knowledgeable and independent to serve as the "Firm"
15
hereunder. The fees of the Firm shall be paid by the Party determined by the
Firm to be the non-prevailing Party with respect to such dispute, and in the
event that the Firm determines that the non-prevailing Party had no reasonable
basis to raise such dispute or that the dispute was not raised in good faith,
the non-prevailing Party also shall pay all costs and expenses (including all
attorney and other professional fees) of the other Party in connection with such
dispute. The Firm shall be chosen within ten (10) days after written notice by
either Party to the other that a Firm be chosen to resolve the dispute. The Firm
shall conduct a hearing of the dispute at a reasonably accessible location
within Dallas, Texas and on a date of the Firm's choosing no less than ten (10)
nor more than twenty (20) days after the Firm has agreed to participate in this
matter. Any hearing may be held by conference telephone call if agreed by the
Parties. The Firm shall render its decision within thirty (30) days after the
hearing. All discovery issues shall be resolved by the Firm and shall be final.
The Parties may use consultants and advisors to assist them and participate in
the hearing. The Parties shall indemnify the Firm in connection with its
services as long as the Firm acts in good faith and without gross negligence.
The Parties shall enter into any retention and indemnification agreements as may
be reasonably required by the Firm in connection with the performance of its
duties under this Section 2.6 which are not inconsistent with the provisions of
this Section 2.6. If the Parties cannot agree on the Firm, the Parties shall
submit their dispute to the American Arbitration Association for resolution in
accordance with its Commercial Arbitration Rules. Such arbitration shall be
conducted in substantially the same manner as described in this Section 2.6. In
the event that any dispute involves or is raised by the Parent, the Parent shall
have all of the rights and obligations of the Seller under this Section 2.6, and
in the event that any dispute involves or is raised by both the Parent and the
Seller, the Parent and the Seller hereby designate the Seller as the entity
through which all decisions related to this Section 2.6 shall be made and upon
which the Purchaser may rely.
ARTICLE III
CLOSING AND SETTLEMENT
Section 3.1 Closing. The closing hereunder shall take place
beginning at 10:00 a.m. (Eastern time) on the Initial Closing Date, and shall,
at Purchaser's option, be conducted either (a) by telephone, confirmed by
letter, facsimile transmission or wire as the Parties shall agree, or (b) in
person, at the offices of Weiner Xxxxxxx Xxxxxx Xxxxx PC in Washington, D.C. The
Parties also shall convene to memorialize the subsequent transfers and to close
the transactions contemplated hereunder on the Final Closing Date at a mutually
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agreeable time on the Final Closing Date by telephone, confirmed by letter,
facsimile transmission or wire as the Parties shall agree.
Section 3.2 Initial Closing Date Deliveries.
(a) Seller's Documents. On the Initial Closing Date, Seller
shall deliver to Purchaser:
(i) A copy of the resolutions of each of the boards
of directors of Parent and Seller authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
certified by an appropriate officer of Seller and Parent, as applicable;
(ii) Certificates of incumbency of the officers of
Seller and Parent, respectively, dated as of the Initial Closing Date;
(iii) One or more certificates signed by an
authorized officer of Seller, dated as of the Initial Closing Date, to the
effect that (1) each of Seller's representations and warranties made in Article
IV hereof are true and correct in all material aspects as of the Initial Closing
Date and that all of the terms, covenants and conditions of this Agreement
required to be complied with and performed by Seller at or prior to the Initial
Closing Date have been duly complied with and performed in all material
respects, and (2) the resolutions of each of the boards of directors of Parent
and Seller delivered to Purchaser pursuant to this Section 3.2(a) have not been
amended, modified, annulled or revoked and are in full force and effect as of
the Initial Closing Date;
(iv) A certificate issued by the Secretary of State
of the State of Arizona stating that Seller is in good standing, which
certificate is dated no earlier than ten (10) Business Days prior to the Initial
Closing Date;
(v) All Schedules and Exhibits required to be
delivered by Seller on the Initial Closing Date;
(vi) A xxxx of sale transferring to Purchaser the
Tangible Assets and the Intangible Assets, free and clear of all liens and
encumbrances, as of the Initial Closing Date, which document shall be in the
form of attached Exhibit D-1;
(vii) A xxxx or bills of sale transferring to
Purchaser the Leases, Equipment Leases and Contract Rights, free and clear of
all liens and encumbrances (other than the Assumed Obligations), as of the
Initial Closing Date or such other date or dates on which such items are
transferred and assigned by Seller to Purchaser in accordance with the terms
hereof, which document shall be in the form of attached Exhibit D-2. The bills
of sale described in this paragraph (vii) shall, notwithstanding anything in
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this Section 3.2 to the contrary, be delivered by Seller to Purchaser on each
date or dates on which such items are transferred and assigned by Seller to
Purchaser;
(viii) The originals or true and correct copies of
the agreements and leases and all amendments thereto giving rise to the Contract
Rights, the Equipment Leases and the Leases. In the event that Seller cannot
transfer and assign to Purchaser all Contract Rights, Equipment Leases and
Leases on the Initial Closing Date, Seller shall deliver the documents required
by this clause (viii) immediately following its receipt of any required Consents
therefor;
(ix) An executed copy of the Transition Services
Agreement;
(x) The preliminary plan for the Seller's
headquarters office in Phoenix, Arizona so that the Acquired Division and the
Production Assets to be acquired by Purchaser are separated physically from the
remainder of Seller and its operations.
(b) Purchaser's Documents. On the Initial Closing Date,
Purchaser shall deliver to Seller:
(i) A copy of the resolutions of the board of
directors of Purchaser authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, certified by an
appropriate officer of Purchaser;
(ii) Certificates of incumbency of the officers of
Purchaser dated as of the Initial Closing Date;
(iii) One or more certificates signed by an
authorized officer of Purchaser, dated as of the Initial Closing Date, to the
effect that (1) each of Purchaser's representations and warranties made in
Article V hereof are true and correct in all material respects as of the Initial
Closing Date and that all of the terms, covenants and conditions of this
Agreement required to be complied with and performed by Purchaser at or prior to
the Initial Closing Date have been duly complied with and performed in all
material respects, and (2) the resolutions of the board of directors of
Purchaser delivered to Seller by Purchaser pursuant to this Section 3.2(b) have
not been amended, modified, annulled or revoked and are in full force and effect
as of the Initial Closing Date;
(iv) A certificate issued by the Secretary of State
of the State of Delaware stating that Purchaser is in good standing, which
certificate is dated no earlier than ten (10) Business Days prior to the Initial
Closing Date;
(v) All Schedules and Exhibits required to be
delivered by Purchaser on the Initial Closing Date;
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(vi) An executed copy of the Transition Services
Agreement;
(vii) The preliminary plan for the Seller's
headquarters office in Phoenix, Arizona so that the Acquired Division and the
Production Assets to be acquired by Purchaser are separated physically from the
remainder of Seller and its operations;
(viii) True and correct copies of the Warehousing
Credit, Term Loan and Security Agreement between Purchaser and Residential
Funding Corporation.
Section 3.3 Final Closing Date.
(a) Seller Deliveries. On the Final Closing Date, Seller shall
deliver to Purchaser:
(i) One or more certificates signed by an authorized
officer or representative of Seller, dated as of the Final Closing Date, to the
effect that (1) each of Seller's representations and warranties made in Article
IV hereof that are operative as of the Final Closing Date are true and correct
in all material aspects as of the Final Closing Date, (2) all of the terms,
covenants and conditions of this Agreement required to be complied with and
performed by Seller at or prior to the Final Closing Date have been duly
complied with and performed in all material respects, and (3) the resolutions of
each of the boards of directors of Parent and Seller delivered to Purchaser
pursuant to Section 3.2(a) have not been amended, modified, annulled or revoked
and are in full force and effect as of the Final Closing Date;
(ii) A certificate issued by the Secretary of State
of the State of Arizona stating that Seller is in good standing, which
certificate is dated no earlier than ten (10) Business Days prior to the Final
Closing Date;
(iii) The originals or true and correct copies of the
agreements and all amendments thereto giving rise to the New Pipeline
Applications and the Final Closing Date Sales Commitments;
(iv) The original Loan Files related to the New
Pipeline Applications;
(v) A xxxx of sale transferring to Purchaser the
Subsequently Acquired Tangible Assets and the Subsequently Acquired Intangible
Assets, free and clear of all liens and encumbrances, as of the Initial Closing
Date, which document shall be in the form of attached Exhibit D-3;
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(vi) All Schedules and Exhibits required to be
delivered by Seller on the Final Closing Date;
(vii) The final plan for the Seller's headquarters
office in Phoenix, Arizona so that the Acquired Division and the Production
Assets to be acquired by Purchaser are separated physically from the remainder
of Seller and its operations.
(b) Purchaser Deliveries. On the Final Closing Date,
Purchaser shall deliver to Seller:
(i) One or more certificates signed by an authorized
officer of Purchaser, dated as of the Final Closing Date, to the effect that (1)
each of Purchaser's representations and warranties made in Article V hereof that
are operative as of the Final Closing Date are true and correct in all material
respects as of the Final Closing Date, (2) all of the terms, covenants and
conditions of this Agreement required to be complied with and performed by
Purchaser at or prior to the Final Closing Date have been duly complied with and
performed in all material respects, and (3) the resolutions of the board of
directors of Purchaser delivered to Seller by Purchaser pursuant to Section
3.2(b) have not been amended, modified, annulled or revoked and are in full
force and effect as of the Final Closing Date;
(ii) A certificate issued by the Secretary of State
of the State of Delaware stating that Purchaser is in good standing, which
certificate is dated no earlier than ten (10) Business Days prior to the Final
Closing Date;
(iii) All Schedules and Exhibits required to be
delivered by Purchaser on the Final Closing Date;
(iv) The final plan for the Seller's headquarters
office in Phoenix, Arizona so that the Acquired Division and the Production
Assets to be acquired by Purchaser are separated physically from the remainder
of Seller and its operations;
(v) Copies of all permits, authorizations, consents
and approvals of any governmental or regulatory authority required to be
obtained by Purchaser as a condition to the lawful consummation by Purchaser of
the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Section 4.1A Initial and Final Closing Date Representations
and Warranties of Seller. As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, Seller
represents and warrants as follows (it being acknowledged that each such
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representation and warranty is made to Purchaser as of the Initial Closing Date
and the Final Closing Date, unless otherwise expressly provided herein):
(a) Organization of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona, and is duly qualified and in good standing to transact business in each
jurisdiction in which such qualification is necessary, except where the failure
to so qualify would not have a material adverse effect upon the business, assets
or financial condition of Seller.
(b) Authority. Seller has all requisite power, authority and
capacity to execute and enter into this Agreement and to perform the obligations
required of Seller hereunder and under the other documents, instruments and
agreements required to be executed by Seller pursuant hereto. The execution and
delivery of this Agreement and all documents, instruments and agreements
required to be executed and delivered by Seller pursuant hereto, and the
consummation of the transactions contemplated hereby and thereby, have each been
duly and validly authorized by all necessary corporate action on the part of
Seller. This Agreement constitutes a valid and legally binding agreement of
Seller enforceable against Seller in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, conservatorship,
receivership, moratorium and other laws affecting the rights of creditors
generally and subject to general principles of equity, including without
limitation those regarding the availability of specific performance.
(c) No Conflicts. The execution, delivery and performance of
this Agreement by Seller, its compliance with the terms hereof and consummation
of the transactions contemplated hereby, will not violate, conflict with, result
in a breach of, give rise to any right of termination, cancellation or
acceleration, constitute a default under, be prohibited by or require any
additional consent or approval (other than the Consents specified on Schedule
4.1(c), which will be obtained by Seller on or before the Final Closing Date)
under (i) Seller's articles of incorporation or by-laws, (ii) any material
contract, loan agreement, indenture, mortgage or other undertaking to which
Seller is a party or by which Seller is bound or which affects the Production
Assets, or (iii) any law, rule, regulation, ordinance, order, injunction,
judgment or decree (including but not limited to the Mortgage Loan Requirements)
applicable to Seller or to the Production Assets the effect of which violation
or breach reasonably would be expected to have a material adverse effect upon
Seller's ability to comply with its obligations under this Agreement or upon the
business, operations or financial condition of Seller. Notwithstanding anything
to the contrary in the introductory paragraph of this Section 4.1, the
representations and warranties related to clauses (ii) and (iii) of this Section
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4.1(c) shall not be deemed to have been made as of the Final Closing Date with
respect to the loan origination activities of the Acquired Division during the
Transition Period, unless such matter relates to an act or omission of Seller
(acting through the Executive Committee or its board of directors) in material
variance with the Operating Plan and Purchaser, within seven (7) days of its
receipt of written notice thereof (which notice must be provided promptly to
Purchaser by Seller), affirmatively notifies Seller of its objection thereto in
writing.
(d) Consents. There is no requirement applicable to Seller to
make any filing with, or to obtain any permit, authorization, consent or
approval of, any governmental or regulatory authority, or any Agency, Investor
or Insurer as a condition to the consummation by Seller of the transactions
contemplated by this Agreement; provided, however, that the foregoing
representation and warranty shall not be deemed to have been made as of the
Final Closing Date to the extent that the requirement of such filing, permit,
authorization, consent or approval arises from or relates to any act or omission
of the Acquired Division that (i) is in material variance with the Operating
Plan, and (ii) is taken without the approval or consent of the Executive
Committee or Seller's board of directors.
(e) Compliance with Laws. Seller has complied with, is not in
default under and no act or omission has occurred which reasonably could be
expected to result in a violation of, any law, ordinance, requirement,
regulation, rule, judgment, decree or order applicable to Seller, its
operations, and employees (including without limitation the Employee Benefits
and Employee-Related Matters), the violation of which reasonably would be
expected to materially and adversely affect the Seller or its operations,
employees or assets. The Seller (as it relates solely to the Acquired Division
and the Production Assets) has not engaged in any unfair labor practice, created
a hostile work environment, sexually harassed an employee or discriminated on
the basis of race, color, religion, sex, national origin, age or handicap in its
employment conditions or practices. As it relates solely to the Acquired
Division and to the Production Assets, there are no (A) unfair labor practice or
harassment charges or complaints or racial, color, religious, sex, national
origin, age or handicap discrimination charges or complaints pending or, to the
knowledge of the Seller, threatened against the Seller before any governmental
entity nor, to the knowledge of the Seller, does any basis therefor exist; or
(B) existing or, to the knowledge of the Seller, threatened labor strikes,
disputes, grievances, or controversies affecting the Seller (as it relates
solely to the Acquired Division and the Production Assets), nor does any basis
therefor exist. Notwithstanding anything to the contrary in the introductory
paragraph of this Section 4.1, the representations and warranties contained in
this Section 4.1(e) shall not be deemed to have been made as of the Final
Closing Date with respect to the loan origination activities of the Acquired
Division during the Transition Period, unless such matter relates to an act or
omission of Seller (acting through the Executive Committee or its board of
22
directors) in material variance with the Operating Plan and Purchaser, within
seven (7) days of its receipt of written notice thereof (which notice must be
promptly provided to Purchaser by Seller), affirmatively notifies Seller of its
objection thereto in writing.
(f) Licenses, Permits and Approvals. Seller (i) has, and at
all other relevant times had, all material federal, state and local licenses,
permits, franchises and other authorizations, rights and privileges of
governmental authorities, Agencies, Investors and Insurers required to permit it
to own its properties and to conduct its business, including but not limited to
any required state mortgage banking and real estate licenses, (ii) has not
received any notice that revocation is being considered with respect to any of
such required licenses, permits, or authorizations, (iii) is in compliance with
all and has not violated in any material respect such licenses, permits and
authorizations; and (iv) has timely filed all applications for renewal (on
substantially the same terms and conditions) of any required licenses, permits
and authorizations for which renewal applications must have been filed prior to
the Initial Closing Date. There are no proceedings pending, or to the knowledge
of Seller, threatened, that could reasonably be expected to result in the
revocation, cancellation, modification, or suspension of any such required
licenses, permits or authorizations. Without limiting the generality of the
foregoing, Seller is an FHA approved mortgagee, a VA automatic lender, a GNMA
issuer, a FNMA seller/servicer and a FHLMC seller/servicer, all in good standing
and under no material disability to participate in the program for which Seller
has obtained approval. Seller is an operating subsidiary of a federally
chartered savings bank.
(g) Litigation, Investigations, etc. Except as set forth on
Schedule 4.1(g), there is no claim, hearing, audit, defense, litigation,
set-off, counterclaim, proceeding or governmental investigation (collectively
"Litigation") pending or, to Seller's knowledge, threatened, or any order,
injunction or decree outstanding or, to the knowledge of Seller, threatened,
that pertains to or adversely affects (i) the Production Assets or (ii) the
Seller's or its Affiliates' employee benefit plans relating to any Hired
Employee, including, without limitation, any Litigation related to requirements
associated with employment and employment practices, terms and conditions of
employment, overtime pay or other wage and hour issues, failure to pay any form
of compensation or employee benefit, race, sex, age or other discrimination,
harassment, or other employee-related matters with respect to Hired Employees
(such requirements, collectively, the "Employee-Related Matters").
(h) Title to Tangible Assets, Intangible Assets, etc.
Schedules 4.1(h)-1 through 4.1(h)-4 set forth a list of each: Tangible Asset as
of the Initial Closing Date, Intangible Asset as of the Initial Closing Date,
Subsequently Acquired Tangible Asset as of the Final Closing Date and
Subsequently Acquired Intangible Asset as of the Final Closing Date,
23
respectively. Except for the Assumed Obligations, Seller owns the Production
Assets free and clear of all liens, claims, security interests and encumbrances
whatsoever. Except for the Assumed Obligations, the documents selling,
assigning, conveying and otherwise transferring the Production Assets will
transfer the aforesaid items to Purchaser free and clear of all liens,
encumbrances, security interests, rights, options and assignments whatsoever.
All Subsequently Acquired Tangible Assets and Subsequently Acquired Intangible
Assets have been used by Seller in accordance with all applicable license
agreements and other requirements related thereto. Notwithstanding anything to
the contrary in the introductory paragraph of this Section 4.1, the
representations and warranties contained in this Section 4.1(h) shall be deemed
to have been made as of the Initial Closing Date and as of the date on which
each Production Asset is transferred and assigned to Purchaser hereunder.
(i) Sales Commitments. Schedules 4.1(i)-1 and 4.1(i)-2 set
forth, as of the relevant date, a list of all Initial Closing Date Sales
Commitments and Final Closing Date Sales Commitments, respectively, together
with the name of the other party thereto, the type of commitment (i.e.,
mandatory, best efforts, etc.), the total amount of such commitment, the
expiration date, and the types of Mortgage Loans covered thereby. The Final
Closing Date Sales Commitments shall be assignable to Purchaser at the Final
Closing Date and all necessary Consents therefor have been obtained in advance
of the Final Closing Date. Copies of all Sales Commitments will have been
provided by Seller to Purchaser prior to the Initial Closing Date and the Final
Closing Date, as applicable. With respect to each Sales Commitment:
(i) Each mortgage loan delivery commitment and Sales
Commitment is a legal, valid, binding and enforceable obligation of Seller and
in full force and effect, and their transfer and assignment to Purchaser
hereunder will not change their terms (other than the substitution of
Purchaser's name for Seller's name as contracting party and other than the
substitution of Purchaser's contact information for that of Seller with respect
to notice provisions) following each Closing Date;
(ii) Neither Seller (nor, to Seller's knowledge, the
other party to any mortgage loan delivery commitment and Sales Commitment) is in
breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default on the part of Seller (or, to
Seller's knowledge, on the part of the other party to the mortgage loan delivery
commitment and Sales Commitment) or permit termination, modification or
acceleration thereunder against Seller (or, to Seller's knowledge, against the
other party to the mortgage loan delivery commitment and Sales Commitment); and
24
(iii) Seller has no dispute, and has no knowledge of
any dispute by the other party to any mortgage loan delivery commitment or Sales
Commitment, as to such commitment. There are no oral agreements in effect as to
any such mortgage loan delivery commitment and Sales Commitment.
Notwithstanding anything to the contrary in the introductory
paragraph of this Section 4.1, the representations and warranties contained in
this Section 4.1(i) shall not be deemed to have been made as of the Final
Closing Date with respect to the loan origination activities of the Acquired
Division during the Transition Period, unless such matter relates to an act or
omission of Seller (acting through the Executive Committee or its board of
directors) in material variance with the Operating Plan and Purchaser, within
seven (7) days of its receipt of written notice thereof (which notice must be
provided promptly to Purchaser by Seller), affirmatively notifies Seller of its
objection thereto in writing.
The information provided by Seller in Schedule 4.1(i)-1 shall
be true, correct and complete as of February 14, 2003. Promptly following the
Initial Closing Date, Seller shall deliver an updated Schedule 4.1(i)-1
containing information that is true, correct and complete as of the Initial
Closing Date.
(j) Real Property. Other than real property acquired in the
ordinary course of Seller's business through the foreclosure of residential
mortgage loans, Seller does not own any real property. Notwithstanding anything
to the contrary in the introductory paragraph of this Section 4.1, the
representations and warranties contained in this Section 4.1(j) shall be deemed
to have been made as of the date hereof, as of the Initial Closing Date and as
of the date on which each Lease related to the Leased Premises is assigned to
Purchaser.
(k) Broker Fees. Except for fees and commissions that may be
paid by Seller to Stratmor Group and Xxx Xxxxxxx at or prior to the Final
Closing Date (for which Seller is solely responsible), neither Seller nor any
person acting on Seller's behalf has (nor will it at any time hereafter have)
any liability to any broker, finder or agent or has agreed (nor will it at any
time hereafter agree) to pay any brokerage commission or financial advisory fee
with respect to the transactions contemplated by this Agreement.
Section 4.1B Initial and Final Closing Date Representations
and Warranties of Parent. As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, Parent
represents and warrants as follows (it being acknowledged that each such
representation and warranty is made to Purchaser as of the Initial Closing Date
and the Final Closing Date, unless otherwise expressly provided herein):
25
(a) Authority. Parent has all requisite power, authority and
capacity to execute and enter into this Agreement and to perform the obligations
required of Parent hereunder and under the other documents, instruments and
agreements required to be executed by Seller and Parent pursuant hereto. The
execution and delivery of this Agreement and all documents, instruments and
agreements required to be executed and delivered by Seller and Parent pursuant
hereto, and the consummation of the transactions contemplated hereby and
thereby, have each been duly and validly authorized by all necessary corporate
action on the part of Parent. This Agreement constitutes a valid and legally
binding agreement of Parent enforceable against Parent in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency,
conservatorship, receivership and moratorium laws, laws affecting the rights of
parties contracting with insured depository institutions, and other laws
affecting the rights of creditors generally, and subject to general principles
of equity, including without limitation those regarding the availability of
specific performance.
Section 4.2 Initial Closing Date Representations and
Warranties. As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
as follows (it being acknowledged that, unless otherwise expressly provided
herein, each such representation and warranty is made to Purchaser (i) as of the
Initial Closing Date, and (ii) as of the Final Closing Date if an act or
omission of Seller (acting through the Executive Committee or its board of
directors) was in material variance with the Operating Plan and Purchaser,
within seven (7) days of its receipt of written notice thereof (which notice
must be provided promptly to Purchaser by Seller), affirmatively notifies Seller
of its objection thereto in writing:
(a) Compliance. Seller has complied in all material respects
with all applicable Mortgage Loan Requirements with respect to Seller's
operations and activities, including without limitation the origination,
processing, underwriting and credit approval of the Existing Pipeline
Applications, such as, among others, (a) those laws relating to real estate
settlement procedures, consumer credit protection, truth in lending laws, usury
limitations, fair housing, transfers of servicing, collection practices, equal
credit opportunity and adjustable rate mortgages, and (b) the handbooks and
guides (including without limitation selling and servicing guides) of and
contracts with any Investor. Without limiting the generality of the foregoing,
the documentation in connection with the origination, processing, underwriting
and credit approval of the Existing Pipeline Applications satisfied in all
material respects applicable Mortgage Loan Requirements in effect at the time
such Existing Pipeline Applications were prepared and processed by Seller.
(b) No Default, Breach or Violation. There is no default,
breach or violation existing under any Existing Pipeline Application, and no
event known to Seller and not disclosed to Purchaser which with the passage of
26
time or with notice and the expiration of any grace or cure period would
constitute such default, breach or violation; and Seller has not waived any such
default, breach or violation.
(c) Books and Records; Loan Files. Seller has kept and
maintained books and records that are accurate in all material respects in
connection with the origination, processing, underwriting and credit approval of
the Existing Pipeline Applications. The information contained in each Loan File
with respect to the Existing Pipeline Applications, and other documents upon
which underwriters generally rely (such as verification of employment) are, in
all material respects, complete and accurate and are in compliance with all
applicable Mortgage Loan Requirements.
(d) No Amendments. Except as described in the relevant Loan
File, Seller has not agreed to any modification of any Existing Pipeline
Application. Each such modification has been made in accordance with all
applicable Mortgage Loan Requirements.
(e) Existing Pipeline Applications. Schedule 4.2(e) will set
forth, as of the Initial Closing Date, the name and address of each potential
borrower who has submitted an Existing Pipeline Application for review, provided
that the Existing Pipeline Application is then in force and has not resulted in
a closed loan, the name of the employee responsible for taking the Existing
Pipeline Application, the name of the related Investor, if any, the type of loan
program, the rate and discount charges which Seller has committed to the related
borrower, the expected loan amount and, if known, closing date, and whether the
Existing Pipeline Application has been approved by Seller. In the case of any of
the Existing Pipeline Applications that have been approved by Seller, there are
and will be no terms or conditions under the reasonable control of Seller that
will prevent Purchaser from timely making any required redisclosures or
otherwise complying with all applicable Mortgage Loan Requirements, provided
that Purchaser acts in accordance with normal mortgage banking standards and
procedures. Each Mortgage Loan resulting from the funding of an Existing
Pipeline Application will be deliverable under an Initial Closing Date Sales
Commitment or another sales commitment obtained by Seller in the ordinary course
of business after the Initial Closing Date. The information provided by Seller
in Schedule 4.2(e) shall be true, correct and complete as of February 14, 2003.
Promptly following the Initial Closing Date, Seller shall deliver an updated
Schedule 4.2(e) containing information that is true, correct and complete as of
the Initial Closing Date.
(f) Leases and Equipment Leases. Attached hereto as Schedules
4.2(f), 4.2(f)-1 and 4.2(f)-2 are correct and complete lists of the Leased
Premises, the Leases and Equipment Leases, respectively. Schedules 4.2(f)-1 and
27
4.2(f)-2 set forth, as applicable, the name of the lessor, the property or
equipment leased or service provided, the lease rate or rent and the remaining
term. Copies of the Leases and the Equipment Leases have been provided by Seller
to Purchaser prior to the Initial Closing Date. With respect to each such Lease
and Equipment Lease:
(i) The lease agreement is a legal, valid, binding
and enforceable obligation of Seller and in full force and effect, and its
transfer and assignment to Purchaser hereunder will not change its terms (other
than the substitution of Purchaser's name for Seller's name as contracting party
and other than the substitution of Purchaser's contact information for that of
Seller with respect to notice provisions) following each Closing Date;
(ii) Neither Seller (nor, to Seller's knowledge, the
other party to the lease agreement) is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default on the part of Seller (or, to Seller's knowledge, on the part of the
other party to the lease agreement) or permit termination, modification or
acceleration thereunder against Seller (or, to Seller's knowledge, against the
other party to the lease agreement); and
(iii) Seller has no dispute, and has no knowledge of
any dispute by the other party to the lease agreement, as to such lease
agreement. There are no oral agreements in effect as to such lease agreement.
(g) Contract Rights. Schedules 4.2(g) sets forth a list of the
agreements giving rise to the Contract Rights. Copies of all such agreements
will have been provided by Seller to Purchaser prior to the Initial Closing
Date. With respect to each such agreement:
(i) The agreement is a legal, valid, binding and
enforceable obligation of Seller and in full force and effect, and its transfer
and assignment to Purchaser hereunder will not change its terms (other than the
substitution of Purchaser's name for Seller's name as contracting party and
other than the substitution of Purchaser's contact information for that of
Seller with respect to notice provisions) following each Closing Date;
(ii) Neither Seller (nor, to Seller's knowledge, the
other party to the agreement) is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default on the
part of Seller (or, to Seller's knowledge, on the part of the other party to the
agreement) or permit termination, modification or acceleration thereunder
against Seller (or, to Seller's knowledge, against the other party to the
agreement); and
(iii) Seller has no dispute, and has no knowledge of
any dispute by the other party to the agreement, as to such agreement. There are
no oral agreements in effect as to such agreement.
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(h) Financial Statements. Schedule 4.2(h) contains true,
correct and complete copies of the balance sheets of Seller as of December 31,
2001 (audited) and December 31, 2002 (unaudited), and the related statements of
income for the years ended 2001 and 2002 (collectively, the "Financial
Statements"). The Financial Statements are in accordance with the books and
records of Seller, have been prepared consistent with past practices, have been
prepared in accordance with GAAP (except that the unaudited Financial Statements
do not contain notes required by GAAP) and present fairly in all material
respects the financial position of the Seller on the dates of such statements
and the results of operations for the periods covered. All reserves shown in the
Financial Statements are appropriate, reasonable and sufficient to provide for
losses thereby contemplated.
(i) Statements Made. None of (i) the representations or
warranties of the Seller contained herein; (ii) the information contained in the
Seller's Schedules hereto and (iii) the other information or documents furnished
to the Purchaser or any of its representatives or agents by Seller, Parent or
their respective representatives or agents, is or will be false or misleading in
any material respect or omits or will omit to state a fact herein or therein
required to be stated or necessary to make the statements herein or therein not
misleading in any material respect. There is no fact which adversely affects or
in the future is likely to adversely affect the Seller (as it relates to the
Acquired Division) in any material respect which has not been disclosed to the
Purchaser in this Agreement or the Schedules hereto.
(j) Environmental, Health and Safety.
(i) As to any real property that is the subject of
any Lease, and as to the period of time of Seller's lease of such property, with
respect to such Leased Premises, Seller has complied in all material respects
with all laws (including rules and regulations thereunder) of federal, state or
local government (and all agencies thereof) concerning the environment, public
health and safety, and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand or notice has
been filed or commenced against Seller or relating to the Leased Premises
alleging any failure to comply with such laws or regulations. During the term of
Seller's lease of such property, with respect to the Leased Premises and to
Seller's knowledge, no pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste was buried, stored (in violation of law),
spilled, leaked, discharged, emitted or released. Pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or waste shall be as those
terms are identified and defined in the comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substance Control Act of
29
1976, the Refuse Act of 1989, or the Emergency Planning and community
Right-to-Know Act of 1986 (each as amended), or any other law or rule or
regulation thereunder (hereinafter referred to as "Hazardous Material").
(ii) As to any predecessors in interest to any real
property that is the subject of any Lease, to Seller's knowledge, no Hazardous
Material has ever been buried, stored, spilled, leaked, discharged, emitted or
released, and no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand or notice has been filed or commenced for failure
to comply with any laws or regulations concerning the environment, public health
and safety, including but not limited to those federal acts listed in the
previous subsection.
(iii) With regard to any real property that is the
subject of any Lease, there are no violations, in any material respect, of the
Americans With Disabilities Act.
(iv) Notwithstanding anything to the contrary in the
introductory paragraph of this Section 4.2, the representations and warranties
contained in this Section 4.2(j) shall be deemed to have been made as of the
date hereof, as of the Initial Closing Date and as of the date on which each
Lease related to the Leased Premises is assigned to Purchaser.
(k) Employee Matters. Schedule 4.2(k) sets forth, with respect
to each Hired Employee, an accurate and complete list of (i) all information
contained on Seller's employee census and payroll data report, (ii) all Hired
Employees with whom Seller is a party to an employment, compensation or other
similar agreement (attached to Schedule 4.2(k) shall be copies of all such
agreements), and (iii) all severance and other payments that have accrued or
should have accrued as of the Initial Closing Date as a result of the
termination of employment of any Hired Employee or in connection with the
consummation of the transactions contemplated herein. Other than as set forth on
Schedule 6.8(a)-1, there are no Accrued Consideration and Benefits. Seller is
not and shall not be liable or otherwise responsible for any sick leave or
vacation leave that has accrued during any year prior to 2003. The information
provided by Seller in Schedule 4.2(k) shall be true, correct and complete as of
February 14, 2003, and the information provided by Seller in Schedule 6.8(a)-1
shall be true, correct and complete as of January 31, 2003 with respect to
matters related to accrued commissions and as of February 14, 2003 with respect
to all other relevant matters. Promptly following the Initial Closing Date,
Seller shall deliver updated Schedules 4.2(k) and 6.8(a)-1 containing
information that is true, correct and complete as of the Initial Closing Date.
(l) Tangible and Intangible Assets. All of the Tangible Assets
and Intangible Assets that are transferred and assigned by Seller to Purchaser
on the Initial Closing Date are sufficient to operate the business and affairs
of the Acquired Division in the ordinary course and consistent with the manner
30
it was conducted prior to the Initial Closing Date. All such Tangible Assets and
Intangible Assets have been used by Seller in accordance with all applicable
license agreements and other requirements related thereto.
(m) Unions. The Seller has never been a party to any agreement
with any union, labor organization or collective bargaining unit. No employees
of the Seller are represented by any union, labor organization or collective
bargaining unit. To the knowledge of the Seller, the employees of the Seller
have no intention to and have not threatened to organize or join a union, labor
organization or collective bargaining unit.
(n) Absence of Certain Changes. Except as set forth in
Schedule 4.2(n), from December 31, 2002 to the Initial Closing Date, the Seller
(with respect to the Acquired Division only) has not:
(i) suffered any material adverse change, whether or
not caused by any deliberate act or omission of the Seller or the Parent, in its
condition (financial or otherwise), operations, assets, liabilities, business or
prospects or that would materially and adversely impact its Financial
Statements;
(ii) incurred any indebtedness for borrowed money or
issued or sold any debt securities except in the ordinary course of business;
(iii) incurred or discharged any liabilities or
obligations except in the ordinary course of business;
(iv) mortgaged, pledged or subjected to any security
interest, lien, lease or other charge or encumbrance any of its properties or
assets except in the ordinary course of business;
(v) suffered any damage or destruction to or loss of
any assets (whether or not covered by insurance) that has adversely affected, or
could adversely affect, its business;
(vi) acquired or disposed of any assets except in the
ordinary course of business;
(vii) written up or written down the carrying value
of any of its assets;
(viii) changed any accounting principles, methods or
practices previously followed or changed the costing system or depreciation
methods of accounting for its assets;
(ix) waived any material rights or forgiven any
material claims;
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(x) lost, terminated or experienced any change in its
relationship with any Hired Employee, customer or supplier, which termination or
change has materially and adversely affected, or could materially and adversely
affect, its business or assets;
(xi) entered into any agreement with any person or
group, or modified or amended in any material respect the terms of any such
existing agreement except in the ordinary course of business;
(xii) entered into, adopted or amended any Employee
Benefit Plan; or
(xiii) entered into any other commitment or
transaction or experienced any other event that would reasonable be expected to
materially and adversely affect, the condition (financial or otherwise),
operations, assets, liabilities, business or prospects of the Production
Division.
(o) Tax Matters.
(i) All required foreign federal, state, local and
other tax returns, notices and reports (including, without limitation, income,
property, sales, use, franchise, capital stock, excise, added value, employees'
income withholding, social security and unemployment tax returns) of Seller have
been accurately prepared in all material respects and duly and timely filed, and
all foreign, federal, state, local and other taxes, interest, penalties and
additions to tax required to be paid with respect to the periods covered by such
returns have been paid, except for taxes being accrued and protested or not
being paid in good faith and disclosed in Schedule 4.2(o)(i). Seller has not
been delinquent in the payment of any tax, assessment or governmental charge.
(ii) Except as set forth in Schedule 4.2(o)(ii),
Seller has never had any tax deficiency proposed or assessed against it and has
not executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge. No tax audit, action, suit,
proceeding, investigation or claim is now pending nor, to the knowledge of the
Seller, threatened against Seller.
(iii) Seller has withheld or collected from each
payment made to each of its employees, the amount of all taxes (including, but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and have paid the same to the proper tax receiving officers or
authorized depositories.
(p) Condition of Assets. All facilities, machinery, equipment,
fixtures, vehicles and other properties that are a part of the Production Assets
acquired by Purchaser hereunder are in good operating condition and repair,
32
normal wear and tear excepted, are reasonably fit and usable for the purposes
for which they are being used. Immediately prior to the Initial Closing Date,
Seller will own, and have legal rights to use as currently used in its business,
the Production Assets.
(q) Certain Payments. Neither the Seller (as it relates to the
Acquired Division) nor any director, officer, manager or employee of the Seller
(as it relates to the Acquired Division) has paid or caused to be paid, directly
or indirectly, in connection with the business of the Seller (as it relates to
the Acquired Division): (i) to any government or agency thereof or any agent of
any supplier or customer any bribe, kick-back or other similar payment; or (ii)
any contribution to any political party or candidate (other than from personal
funds of directors, officers or employees not reimbursed by their respective
employers or as otherwise permitted by applicable law).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1 General Representations and Warranties. As an
inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser represents and warrants as follows
(it being acknowledged that each such representation and warranty is made to
Seller as of the Initial Closing Date and, except as otherwise stated, the Final
Closing Date):
(a) Organization. Purchaser is duly organized, validly
existing and in good standing under the laws of the State of Delaware. Purchaser
is duly qualified and in good standing to transact business in each jurisdiction
in which such qualification is necessary, other than those jurisdictions where
the failure to be so qualified would not have a material adverse effect on the
business, assets or financial condition of Purchaser.
(b) Authority. Purchaser has all requisite corporate power and
authority and capacity to execute and enter into this Agreement and to perform
the obligations required of it hereunder and under the other documents,
instruments and agreements required to be executed by Purchaser pursuant hereto.
The execution and delivery of this Agreement and all documents, instruments and
agreements required to be executed and delivered by Purchaser pursuant hereto,
and the consummation of the transactions contemplated hereby, and thereby, have
each been duly and validly authorized by all necessary action. This Agreement
constitutes a valid and legally binding agreement of Purchaser enforceable
against Purchaser in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, conservatorship, receivership,
33
moratorium and other laws affecting the rights of creditors generally and
subject to general principles of equity, including without limitation those
regarding the availability of specific performance.
(c) No Conflicts. The execution, delivery and performance of
this Agreement by Purchaser, its compliance with the terms hereof and the
consummation of the transactions contemplated hereby will not violate, conflict
with, result in a breach of, give rise to any right of termination, cancellation
or acceleration, constitute a default under, be prohibited by or require any
additional approval (except for the Consents specified on Schedule 5.1(c), which
will be obtained by Purchaser on or before the Final Closing Date) under (i)
Purchaser's organizational documents, (ii) any material contract, loan
agreement, indenture, mortgage or other undertaking to which it is a party or by
which it is bound or (iii) any law, rule, regulation, ordinance, order,
injunction or decree applicable to it the effect of which violation or breach
reasonably would be expected to have a material adverse effect upon Purchaser's
ability to comply with its obligations under this Agreement or upon the
business, operations or financial condition of Purchaser.
(d) Compliance with Laws. Purchaser is not in default under
and has not violated any applicable law, ordinance, requirement, regulation,
rule or order applicable to its business or properties, the violation of which
reasonably would be expected to materially and adversely affect Purchaser or its
operations, employees or assets.
(e) Consents. There is no requirement applicable to Purchaser
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 Purchaser of the transactions contemplated by this
Agreement, other than those Consents set forth on Schedule 5.1(c) and obtained
by Purchaser on or before the Final Closing Date.
(f) Broker Fees. Neither Purchaser nor any Person acting on
Purchaser's behalf has (nor will it at any time hereafter have) any liability to
any broker, finder or agent or has agreed (nor will it at any time hereafter
agree) to pay any brokerage commission or financial advisory fee with respect to
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
Purchaser shall pay and be solely responsible for any consideration due Samco
Corp. in facilitating this transaction.
(g) Litigation, Investigations, etc. There is no claim,
defense, litigation, set-off, counterclaim, proceeding or governmental
investigation pending or, to Purchaser's knowledge, threatened, or any order,
injunction or decree outstanding or, to the knowledge of Purchaser, threatened,
that pertains to or adversely affects the Purchaser.
34
(h) Statements Made. None of (i) the representations or
warranties of the Purchaser contained herein; (ii) the information contained in
Purchaser's Schedules hereto and (iii) the other information or documents
furnished to the Seller or any of its representatives or agents by Purchaser or
its representatives or agents, is or will be false or misleading in any material
respect or omits or will omit to state a fact herein or therein required to be
stated or necessary to make the statements herein or therein not misleading in
any material respect. There is no fact which adversely affects or in the future
is likely to adversely affect the Purchaser (as it relates to the Production
Assets) in any material respect which has not been disclosed to the Seller in
this Agreement or the Schedules hereto.
(i) Financial Condition. Schedule 5.1(i) contains a true,
correct and complete copy of the balance sheet of Purchaser as of the Initial
Closing Date (unaudited). Such balance sheet has been prepared in accordance
with GAAP and presents fairly in all material respects the financial position of
the Purchaser on the date thereof.
Section 5.2 Mortgage Banking Representations and Warranties.
As an inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser represents and warrants as follows
(it being acknowledged that each such representation and warranty is made to
Seller as of the Final Closing Date):
(a) Licenses, Permits and Approvals. Purchaser has all
federal, state and local material licenses, permits, and other authorizations of
governmental authorities used or required in the conduct of its business with
respect to the Production Assets, including but not limited to any required
state mortgage banking and real estate licenses, and Purchaser has not received
any notice that revocation is being considered with respect to any of such
required licenses, permits, or authorizations.
ARTICLE VI
COVENANTS
Section 6.1 Cooperation. Each of the Parties shall use its
reasonable best efforts to file and prosecute any required regulatory
applications and take other reasonable and appropriate action to consummate the
transactions contemplated by this Agreement and the Transition Services
Agreement as promptly as possible. To the extent reasonably possible, the
Parties shall cooperate with and assist each other, as requested, in carrying
out the purposes of this Agreement and in connection with Purchaser's filing and
obtaining mortgage banking licenses and approvals from FNMA, FHLMC, GNMA, HUD,
VA, RHS (if desired) and applicable state authorities, and they shall comply
with all material laws and Mortgage Loan Requirements in connection therewith.
35
In all cases where there is a conflict between the applicable laws and Mortgage
Loan Requirements and any provisions of this Agreement and the Transition
Services Agreement, the applicable laws and Mortgage Loan Requirements shall
take precedence.
Section 6.2 Material Assurances. Each Party covenants and
agrees with the other Party that it will, whenever and as often as reasonably
requested so to do by such other Party or its successors and assigns, do,
execute, acknowledge and deliver any and all such other and further acts,
assignments, limited powers of attorney, acknowledgments, acceptances and any
instruments of further assurance, approvals and consents as such other Party or
its successors and assigns, may hereinafter reasonably deem necessary or proper
in order to complete and perfect the conveyances contemplated hereby.
Section 6.3 Operating Plan. Seller, Purchaser and Parent shall
comply with the Operating Plan in accordance with its terms.
Section 6.4 Consents.
(a) General. Each of Seller and Purchaser shall prepare and
submit all documentation necessary to obtain the Consents and regulatory
licenses and approvals required to be obtained by it. Purchaser and Seller shall
cooperate in good faith in connection with obtaining the Consents and such
regulatory licenses and approvals. Each of Seller and Purchaser shall use its
reasonable efforts to obtain the Consents and such regulatory licenses and
approvals as soon as possible following the date hereof but in no event later
than the Final Closing Date. Seller shall take all commercially reasonable steps
to assure that Purchaser can, on and after the Initial Closing Date or Final
Closing Date, as appropriate, control and operate the Production Assets for
which any required Consent has not been received prior to or on the Initial
Closing Date or Final Closing Date, as appropriate, such as through an
appropriate sublease or other financial undertaking, without material adverse
modification to the rights of Purchaser that would have accrued to Purchaser had
such Consent been obtained and without cost or expense to Purchaser (other than
the costs and expenses incurred by Purchaser (including professionals' fees and
expenses) in connection with the review of such Consent).
(b) Form of Consents. The requests for Consent to, or notices
of, the intended transfer to Purchaser of the Tangible Assets, Intangible
Assets, Contract Rights, Leases, Equipment Leases and New Pipeline Applications,
as applicable, shall be in a form reasonably acceptable to Seller and Purchaser.
The assignment of each Final Closing Date Sales Commitment shall be in such form
as is ordinarily utilized by the issuer of such Final Closing Date Sales
Commitment or, if none, in a form reasonably acceptable to Seller and Purchaser.
Section 6.5 Further Information. Seller shall furnish
Purchaser such incidental information relating to the Production Assets, which
is reasonably available to Seller, supplementary to the information contained in
36
the documents and Schedules delivered pursuant hereto, as Purchaser may
reasonably request.
Section 6.6 Access to Documents, Files, Records, Personnel,
etc. From the date hereof to the Final Closing Date, Purchaser and its
attorneys, accountants, consultants and other representatives shall have
reasonable access to the Production Assets, the Assumed Obligations and Seller's
books, records and accounts with respect to the Production Assets, and to
employees, attorneys, accountants, consultants and other representatives of
Seller related to the Production Assets, during normal business hours, after
reasonable notice and without disrupting Seller's business and activities.
Purchaser's access hereunder shall not evidence that the Seller has complied or
failed to comply with any of its representations, warranties or covenants under
this Agreement.
Section 6.7 Certain Claims. The Parties acknowledge that
certain actions of third parties during the Transition Period could adversely
impact the Production Assets. As such, at Purchaser's request and at Purchaser's
sole cost and expense, Seller agrees that it will enforce all rights and
remedies reasonably available to Seller that relate to the Production Assets or
permit Purchaser to enforce Seller's rights and remedies in Seller's name
pursuant to a mutually acceptable subrogation arrangement.
Section 6.8 Seller's Employees.
(a) Purchaser shall deliver to Seller a list, on the Initial
Closing Date on Schedule 6.8-1, of those employees to whom it intends to extend
offers of employment ("Hired Employees"). The Parties recognize that certain
other employees of Seller may be needed to perform certain services during all
or part of the Transition Period, and a list of those employees shall be
delivered to Seller by Purchaser on the Initial Closing Date on Schedule 6.8-2
("Transition Employees"). With respect to the Transition Employees, Purchaser
shall be responsible for offering and paying any "stay" bonus with respect to
the Transition Period if and to the extent that Purchaser determines to pay any
"stay" bonus, and Seller shall be responsible for paying any and all severance
and other payments that may be due as a result of the transactions contemplated
herein. Purchaser intends to extend offers of employment to the Hired Employees
on substantially the same terms as such employees had with Seller immediately
prior to the Final Closing Date. If Purchaser determines, during the Transition
Period, that it does not wish to extend, or that it wishes to rescind, an offer
of employment to one or more Hired Employees, then Purchaser shall be
responsible for paying any and all severance and other payments that have
accrued or will accrue from and after the Initial Closing Date that may be due
as a result of the termination of his or her employment or as a result of the
consummation of the transactions contemplated herein. Seller shall take no
37
action that reasonably would be expected to prevent any employee from accepting
employment with Purchaser (for instance, Seller shall not disparage Purchaser or
the Acquired Division, their respective employees or management, or their
respective business plans). Except as specified in this Agreement, Purchaser
will not assume and will have no obligation with respect to any employee bonus,
retirement, pension, profit sharing, incentive, deferred compensation, medical,
retiree medical, retiree life, other insurance plan, employee severance,
vacation or sick leave plan or policy or other employee benefit plan of Seller
of any kind (collectively, "Employee Benefit Plans"). Purchaser shall have no
responsibility for any Accrued Consideration and Benefits. However, Purchaser
agrees to use commercially reasonable efforts to give to each employee of Seller
who is hired by Purchaser on the Final Closing Date credit for past service with
Seller for purposes of participation in and vesting with respect to any
employee, retirement, pension, profit sharing, bonus, incentive, deferred
compensation, medical, vacation, sick leave or other employee benefit plan of
Purchaser in which such employee may be eligible to participate, and, in
connection therewith, Purchaser shall, to the extent prudent under applicable
law, permit each Hired Employee the option to obtain such past service credit
for accrued vacation leave or to accept payment from Seller for such accrued
vacation leave (in which case, no past service credit shall be provided by
Purchaser to such Hired Employee). However, Purchaser will not be required to
establish or adopt any employee benefit plan or policy to accommodate Seller's
employees. Purchaser shall take commercially reasonable steps to waive any
applicable waiting period and pre-existing condition exclusions related to any
newly established ss.401(k) plan and health insurance benefits. Purchaser shall
adopt a vacation and sick leave plan substantially similar to that applicable to
Seller's employees prior to the Initial Closing Date. Purchaser is not, and
shall not be deemed to be, a successor employer to Seller or any affiliate
thereof with respect to any employee benefit plan of Seller; and no plan adopted
or maintained by Purchaser after the Final Closing Date is or shall be deemed to
be a "successor plan" (as such term is defined in Section 4021(a) of the
Employee Retirement Income Security Act). Purchaser shall notify Seller: (i)
when Purchaser, after the Final Closing Date, offers health insurance benefits
to the Hired Employees that Purchaser actually hires, and (ii) if such health
insurance benefits exclude pre-existing conditions.
(b) Except as specified in Section 6.8(a) above, Seller shall
be responsible for all other costs and expenses relating to its employees
(including, but not limited to, the Hired Employees and the Transition
Employees) if such cost or expense arises or accrues on or before the Final
Closing Date, including but not limited to salaries and other compensation,
accrued vacation pay, bonuses that are payable for or relate to the period to
and including the Final Closing Date, fringe benefits, pension, health and other
amounts. With respect to the Hired Employees, Seller and its affiliates shall
(i) fully vest all participants in the Seller's ss.401(k) Plan and make whatever
38
distributions to participants in those plans as are permitted by law and (ii)
provide notices concerning eligibility for continuation health coverage under
all applicable health plans pursuant to Internal Revenue Code ss.4980B to
eligible employees and family members and provide such individuals with the
opportunity to elect to continue their health coverages under the applicable
Seller or affiliate health and cafeteria plans, but only as to those employees
requiring such protections.
(c) Seller and Parent shall cause all employee benefit plans
described in paragraphs (a) and (b) of this Section 6.8 to remain in place
during the Transition Period so as to allow the Hired Employees and Transition
Employees to continue to enjoy all such benefits during the Transition Period in
the same manner as they had prior to the Transition Period; provided, however,
that Seller and Parent may modify any such employee benefit plan if all
employees of Seller, Parent and their respective affiliates are treated in the
same manner with regard to such plan modification; and provided further,
however, that no material employee benefit plan may be eliminated by Seller or
Parent prior to the Final Closing Date.
Section 6.9 Processing Pipeline Applications. On the Final
Closing Date, Seller shall assign to Purchaser all of the Loan Files and all
other documents in its possession pertinent to the New Pipeline Applications and
the Final Closing Date Sales Commitments. Purchaser agrees to use commercially
reasonable efforts to close New Pipeline Applications in the ordinary course of
business, with due regard for any Purchaser requirements that may be applicable
to it (e.g., redisclosure and underwriting).
Section 6.10 Noncompetition.
(a) Seller and Parent each covenant and agree that it shall
not (and shall cause the other not to) engage in, and shall cause its (and the
other's) Affiliates not to engage in, directly or indirectly, for the two (2)
year period following the Initial Closing Date, the retail or wholesale
single-family mortgage origination business in the states or other jurisdictions
in which the Acquired Division operates or is located as of the Initial Closing
Date, including but not limited to serving as an officer, director, proprietor,
employee, agent, consultant, partner, member, shareholder or investor (other
than as a passive investor in less than one percent (1%) of the outstanding
capital stock of a publicly traded corporation). Seller and Parent further
covenant and agree that during the two (2) year period following the Initial
Closing Date, Seller and Parent will not (and will cause the other not to), and
shall cause its (and the other's) Affiliates not to, directly or indirectly,
hire any of the employees designated in Section 6.8 as Hired Employees.
Notwithstanding anything in this Section 6.10 to the contrary, this covenant
shall not prohibit or limit (A) the operations of the Acquired Division during
the Transition Period or (B) the Parent or the Seller or its or their Affiliates
from engaging, currently or in the future, in the retail or wholesale mortgage
39
origination business in any geographic location, including but not limited to
serving as an officer, director, proprietor, employee, agent, consultant,
partner, member, shareholder or investor of another entity, in order to comply
with (1) applicable laws, rules, or regulations, (2) any directive, order,
agreement or commitment, formal or informal, with the Parent's or Seller's
primary federal banking regulator, or (3) any order, agreement or commitment,
formal or informal, with any third party, provided such order, agreement or
commitment is undertaken or entered into in order to facilitate resolution of
any supervisory or regulatory concern of the Parent, the Seller or any Affiliate
of theirs, and provided further that, if the Parent, the Seller or any Affiliate
of theirs believes it is appropriate in its sole discretion to do so, Seller
shall provide Purchaser advance notice of such order, agreement or commitment
and an opportunity to comment therein.
(b) Notwithstanding anything to the contrary in Section
6.10(a), the two-year restriction period contained in Section 6.10(a) shall
expire on the date on which a Change of Control (as defined in this Section
6.10(b) below) occurs; provided, however, that regardless of when a Change of
Control occurs, the restrictions contained in Section 6.10(a) shall continue in
effect for no less than six (6) months following the Initial Closing Date. For
purposes of this Section 6.10, a Change of Control shall mean any of the
following (other than as a result of a public offering of shares of Parent or
Matrix Bancorp, Inc.): any transaction (which shall include a series of related
transactions or a transaction occurring pursuant to a plan) that has the result
that the present shareholders of Parent or of Matrix Bancorp, Inc.,
respectively, cease to own or control (individually or collectively) more than
50% of (x) the voting stock of Parent or Matrix Bancorp, Inc., respectively, or
(y) any entity that results from the participation of Parent or Matrix Bancorp,
Inc. in a consolidation, merger or other similar form of corporate transaction.
(c) Each of Seller and Parent hereby acknowledges that the
geographic boundaries, scope of prohibited activities and the time duration of
the provisions of this Section 6.10 are reasonable and are no broader than are
necessary to protect the legitimate business interests of Purchaser.
(d) Each of Seller and Parent acknowledges that breach of any
of the provisions of this Section 6.10 will give rise to irreparable injury to
Purchaser, inadequately compensable in damages. Accordingly, Purchaser shall be
entitled to injunctive relief to prevent or cure breaches or threatened breaches
of the provisions of this Agreement and to enforce specific performance of the
terms and provisions hereof in any court of competent jurisdiction, in addition
to any other legal or equitable remedies which may be available. Each of Seller
and Purchaser further acknowledges and agrees that the enforcement of a remedy
40
hereunder by way of injunction shall not prevent it from earning a reasonable
livelihood. Each of Seller and Purchaser further acknowledges and agrees that
the covenants contained herein are necessary for the protection of Purchaser's
legitimate business interests and are reasonable in scope and content.
(e) Purchaser, Parent and Seller agree and stipulate that the
agreements and covenants contained in this Section 6.10 are fair and reasonable
in light of all of the facts and circumstances of the relationship between
Purchaser, Parent and Seller, however, Purchaser, Parent and Seller are aware
that in certain circumstances courts have refused to enforce certain agreements
not to compete. Therefore, in furtherance of, and not in derogation of the
provisions of Section 6.10, Purchaser, Parent and Seller agree that in the event
a court should decline to enforce the provisions of this Section 6.10, that this
Section 6.10 shall be deemed to be modified or reformed to restrict Seller's or
Parent's competition with Purchaser to the maximum extent, as to time, geography
and business scope, which the court shall find enforceable; provided, however,
in no event shall the provisions of this Section 6.10 be deemed to be more
restrictive to Seller or Parent than those contained herein.
Section 6.11 Seller Name. Purchaser is not acquiring any
rights to Seller's corporate name and will have no right of any kind to use
Seller's name in any manner after the Final Closing Date.
Section 6.12 WARN Legislation. Seller shall provide to all of
Seller's employees all notices that would be required by the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. Section 2101-2109 ("WARN") if such
employees had suffered or were deemed to have suffered an "employment loss," as
defined in 29 U.S.C. Section 2101(a)(6) as a result of the transactions
contemplated by this Agreement. Except as expressly set forth in this Agreement,
Seller shall be responsible for any payments required to be made to such
employees as a result of the termination of their employment with Seller.
Section 6.13 Mail and Other Communications Received After the
Final Closing Date. On and after the Final Closing Date, Purchaser may receive
and open all mail or other communications addressed to Seller which Purchaser
reasonably believes relates to the Production Assets and deal with the contents
thereof to the extent such mail or other communications and the contents thereof
relate to the Production Assets. If Seller receives mail or other communications
which relate to the Production Assets on or after the Final Closing Date, Seller
will deliver or cause to be delivered promptly to Purchaser such mail or other
communications. If Purchaser receives mail or other communications which do not
relate to the Production Assets on or after the Final Closing Date, Purchaser
will deliver or cause to be delivered promptly to Seller such mail or other
41
communications. Each Party agrees to keep and cause to be kept confidential the
contents of any mail or other communications that are misdirected to it.
Section 6.14 Post-Final Closing Date Services. During the
Transition Period, the Parties will seek to identify any services that either
Party may need to obtain from the other Party following the Final Closing Date.
The Parties agree to negotiate, expeditiously and in good faith, an agreement
setting forth the scope of such services and the reasonable fair market fees to
be charged therefor. In connection therewith, the Parties agree that, in
addition to any other services that may be identified by the Parties in
connection with this Section 6.14, the services identified in Schedule 6.14
shall be made available as indicated thereon.
Section 6.15 Warehouse Agreement. Parent shall provide
financing to the Acquired Division in accordance with the Warehouse Agreement.
Section 6.16 Parent Guaranty. Immediately upon (a) the
dissolution, termination of existence, insolvency, business failure, commission
of any act of bankruptcy, appointment of a receiver or other legal
representative for any part of the property of Seller, assignment for the
benefit of creditors, or commencement of any proceedings under any bankruptcy or
insolvency law, with respect to Seller, (b) the failure of the Seller to
maintain at all times during the Transition Period a net worth of at least ten
million dollars ($10,000,000) and at all times after the Transition Period a net
worth of at least five million dollars ($5,000,000) (in each case, determined in
accordance with GAAP consistent with past practices), or (c) any transaction
(which shall include a series of related transactions or a transaction occurring
pursuant to a plan) that has the result that Parent or any Affiliate of either
Parent or Seller ceases to own (individually or collectively) more than 50% of
(x) the voting stock of Seller or (y) any entity that results from the
participation of Seller in a consolidation, merger or other similar form of
corporate transaction (any such event, a "Trigger Event"), Parent shall
immediately and without notice become and thereafter be bound by and under the
terms of this Agreement and all Exhibits hereto in the same manner as Seller
would have been but for the occurrence of such Trigger Event. This Parent
guarantee shall cease when all of Seller's obligations under this Agreement have
been fulfilled or otherwise terminated.
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ARTRICLE VII
INDEMNIFICATION
Section 7.1 Indemnification by Seller. Upon the terms and
subject to the conditions hereof, Seller shall indemnify and hold Purchaser and
its officers, directors, employees, agents and Affiliates harmless against and
in respect of, and shall reimburse such Indemnified Party for, any and all
Losses suffered or incurred by such Indemnified Party arising out of, resulting
from or relating to:
(a) Any breach or non-performance by Seller or Parent of any
representation, warranty, covenant, obligation, requirement, agreement or
undertaking of Seller or Parent contained in this Agreement, in any agreement
entered into by the Seller or Parent in connection with this Agreement, in any
Schedule or Exhibit, or in any written statement or certificate furnished by
Seller or Parent pursuant to this Agreement.
(b) Litigation pending or threatened that results from events
occurring prior to the Initial Closing Date in connection with Seller, Parent or
their respective assets or operations.
(c) Material errors, omissions or fraud in the processing on
or prior to the Initial Closing Date of any of the Existing Pipeline
Applications on the part of Seller.
(d) Any action or failure to act by Seller or an Affiliate of
Seller on or before the Initial Closing Date.
(e) The operation of Seller's business prior to the Initial
Closing Date.
(f) Any failure to deliver, with all required Consents, any of
the Production Assets to Purchaser on the date or dates required hereunder free
and clear of all liens, encumbrances, security interests or rights whatsoever
except for the Assumed Obligations.
Section 7.2 Indemnification by Purchaser. Upon the terms and
subject to the conditions hereof, Purchaser shall indemnify and hold Seller and
Parent, and their respective officers, directors, employees, agents and
Affiliates harmless against and in respect of, and shall reimburse such
Indemnified Party for, any and all Losses suffered or incurred by such
Indemnified Party arising out of, resulting from or relating to:
(a) Any breach or non-performance by Purchaser of any
representation, warranty, covenant, obligation, requirement, agreement or
undertaking of Purchaser contained in this Agreement, in any agreement entered
into by the Parties in connection with this Agreement, in any Schedule or
43
Exhibit or in any written statement or certificate furnished by Purchaser
pursuant to this Agreement.
(b) Litigation pending or threatened that results from events
occurring after the Initial Closing Date in connection with Purchaser, its
assets or operations.
(c) Litigation pending or threatened that results from events
occurring after the Initial Closing Date in connection with the Acquired
Division, its assets or operations.
(d) Any material non-compliance by the Acquired Division with
applicable Mortgage Loan Requirements with respect to its mortgage banking
operations and activities after the Initial Closing Date, including without
limitation the origination, processing, underwriting and credit approval of New
Pipeline Applications, and, without limiting the generality of the foregoing,
the failure of the documentation in connection with the origination, processing,
underwriting and credit approval of the New Pipeline Applications to satisfy in
all material respects applicable Mortgage Loan Requirements in effect at the
time such New Pipeline Applications were prepared and processed.
(e) Any failure of the information contained in the Loan Files
with respect to the New Pipeline Applications, and other documents upon which
underwriters generally rely (such as verification of employment), to be, in all
material respects, complete and accurate and in compliance with applicable
Mortgage Loan Requirements.
(f) In the case of any of the New Pipeline Applications that
have been approved by the Acquired Division, any term or condition relating to
such New Pipeline Application that will prevent Purchaser from timely making any
required redisclosures or otherwise complying with all applicable Mortgage Loan
Requirements following the Final Closing Date.
(g) Material errors and omissions in the processing of any of
the New Pipeline Applications on the part of Purchaser after the Initial Closing
Date.
(h) Any action or failure to act by Purchaser after the
Initial Closing Date.
(i) Any breach or non-performance under a Lease that has been
assigned to Purchaser or sublet to Purchaser after the Initial Closing Date.
(j) Any failure to pay or discharge when due any Assumed
Obligation.
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Notwithstanding anything herein to the contrary, the
indemnities set forth in Section 7.2 shall not apply and have no force or effect
with respect to any particular indemnified event if a related act or omission of
Seller (acting through the Executive Committee or its board of directors) is in
material variance with the Operating Plan and Purchaser, within seven (7) days
of its receipt of written notice thereof (which notice must be provided promptly
to Purchaser by Seller), affirmatively notifies Seller of its objection thereto
in writing.
Section 7.3 Indemnification Procedures.
(a) General. If at any time an Indemnified Party learns of a
Loss resulting from an Indemnified Event, the Indemnified Party shall give to
the Indemnifying Party notice within such time as is reasonable under the
circumstances, describing such Loss and Indemnified Event in reasonable detail.
In the event that the Loss involves a claim or assertion by an Investor, the
Indemnified Party shall provide the Indemnifying Party, at the Indemnifying
Party's cost and expense, a reasonable opportunity to cure such defective
condition underlying any such claim to the satisfaction of the relevant Investor
and the reasonable satisfaction of the Indemnified Party. In the event that a
demand or claim for indemnification is made hereunder with respect to Losses the
amount or extent of which is not yet known or certain, the notice of demand for
indemnification shall so state, and, where practicable, shall include an
estimate of the amount of the Losses. In the case of any notice of
indemnification hereunder involving any claim of any third party, the
Indemnifying Party shall have responsibility for, and shall assume all expense
with respect to, the defense or settlement of such claim, subject to the
following:
(i) The Indemnified Party shall be entitled to
participate in the defense of such claim and to employ counsel at its own
expense to assist in the handling of such claim.
(ii) The Indemnifying Party shall not enter into any
such settlement of such claim or ceasing to defend against such claim unless
such settlement or compromise includes a full and unconditional release of each
such Indemnified Party from all liability arising out of such claim, action,
suit or proceeding, reasonably satisfactory in form and substance to such
Indemnified Party.
(iii) If the Indemnifying Party does not provide to
the Indemnified Party within ten (10) days after receipt of a notice of
indemnification, a written acknowledgment that the request for indemnification
involves a matter which the Indemnifying Party is obligated to indemnify the
Indemnified Party for and that the Indemnifying Party shall assume
responsibility for the defense or settlement of such claim as provided in this
Section 7.3, then the Indemnified Party shall have the right to defend and
settle the claim in such manner as it may deem appropriate at the cost and
45
expense of the Indemnifying Party, and the Indemnifying Party shall promptly
reimburse the Indemnified Party therefor in accordance with Sections 7.1 or 7.2,
as the case may be, and this Section 7.3.
(iv) If the defendants in any action shall include
both an Indemnified Party and an Indemnifying Party, and any such Indemnified
Party shall have reasonably concluded, based upon the written advice of its
counsel, that counsel selected by the Indemnifying Party has a conflict of
interest which under the Rules of Professional Conduct of the relevant Bar
Association would prohibit the representation because of the availability of
different or additional defenses to any such Indemnified Party, such Indemnified
Party shall have the right to select separate counsel reasonably acceptable to
the Indemnifying Party to participate in the defense of such Indemnified Party.
The foregoing shall not eliminate or modify in any respect the obligation of the
Indemnifying Party with respect to the defense, settlement or appeal of such
matter, attorney's fees and other Losses related thereto.
(v) In addition to the obligations set forth above in
this Section 7.3(a), if an Investor requests that Seller repurchase a Mortgage
Loan that closed on or after the Initial Closing Date (and for which Seller
believes it has an indemnification claim against Purchaser), Seller shall,
within five days of receipt of such Investor request, notify Purchaser of such
repurchase request and forward to Purchaser a copy of the Investor request and a
copy of the related Loan File (if then in Seller's possession or control). To
the extent permitted by the applicable Investor, Purchaser shall have the
opportunity, at its sole cost and expense, to cure any defects in the affected
Mortgage Loan. In the event that the applicable Investor requires that the
defense of such repurchase request come from Seller and not from Purchaser, then
Seller shall forward to Purchaser copies of all correspondence with the Investor
and Seller shall submit to the Investor the response and defense that is
prepared by Purchaser. No such Investor repurchase request may be settled
without the consent of Purchaser, which will not be unreasonably withheld.
(vi) In addition to the obligations set forth above
in this Section 7.3(a), if an Investor requests that Purchaser repurchase a
Mortgage Loan that closed on or after the Initial Closing Date (and for which
Purchaser believes it has an indemnification claim against Seller), Purchaser
shall, within five days of receipt of such Investor request, notify Seller of
such repurchase request and forward to Seller a copy of the Investor request and
a copy of the related Loan File (if then in Purchaser's possession or control).
To the extent permitted by the applicable Investor, Seller shall have the
opportunity, at its sole cost and expense, to cure any defects in the affected
Mortgage Loan. In the event that the applicable Investor requires that the
defense of such repurchase request come from Purchaser and not from Seller, then
Purchaser shall forward to Seller copies of all correspondence with the Investor
46
and Purchaser shall submit to the Investor the response and defense that is
prepared by Seller. No such Investor repurchase request may be settled without
the consent of Seller, which will not be unreasonably withheld.
(b) Time Limits. Notwithstanding any other provision of this
Article VII, an Indemnifying Party shall have no obligation under this Article
VII to an Indemnified Party for an Indemnified Event unless the Indemnified
Party, pursuant to Section 7.3(a), provides the Indemnifying Party, on or before
the second (2nd) anniversary of the Initial Closing Date, with a claim of Loss
resulting from an Indemnified Event; provided, however, that the time period
described in this Section 7.3(b) shall be extended to the fourth (4th)
anniversary of the Initial Closing Date for any claim of Loss arising from or
related to the buy back by Purchaser or Seller of a mortgage loan that closes on
or after the Initial Closing Date.
(c) Indemnification Cap. Notwithstanding any other provision
of this Article VII, an Indemnifying Party shall have no obligation under this
Article VII to an Indemnified Party for an Indemnified Event to the extent that
the aggregate indemnity payments made by the Indemnifying Party equal or exceed
$2,500,000.00; provided, however, that no dollar limitation of any type shall
apply with respect to Losses arising from or related to (i) the buy back by
Purchaser or Seller of a Mortgage Loan that closes on or after the Initial
Closing Date, and (ii) Mortgage Loans that are closed by the Acquired Division
from and after the Initial Closing Date that remain under the Warehouse
Agreement at any time after the sixtieth (60th) day following the Transition
Period.
(d) Indemnification Basket. Notwithstanding any other
provision of this Article VII, an Indemnifying Party shall have no obligation
under this Article VII to an Indemnified Party for an Indemnified Event, and the
Indemnified Party shall not submit any claim for indemnification hereunder,
unless and until all valid claims for indemnification that are entitled to
indemnification hereunder exceed an aggregate of $100,000.00. Upon satisfying
the $100,000 threshold described in the immediately preceding sentence, the
Indemnified Party shall submit its claim or claims for indemnification
(including claims related to Indemnified Events that occurred prior to the
satisfaction of such $100,000 threshold) in accordance with Section 7.3(a)
hereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Notices.
(a) General. All demands, notices or other communications
permitted or required hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered, sent by overnight courier, or mailed by
47
certified mail, postage prepaid, and return receipt requested or transmitted by
facsimile and confirmed by a similar mailed writing:
If to Purchaser, addressed to Purchaser at:
Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxx
Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
With a copy to:
Weiner Xxxxxxx Xxxxxx Xxxxx P.C.
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
or to such other address as Purchaser may have designed in
writing to Seller.
If to Seller, addressed to Seller at:
Matrix Financial Services Corp.
C/o Matrix Capital Bank
000 00xx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
With a copy to:
T. Xxxxx XxXxxxxxx, Esq.
General Counsel
Matrix Bancorp, Inc.
000 00xx Xxxxxx
Xxxxxx, XX 00000
If to Parent, addressed to Parent at:
Xxxxxxx X. Xxxxx
President
Matrix Capital Bank
000 00xx Xxxxxx
Xxxxxx, XX 00000
and
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T. Xxxxx XxXxxxxxx, Esq.
General Counsel
Matrix Bancorp, Inc.
000 00xx Xxxxxx
Xxxxxx, XX 00000
or to such other address as Seller may have designed in
writing to Purchaser.
Section 8.2 Effective Time of Notice. A notice given by
personal delivery, facsimile transmission or overnight courier shall be
effective as of the time and date of the receipt of such delivery or
transmission at the receiving Party's notice address. A notice given by
certified mail shall be deemed to have been delivered on and shall be effective
as of the third Business Day following the date on which it was deposited in the
United States postal system. In the event the last day for giving notice or
taking any other action under this agreement falls on a day that is not a
Business Day, the last day for giving such notice or taking such other action
shall be extended until the next day that is a Business Day.
Section 8.3 Entire Agreement; Amendment. This Agreement and
the documents, instruments and agreements to be executed and delivered pursuant
to this Agreement constitute the entire agreement between the Parties with
respect to the subject of the transactions contemplated hereby and supersede all
prior letters or agreements with respect thereto. This Agreement may be amended
and any provision thereof waived, but only writing signed by the Party against
whom such amendment or waiver is sought to be enforced.
Section 8.4 Binding Effect; Assignment. This Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
successors and permitted assigns. This Agreement is not assignable by Seller or
by Purchaser without the prior written consent of the other Party.
Section 8.5 Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original and all of which, taken together, shall constitute one and the
same agreement.
Section 8.6 Exhibits and Schedules. Each of the Exhibits and
Schedules is incorporated herein by reference.
Section 8.7 Governing Law. The Parties agree that this
Agreement shall be governed by federal law and the internal substantive laws of
the State of Texas, as applicable, without giving effect to the principles of
conflicts of law.
Section 8.8 No Third Party Benefit Intended. This Agreement
does not create, and shall not be deemed to create, a relationship between the
Parties or either of them and any third party (including, but not limited to,
the employees of Purchaser or Seller) in the nature of a third party beneficiary
or fiduciary relationship.
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Section 8.9 No Waiver. Unless expressly provided to the
contrary, the failure of any Party to insist upon strict performance of any
covenant or obligation in this Agreement shall not be a waiver of such Party's
right to demand strict compliance in the future or to pursue or enforce whatever
remedies may be available to such Party for any breach or default or in such
covenant or obligation (subject to applicable statues of limitation). No consent
or waiver, express or implied, to or of any breach or default in the performance
of any covenant or obligation in this Agreement shall constitute a consent or
waiver to or of any other breach or default in the performance of the same or
any other covenant or obligation hereunder.
Section 8.10 Time. Time is of the essence of this Agreement
and of each provision herein of which time is a part.
Section 8.11 Construction. This Agreement shall be construed
and interpreted fairly as to each of the Parties and not in favor of or against
any Party, regardless of which Party or Parties prepared this Agreement.
Section 8.12 Severability. If any provision of this Agreement,
or the application thereof, shall, for any reason and to any extent, be finally
adjudicated to be invalid or unenforceable, then the remainder of this Agreement
and the application of such provision to other persons or circumstances shall
not be affected thereby, but rather shall remain valid and enforceable to the
maximum extent permissible under applicable law.
Section 8.13 Venue. Any claim or other action (including, in
particular, any matter brought pursuant to Section 2.6 hereof) instituted by
Purchaser, Seller or Parent in connection with this Agreement shall be brought
exclusively in a federal or state court of appropriate jurisdiction in Dallas,
Texas.
Section 8.14 Specific Performance. Each of the Parties and
Parent acknowledge that breach of the obligations of the Parties and, as
appropriate, Parent to (i) deliver all of the Production Assets to Purchaser on
the date or dates required hereunder free and clear of all liens, encumbrances,
security interests or rights whatsoever, (ii) take appropriate actions to
disburse funds from the Escrow in accordance with the terms hereof, (iii) make
the deliveries specified in Sections 3.2 and 3.3 hereof, and (iv) perform the
covenants contained in Article VI hereof, will give rise to irreparable injury
to the appropriate Party, inadequately compensable in damages. Accordingly, the
entity intended to benefit from such provision of this Agreement shall be
entitled to injunctive relief to prevent or cure breaches or threatened breaches
of the provisions of this Agreement and to enforce specific performance of the
terms and provisions hereof in any court of competent jurisdiction, in addition
to any other legal or equitable remedies which may be available.
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Section 8.15 Exclusive Remedy.
(a) Subject to Sections 6.10(d), 8.14 and 8.15(b) hereof, and
notwithstanding any other provision of this Agreement to the contrary, the
indemnity provisions contained in Article VII hereof shall constitute the only
remedy available to Seller, Purchaser and/or Parent in connection with any
breach, non-performance or other matter of any kind whatsoever concerning,
related to or arising from this Agreement, any Exhibit or Schedule hereto, or
any certificate, document or other information provided or required to be
provided in connection herewith.
(b) In the event of any fraud by Purchaser, Seller or Parent
in connection with this Agreement, their respective negotiation or execution
hereof, the conduct of the Parties or Parent in connection herewith or the
transaction contemplated hereby (other than fraud committed in connection with
the origination of mortgage loans), notwithstanding Section 8.15(a), the Party
upon whom such fraud has been committed shall have all rights and remedies
available at law and in equity in addition to the rights and remedies contained
in this Agreement.
[SIGNATURE PAGES APPEAR ON FOLLOWING PAGE]
51
IN WITNESS WHEREOF, and intending to be legally bound, each of
the undersigned Parties has caused this Agreement to be duly executed under seal
and delivered by its duly authorized officers, as of the date first indicated
above.
MATRIX FINANCIAL SERVICES CORPORATION
By:
-------------------------------------
Its:
-------------------------------------
MATRIX CAPITAL BANK
By:
-------------------------------------
Its:
-------------------------------------
AMPRO MORTGAGE CORPORATION
By:
-------------------------------------
Its:
-------------------------------------
52
EXHIBIT A-1
The Monthly Transition P&L Statement and the Transition P&L
Statement shall include and take into account the following items (i.e., such
items will increase or reduce, as appropriate, any Monthly Anticipated Purchase
Price Adjustment Payment and Transition Period Gain or Loss):
o normal operating items, such as prepaid and regular rent, utilities,
insurance, taxes, Deficit Draw and other similar items shall be
appropriately allocated to the relevant periods;
o utilities, service contracts and other similar items that are paid in
arrears shall be presumed to be utilized ratably throughout the
relevant period;
o employee expense, including salary, bonus, commission and benefits,
related to the Hired Employees and Transition Employees;
o all fees and expenses paid to the Management Consultant;
o the allocable portion, as agreed upon by the Parties pursuant to the
Transition Services Agreement, of certain services provided to the
Acquired Division by Seller during the Transition Period;
o hedging costs (including any gain or loss), pair-off fees, commitment
and extension costs, and non-delivery or late fees;
o any credits received by or charges made to the Acquired Division by
the Parent in the ordinary course.
53
EXHIBIT A-2
The Monthly Transition P&L Statement and the Transition P&L
Statement shall not include nor take into account the following items (i.e.,
such items will not increase or reduce any Monthly Anticipated Purchase Price
Adjustment Payment and Transition Period Gain or Loss):
o any amounts required to be paid by Seller, Parent or
Purchaser under Article VII,
o fees paid by Seller, Parent or Purchaser in connection
with the transaction contemplated by this Agreement
(including, but not limited to legal, accounting or
other professional fees, due diligence costs, and
broker or finder fees),
o any costs, expenses and any other amounts that have
accrued or that should have accrued prior to the
Initial Closing Date (regardless of when billed),
o any amounts that do not relate directly to the Acquired
Division, except to the extent that an allocation
therefor has been made in the Transition Services
Agreement,
o any credit for past service with Seller given to
employees of Seller who are to be hired by Purchaser
(such as credit as to vacation days and other
benefits),
o any bonuses, commissions and all other amounts due to
any employee of Seller not hired by Purchaser in
connection with the transactions contemplated by this
Agreement, and all other costs and expenses relating to
all of Seller's employees if such cost or expense
arises or accrues before the Initial Closing Date,
including but not limited to salaries and other
compensation, accrued vacation pay, bonuses that are
payable for or that have accrued with respect to the
period prior to the Initial Closing Date, fringe
benefits, pension, health and other amounts,
o all Accrued Consideration and Benefits,
o any amounts paid to Xx. Xxxxx Xxxxxxx that are (i)
other than salary under the terms and conditions of his
written employment agreement with Seller, and (ii) paid
in connection with the closing of the transactions
contemplated by this Agreement, such as, among other
things, a finder's fee, bonus or other related payment,
o Any amounts required to be paid by Seller or Purchaser
into Escrow under Section 2.3(c),
o The Purchase Price and any portion thereof.
54
EXHIBIT B
OPERATING PLAN
Capitalized terms used, but not otherwise defined herein,
shall have the meanings ascribed to them in the Purchase and Assumption
Agreement entered into between the Seller and the Purchaser of which this
Exhibit B is a part.
The Acquired Division will continue to be operated in a manner
that is substantially similar to the manner in which it has been operated prior
to the Initial Closing Date, including operating in a manner consistent with the
existing policies and procedures of the Seller and the Mortgage Loan
Requirements. The President of Seller may make changes to (i) the origination
practices of the Acquired Division as he believes, in good faith, to be
reasonable to continue to comply with Mortgage Loan Requirements and (ii) the
operations of the Acquired Division subject to the conditions set forth herein.
The business and affairs of the Acquired Division shall be
overseen by a three (3) person executive committee of Seller, which shall
consist of the President of Seller, the President of Parent and one (1) other
individual selected by the board of directors of Seller (the "Executive
Committee"). On the Initial Closing Date, the Management Consultant will be
retained by Seller as a management consultant, pursuant to the terms of a
mutually acceptable consulting agreement, to assist the Executive Committee with
the operation and management of the business and affairs of the Acquired
Division during the Transition Period. The Management Consultant shall report to
Xx. Xxxxx X. Xxxxxxx or any successor President of Seller; it being agreed that
in the event a vacancy exists in the office of President of Seller, Seller shall
give serious consideration to successor recommendations suggested by the
Management Consultant.
During the Transition Period, the Management Consultant may
present to the Executive Committee or to Xx. Xxxxxxx (who shall promptly deliver
such proposal to the Executive Committee) proposals regarding the operation and
expansion of the Acquired Division (including, without limitation, proposals to
acquire additional loan production offices and capabilities) during the
Transition Period, and Seller agrees that any such proposal shall be considered
by the Executive Committee reasonably and in good faith, but disapproval by the
Executive Committee of any proposal shall not be deemed as a breach of this
Operating Plan, the Transition Services Agreement or the Purchase and Assumption
Agreement.
The Acquired Division may, at its option, obtain warehouse
financing from a source other than the Parent during the Transition Period and
cease using financing by Parent upon providing Parent thirty (30) days prior
55
written notice. Purchaser will utilize commercially reasonable efforts to pay
off (i.e., take out), within thirty (30) days following the Final Closing Date,
all outstanding amounts financed by Parent under the Warehouse Agreement with
respect to Mortgage Loans closed by the Acquired Division from and after the
Initial Closing Date, including without limitation by using commercially
reasonable efforts to obtain such "take-out" financing from Residential Funding
Corporation. Purchaser agrees that all outstanding amounts financed by Parent
under the Warehouse Agreement with respect to Mortgage Loans closed by the
Acquired Division from and after the Initial Closing Date will be paid off
(i.e., taken out) within sixty (60) days following the Transition Period. During
the sixty (60) days following the Transition Period, Purchaser shall provide to
Seller daily statements and weekly reconciliations regarding the amounts
outstanding under the Warehouse Agreement. Purchaser shall be entitled to all
profits and obligated with respect to all losses associated with Mortgage Loans
closed by the Acquired Division from and after the Initial Closing Date.
Purchaser may recommend the hiring of, and Seller shall hire,
up to twenty (20) new employees (excluding Xxxxxxx X. Xxxxxxx, Xx. and Xxxxxxx
X. Xxxxxxx), each of whom shall be employees of Seller during the Transition
Period and deemed "Hired Employees" hereunder, to work in Dallas or Houston,
Texas. None of these new employees may work in Seller's retail loan origination
business, and all such employees shall perform functions not performed by other
Seller employees (i.e., such employees will not be replacements of existing
Seller employees).
Seller and Parent shall have no right to require the Acquired
Division to utilize, adopt or otherwise provide any new loan products or
origination processes, other than those (i) typically utilized by the Acquired
Division, and (ii) required by the Mortgage Loan Requirements, without the prior
approval of Purchaser, which approval will not be unreasonably withheld or
delayed.
The Parties will work together, in the ordinary course of
business, to identify all Subsequently Acquired Tangible Assets and Subsequently
Acquired Intangible Assets and to reasonably determine the Subsequently Acquired
Assets Payment Amount.
During the Transition Period, unless Purchaser and the
Executive Committee otherwise mutually agree in writing, Seller will, with
regard to the Acquired Division:
(i) not purchase or acquire any fixed asset with a
purchase price or value in excess of $25,000; To the extent feasible, and if the
Parties agree, all assets to be purchased or acquired by the Acquired Division
during the Transition Period may instead be purchased or acquired by and in the
name of the Purchaser;
56
(ii) not (a) enter into any lease, equipment lease or
contract that would give rise to any Lease, Equipment or Contract Right with a
value or financial obligation in excess of $25,000, or (b) terminate, renew,
modify or extend any existing Lease, Equipment Lease or Contract Right with a
value or financial obligation in excess of $25,000; To the extent feasible, and
if the Parties agree, all leases, equipment leases and contracts to be entered
into by the Acquired Division during the Transition Period may instead be
entered into by and in the name of the Purchaser.
(iii) not terminate or amend (y) the Warehouse
Agreement or (z) the terms governing any other existing credit agreements;
(iv) not close or discontinue any existing wholesale
origination branch office of the Acquired Division;
(v) not terminate or lay-off Hired Employees or
Transition Employees;
(vi) use commercially reasonable efforts to (y)
preserve its business organization intact in all material respects and (z)
preserve generally the goodwill of Seller and those persons and entities with
whom it has business relationships;
(vii) originate pipeline applications and become
party to sales commitments only in the ordinary and usual course of its business
consistent with its past practices;
(viii) not increase the compensation payable to its
employees other than normal cost of living increases and merit increases that
are in the ordinary course, nor make any change in Seller's compensation
policies;
(ix) maintain substantially the same insurance
coverage as that currently maintained by Seller with respect to the Production
Assets and, in any event, not less than that required by applicable legal and
regulatory requirements;
(x) pay, perform and satisfy all Seller's obligations
required to have been paid, performed or satisfied, or related to the period,
prior to the Final Closing Date;
(xi) not sell, pledge or encumber, not cause a lien
or security interest to be imposed against, and not cause to become pledged,
secured or encumbered any Production Asset except for Assumed Obligations.
In addition, during the Transition Period, unless the Parties
otherwise agree in writing:
57
(i) Seller will maintain all licenses and approvals
(and any related net worth, facilities or other items required by such licenses
and approvals) necessary to conduct its business activities and operations in
accordance with all applicable law;
(ii) Seller will comply with all of the terms and
conditions of its employment agreement with Xxxxx Xxxxxxx, President and Chief
Operating Officer of Seller, which is attached to this Operating Plan as
Appendix B;
(iii) Parent will ensure that Seller remains an
operating subsidiary of Parent such that Seller will, to the extent permitted by
federal law, continue to be exempt from all mortgage banking license,
authorization, registration and approval requirements.
The employees of the QC/Compliance department of the Seller
will become employees of the Parent for the duration of the Transition Period
and will report directly to, and take direction only from, the Chief Operating
Officer of the Parent. Regardless of the designation of these employees as Hired
Employees under the Purchase and Assumption Agreement, neither Purchaser nor the
Acquired Division shall have any liability for any acts or omissions of these
employees while they report to or are under the direction of Parent; provided,
however, that if the Purchaser or the Acquired Division directs such employee to
take action that is contrary to the direction of the Parent, then Purchaser and
the Acquired Division shall have liability for those actions.
58
Appendix A to Operating Plan
Warehouse Agreement
[TO BE ATTACHED]
00
Xxxxxxxx X to Operating Plan
Employment Agreement between Seller and Xxxxx Xxxxxxx
[TO BE ATTACHED]
60
EXHIBIT C
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT, effective as of February
28, 2003 (hereinafter referred to as the "Services Agreement"), is entered into
by and between MATRIX FINANCIAL SERVICES CORPORATION (hereinafter "SELLER"), and
AMPRO MORTGAGE CORPORATION (hereinafter "PURCHASER").
WITNESSETH:
WHEREAS, SELLER and PURCHASER have entered into that certain
Purchase and Assumption Agreement, dated as of February 28, 2003 (the "Purchase
Agreement"), pursuant to which SELLER has agreed to sell to PURCHASER certain
assets (the "Purchased Assets") relating to the mortgage loan origination
business of SELLER (the "Business"); and
WHEREAS, SELLER currently provides certain support services to
support the Business, and will continue to provide certain of such support
services to PURCHASER after the Initial Closing Date, all as more fully set
forth herein; and
WHEREAS, the PURCHASER will provide certain support services
to SELLER to support certain aspects of the Business after the Initial Closing
Date, all as more fully set forth herein; and
WHEREAS, it is the intention of SELLER and PURCHASER that
services undertaken pursuant to this Services Agreement (the "Services") be
rendered at the fees and costs indicated in the Schedules attached hereto,
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
2. Services.
(a) The services to be performed by SELLER under this Services
Agreement shall consist of the support services described in Schedules 1 through
10 attached hereto (hereinafter referred to as the "SELLER Services"). SELLER
shall provide the SELLER Services to PURCHASER, on the terms and conditions set
61
forth herein, during the Transition Period or such other period as may be
indicated in the Schedules attached hereto.
(b) The services to be performed by PURCHASER under this
Services Agreement shall consist of the support services described in Schedule
11 attached hereto (hereinafter referred to as the "PURCHASER Services").
PURCHASER shall provide the PURCHASER to SELLER, on the terms and conditions set
forth herein, during the Transition Period or such other period as may be
specified in Schedule 8 attached hereto.
3. Compensation.
(a) The charges to be paid by one Party to the other Party for
the Services shall be determined in accordance with the Schedules hereto, and
such charges shall be payable as set forth in Section 3(b), below.
(b) Any charges to be paid by a Party to the other Party
hereunder shall be included on and taken into account in connection with the
preparation of the Transition P&L Statement (i.e., such amounts will increase or
decrease, as appropriate, any Monthly Anticipated Purchase Price Adjustment
Payment and the Transition Period Gain or Loss) and will be paid in accordance
with Section 2.3 of the Purchase Agreement.
(c) SELLER shall be entitled to all profits and obligated with
regard to all losses associated with Mortgage Loans closed prior to the Initial
Closing Date, irrespective of when such Mortgage Loans actually are delivered
under a sales commitment, subject only to a loan delivery fee as set forth on
Appendix A to Schedule 11 of this Services Agreement. Appendix C attached hereto
contains a list of all such Mortgage Loans closed prior to the Initial Closing
Date. The information provided by Seller in Appendix C shall be true, correct
and complete as of February 14, 2003. Promptly following the Initial Closing
Date, Seller shall deliver an updated Appendix C containing information that is
true, correct and complete as of the Initial Closing Date.
4. Change Order Procedures. If either Party requests any change in, modification
of or adjustment to the Services provided by the other Party and if such other
Party agrees to such change, modification or adjustment, an appropriate
adjustment in the applicable charges will be negotiated in accordance with the
attached change order procedure ("Change Order Procedure") attached as Appendix
B hereto.
5. Term and Renewal. Unless otherwise described in this Services Agreement or in
the Schedules attached hereto, if PURCHASER wishes SELLER to continue, after the
expiration of the Transition Period, to provide SELLER Services, the PURCHASER
will submit a proposal to SELLER no later than 30 days prior to the termination
of the Transition Period. The SELLER agrees to notify the PURCHASER, in writing,
62
within fifteen (15) days following the SELLER's receipt of such proposal, of the
SELLER's decision either to accept the extension of the SELLER Services as
proposed by PURCHASER, or allow the SELLER Services to expire on the Final
Closing Date.
6. Performance. Each Party shall use its reasonable best efforts to perform its
Services as described in the Schedules.
7. Indemnification.
(a) SELLER hereby agrees to indemnify PURCHASER and its
officers and directors from any and all liabilities, losses, claims, causes of
action, damages, expenses and costs (including, without limitation, attorneys'
fees and expenses) incurred by any such persons as a result of SELLER's
performance of its duties and obligations under this Services Agreement, except
to the extent that such liabilities, losses, claims, damages, expenses or costs
results from the negligence, misfeasance or bad faith of such persons
indemnified. The indemnity provided by this section shall be in addition to such
indemnities as agreed by SELLER in the Purchase Agreement, but all claims for
indemnity under this section shall be subject to and handled in the manner set
forth in Article VII of the Purchase Agreement.
(b) PURCHASER hereby agrees to indemnify SELLER and its
officers and directors from any and all liabilities, losses, claims, causes of
action, damages, expenses and costs (including, without limitation, attorneys'
fees and expenses) incurred by any such persons as a result of PURCHASER's
performance of its duties and obligations under this Services Agreement, except
to the extent that such liabilities, losses, claims, damages, expenses or costs
results from the negligence, misfeasance or bad faith of such persons
indemnified. The indemnity provided by this section shall be in addition to such
indemnities as agreed by PURCHASER in the Purchase Agreement, but all claims for
indemnity under this section shall be subject to and handled in the manner set
forth in Article VII of the Purchase Agreement.
8. Force Majeure. Neither party shall be responsible for any failure or delay in
performing the Services if and to the extent caused by acts of God, fire,
explosion, earthquake, floods, civil disturbances, war, acts of terrorism,
storms, or acts of government, or any other event whether similar or dissimilar
beyond such party's reasonable control.
9. Termination.
(a) PURCHASER may terminate the Services Agreement with
respect to any or all of the SELLER Services described herein at any time with
such termination to be effective thirty (30) days after delivery of written
notice of termination to SELLER.
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(b) SELLER may terminate the Services Agreement with respect
to any or all of the PURCHASER Services described herein at any time with such
termination to be effective thirty (30) days after delivery of written notice of
termination to PURCHASER.
(c) If either Party is in default in the performance of its
obligations hereunder (other than a failure to pay monthly charges pursuant to
Section 3, above), in addition to any other rights which the Parties may have at
law or in equity, the non-defaulting Party may elect to immediately enact the
Dispute Resolution Procedures in Appendix A of this Services Agreement if the
other Party fails to cure any such default within thirty days of written notice
from the non-defaulting Party, specifying the nature and extent of any such
default.
10. Confidentiality.
(a) PURCHASER/SELLER Data. All information concerning either
party, its business, or customers submitted by that party to the other party
pursuant to this Services Agreement shall be held in confidence by the receiving
party and shall not be disclosed except as required by law. Access to such
information shall not be available to any persons other than the receiving
party's employees, attorneys, accountants and advisors. Except as each party may
specifically approve in writing, the receiving party will not utilize any such
information, data, systems, or programs, except as contemplated by this Services
Agreement. Each party will maintain reasonable security standards with respect
to the other party's data and will require its employees to follow such
standards.
(b) The parties acknowledge that any information concerning
the business or operations of the other received as a result of the operation of
this Services Agreement constitutes confidential information subject to the
terms and conditions of the Purchase Agreement.
11. Audit. SELLER and PURCHASER agree to cooperate fully with each other in
connection with the performance of any internal or external audit or with regard
to examinations by regulatory authorities. In such connection, upon reasonable
advance notice, SELLER and PURCHASER shall make available for examination or
interview during normal business hours any records relating to the Services and
any personnel involved in the performance thereof.
12. Planning and Communication. The parties acknowledge and agree that an
ongoing, joint cooperative effort will be required in order to accomplish the
purposes of this Services Agreement to provide for the smooth and orderly
transition of the sale of the Production Assets to PURCHASER by SELLER. To that
end, it will periodically be necessary and/or appropriate to mutually review,
revise and redefine the Services to be provided under this Services Agreement,
the processes by which such services will be provided and the cost of providing
64
such services. The parties agree to promptly discuss and, prior to the
institution of any changes, mutually agree, subject to the terms of the Purchase
Agreement and the exhibits thereto, upon any changes in Services or staffing,
costs which are unanticipated and/or unknown at the date of this Services
Agreement and any incremental pricing resulting from changes in process,
Services, staffing or other such similar circumstances as may arise during the
term of this Services Agreement, all in accordance with the Change Order
Procedures described in paragraph 4 and Appendix B attached hereto.
13. Affirmative Actions. The SELLER and PURCHASER (through the employees of the
Acquired Division) hereby agree and commit to each other that they will, subject
to and in accordance with the terms of the Operating Plan, each diligently
continue and pursue the final resolution of all compliance initiatives begun
prior to the Initial Closing Date as well as any new initiatives that arise
during the Transition Period.
14. Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and either delivered personally to the addressee
faxed to the addressee or mailed, certified or registered mail, postage prepaid,
and shall be deemed given when so delivered personally, or by confirmed
facsimile transmission, or if mailed, two days after the date of mailing as
follows:
(a) If to SELLER, to:
Xxxxx X. Xxxxxxx
President and COO
Matrix Financial Services Corp.
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
With a copy to:
Xxxxxxx X. Xxxxx
President
Matrix Capital Bank
000 00xx Xxxxxx
Xxxxxx, XX 00000
and
T. Xxxxx XxXxxxxxx, Esq.
General Counsel
Matrix Bancorp, Inc.
000 00xx Xxxxxx
Xxxxxx, XX 00000
65
(b) If to PURCHASER, to:
Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxx
Xxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Weiner Xxxxxxx Xxxxxx Xxxxx PC
0000 00xx Xxxxxx XX, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
or to such other address as SELLER or PURCHASER shall have
specified in writing to the other.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and permitted
assigns.
16. Independent Activities. The Parties understand and agree that the PURCHASER
Services shall be performed by the Acquired Division during the Transition
Period. The PURCHASER Services shall be performed by Seller employees within the
Acquired Division under the direction and oversight of the President and Chief
Operating Officer of Seller. In the event that any PURCHASER Service will
require the PURCHASER to perform actions that are outside of the ordinary course
of business of the Acquired Division, PURCHASER shall seek authority for such
action from the Executive Committee.
17. Entire Agreement; Amendment; Benefit of Provisions. This Services Agreement,
including the Appendices and Schedules hereto, embody the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements with respect thereto between SELLER and PURCHASER, other than
the Purchase Agreement and any exhibits thereto, the provisions of which shall
control in the event of a conflict with this Services Agreement. Except as
otherwise expressly provided herein, no person other than the parties hereto
shall have any right hereunder or be entitled to the benefit of any provision
hereof.
18. Counterparts. This Services Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same instrument
and shall become effective when one or more counterparts hereof have been signed
by SELLER and delivered to PURCHASER and one or more counterparts hereof have
been signed by PURCHASER and delivered to SELLER.
66
19. Governing Law. THIS SERVICES AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT
REFERENCE TO ANY CONFLICT OF LAW PRINCIPLES. ANY CLAIM INSTITUTED BY ANY PARTY
HERETO IN CONNECTION WITH THIS SERVICES AGREEMENT SHALL BE EXCLUSIVELY BROUGHT
IN A FEDERAL OR STATE COURT OF APPROPRIATE JURISDICTION IN DALLAS, TEXAS.
IN WITNESS WHEREOF, the undersigned have caused this Services
Agreement to be signed by their officers or representatives thereunto duly
authorized as of the date first written above.
MATRIX FINANCIAL SERVICES CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
AMPRO MORTGAGE CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
67
TRANSITION SERVICES AGREEMENT
Appendix A
Dispute Resolution Procedure
SELLER and PURCHASER agree to cooperate in good faith to
resolve any and all disputes that may arise or stem from the services performed
under this Services Agreement. Should any disputes arise, whether with respect
to costs billed by a party for the Services, the service levels provided, or
losses incurred by either party, or any other reason, which cannot be resolved
otherwise, the dispute shall be submitted to a Resolution Committee as described
below.
SELLER and PURCHASER agree to form a Resolution Committee
consisting of a senior officer of each entity to resolve any disputes arising
out of the Services provided under this Agreement. The Resolution Committee
shall meet by teleconference or otherwise and resolve all disputes submitted to
it within ten (10) Business Days of a dispute's submission to the Resolution
Committee. If the Resolution Committee cannot agree on a resolution, the parties
shall resolve such dispute in accordance with Section 2.6 of the Purchase
Agreement.
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TRANSITION SERVICES AGREEMENT
Appendix B
Change Order Procedure
In the event that PURCHASER or SELLER desire to make any
change in, modification of, or adjustment to any of the Services such proposed
changes shall be handled under the Change Order Procedures outlined below:
1. PURCHASER or SELLER may submit a written Change Request signed by (a) the
Management Consultant or the President of the Seller, on behalf of the PURCHASER
and (b) the President of the Seller, the President of the Parent or the Chief
Operating Officer of the Parent, on behalf of the Seller. Each Change Request
will be assigned a unique reference number and will identify the affected
portion of the Services and the proposed changes to the Services. Change
Requests will be submitted to the Chief Financial Officers of SELLER and
PURCHASER.
2. For each Change Request submitted by PURCHASER or SELLER, SELLER/PURCHASER
will, within 15 days of the Change Request's submission, provide information to
the requesting party as to the impact of the Change Request on any deliverables,
schedules, costs and/or fees, and the expected impact upon other portions of the
Services.
3. If SELLER's/PURCHASER's terms for the change are acceptable to
PURCHASER/SELLER, and after approval by the Executive Committee, a Change
Authorization will be executed by SELLER and PURCHASER and the schedule of
Services and any other schedules or Appendices will be adjusted accordingly. If
the terms for the change are not acceptable to SELLER or PURCHASER, the
then-existing Services, including previously agreed changes, will continue in
force.
69
TRANSITION SERVICES AGREEMENT
Appendix C
Mortgage Loans closed prior to the Initial Closing Date
[TO BE ATTACHED]
70
TRANSITION SERVICES AGREEMENT
Schedule 1
Human Resources
On a month-to-month basis during the Transition Period, SELLER shall continue to
provide human resources support (which shall include, among other things,
payroll and benefits services) for employees in the Acquired Division.
Seventy-five percent (75%) of the costs and expenses associated with the
SELLER's human resources department and the amount allocated to SELLER by the
Parent or Matrix Bancorp, Inc. shall be allocated to the Acquired Division.
Twenty-five percent (25%) of such costs, expenses or allocation shall not be
included on or taken into account in connection with the preparation of the
Transition P&L Statement and will not impact the Monthly Anticipated Purchase
Price Adjustment Payment or Transition Period Gain or Loss.
All allocations to SELLER by the Parent or Matrix Bancorp, Inc. shall be
determined, except as otherwise set forth herein, in a manner consistent with
the historic practices of Seller, Parent and Matrix Bancorp, Inc.
71
TRANSITION SERVICES AGREEMENT
Schedule 2
Accounting
On a month-to-month basis during the Transition Period, SELLER shall continue to
provide accounting support for the Acquired Division.
One hundred percent (100%) of the costs and expenses associated with the
SELLER's accounting department devoted to handling the warehouse accounting
(including 100% of the costs of the Parent's on-site employees handling the
warehouse collateral) plus seventy-five percent (75%) of all other costs and
expenses associated with the SELLER's accounting department and the amount
allocated to SELLER by the Parent or Matrix Bancorp, Inc. shall be allocated to
the Acquired Division. Twenty-five percent (25%) of all such other costs,
expenses or allocation shall not be included on or taken into account in
connection with the preparation of the Transition P&L Statement and will not
impact the Monthly Anticipated Purchase Price Adjustment Payment or Transition
Period Gain or Loss.
Outside Audit
Seventy-five percent (75%) of the amount allocated to SELLER by the Parent or
Matrix Bancorp, Inc. for the purposes of the annual independent audit shall be
allocated to the Acquired Division. Twenty-five percent (25%) of such allocation
shall not be included on or taken into account in connection with the
preparation of the Transition P&L Statement and will not impact the Monthly
Anticipated Purchase Price Adjustment Payment or Transition Period Gain or Loss.
Tax Preparation
Fifty percent (50%) of the amount allocated to SELLER by the Parent or Matrix
Bancorp, Inc. for the purposes of tax return preparation shall be allocated to
the Acquired Division. The remaining fifty percent (50%) of such allocation
shall not be included on or taken into account in connection with the
preparation of the Transition P&L Statement and will not impact the Monthly
Anticipated Purchase Price Adjustment Payment or Transition Period Gain or Loss.
Internal Audit
On a month-to-month basis during the Transition Period, SELLER shall continue to
provide internal audit support for the Acquired Division.
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The allocation of cost will be the actual cost, tracked on a departmental level,
attributable to departments of the Acquired Division versus the non-Acquired
Division departments.
All allocations to SELLER by the Parent or Matrix Bancorp, Inc. shall be
determined, except as otherwise set forth herein, in a manner consistent with
the historic practices of Seller, Parent and Matrix Bancorp, Inc.
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TRANSITION SERVICES AGREEMENT
Schedule 3
Employee Benefits
On a month-to-month basis during the Transition Period, SELLER shall continue to
extend to all of the employees in the Acquired Division all of the employee
benefits that each such employee enjoyed with SELLER immediately prior to the
Initial Closing Date, subject to the terms of the Purchase Agreement.
The costs and expenses associated with the employee benefits shall be allocated
to the Acquired Division on a per employee basis.
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TRANSITION SERVICES AGREEMENT
Schedule 4
Office Space
Prior to the Initial Closing Date, the Parties shall have developed and agreed
upon a floor plan setting forth, for each Leased Premises, the office space that
will be utilized by the Acquired Division.
Prior to the assignment of the Leases to Purchaser, rent associated with the
Leased Premises that are utilized by the Acquired Division shall be allocated to
the Acquired Division on a straight pass-through basis of all rent required to
be paid with respect to the Transition Period.
For the Seller's corporate offices, located at 2133 West Peoria, Phoenix,
Arizona, the Parties shall, prior to the Final Closing Date, enter into a
Sublease that will, for the space agreed to by the Parties, (a) have an
expiration date or termination date equal to the Seller's current lease on said
corporate office and (b) have rent payments due the Seller equal to (i) the per
square foot total rent payments made by the Seller under the lease on said
premises multiplied by (ii) the square footage subleased by the Purchaser under
the Sublease.
Prior to the execution of the Sublease, fifty percent (50%) of the costs and
expenses associated with the Seller's corporate offices (and not any space
associated with any affiliate of Seller or other third party), located at 2133
West Peoria, Phoenix, Arizona, shall be allocated to the Acquired Division. The
other fifty percent (50%) of the costs and expenses associated with the Seller's
corporate offices (and not any space associated with any affiliate of Seller or
other third party), located at 2133 West Peoria, Phoenix, Arizona, shall not be
included on or taken into account in connection with the preparation of the
Transition P&L Statement and will not impact the Monthly Anticipated Purchase
Price Adjustment Payment or Transition Period Gain or Loss.
In the event that a Lease expires during the Transition Period and prior to its
assignment to Purchaser, Seller's executive committee, with the assistance of
the Management Consultant, shall have authority to negotiate and enter into a
new lease with the applicable landlord, which lease will be entered into in the
name of PURCHASER.
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General Services (Building Management and Mail Room)
On a month-to-month basis during the Transition Period, SELLER shall continue to
provide general services (i.e., building management and mail room) for the
Acquired Division.
Fifty percent (50%) of the costs and expenses associated therewith shall be
allocated to the Acquired Division. The other fifty percent (50%) of the costs
and expenses associated therewith shall not be included on or taken into account
in connection with the preparation of the Transition P&L Statement and will not
impact the Monthly Anticipated Purchase Price Adjustment Payment or Transition
Period Gain or Loss. The allocation of mailing and shipping cost during the
Transition Period is actual cost, tracked on a departmental level, attributable
to departments of the Acquired Division versus the non-Acquired Division
departments.
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TRANSITION SERVICES AGREEMENT
Schedule 5
Telephone System
On a month-to-month basis during the Transition Period, SELLER shall continue to
make available SELLER's telephone system to the Acquired Division.
Fifty percent (50%) of the costs and expenses associated with the Seller's
telephone system shall be allocated to the Acquired Division. The other fifty
percent (50%) of the costs and expenses associated with the Seller's telephone
system shall not be included on or taken into account in connection with the
preparation of the Transition P&L Statement and will not impact the Monthly
Anticipated Purchase Price Adjustment Payment or Transition Period Gain or Loss.
Reception Services
Fifty percent (50%) of the personnel costs and expenses associated with the
Seller's receptionist shall be allocated to the Acquired Division. The other
fifty percent (50%) of the personnel costs and expenses associated with the
Seller's receptionist shall not be included on or taken into account in
connection with the preparation of the Transition P&L Statement and will not
impact the Monthly Anticipated Purchase Price Adjustment Payment or Transition
Period Gain or Loss.
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TRANSITION SERVICES AGREEMENT
Schedule 6
Computer System
On a month-to-month basis during the Transition Period, SELLER shall continue to
make available SELLER's computer system to the Acquired Division.
Seventy-five percent (75%) of the MIS personnel costs and expenses associated
with the Seller's MIS department and the amount allocated to the SELLER by
Parent or Matrix Bancorp, Inc. shall be allocated to the Acquired Division. The
other twenty-five percent (25%) of the MIS personnel costs, expenses or
allocation shall not be included on or taken into account in connection with the
preparation of the Transition P&L Statement and will not impact the Monthly
Anticipated Purchase Price Adjustment Payment or Transition Period Gain or Loss.
All allocations to SELLER by the Parent or Matrix Bancorp, Inc. shall be
determined, except as otherwise set forth herein, in a manner consistent with
the historic practices of Seller, Parent and Matrix Bancorp, Inc.
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TRANSITION SERVICES AGREEMENT
Schedule 7
QC/Compliance
On a month-to-month basis during the Transition Period, SELLER shall continue to
make available SELLER's QC/Compliance department to the Acquired Division.
Fifty percent (50%) of the QC/Compliance department personnel costs and expenses
will be allocated to the Acquired Division. The remaining fifty percent (50%) of
all such costs and expenses shall not be included on or taken into account in
connection with the preparation of the Transition P&L Statement and will not
impact the Monthly Anticipated Purchase Price Adjustment Payment or Transition
Period Gain or Loss.
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TRANSITION SERVICES AGREEMENT
Schedule 8
Records Retention
On a month-to month basis during the Transition Period, SELLER shall continue to
make available SELLER's records retention department to the Acquired Division.
Thirty-three percent (33%) of the Records Retention personnel costs and expenses
and ten percent (10%) of the lease payments associated with the Seller's
existing records warehouse storage facility shall be allocated to the Acquired
Division. Sixty-seven percent (67%) of the Records Retention personnel costs and
expenses and ninety percent (90%) of the lease payments associated with the
Seller's existing records warehouse storage facility shall not be included on or
taken into account in connection with the preparation of the Transition P&L
Statement and will not impact the Monthly Anticipated Purchase Price Adjustment
Payment or Transition Period Gain or Loss.
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TRANSITION SERVICES AGREEMENT
Schedule 9
Miscellaneous Corporate Services
On a month-to month basis during the Transition Period, SELLER shall continue to
provide Parent and holding company support services to the Acquired Division in
the areas of Seller's executive and board member travel and entertainment,
professional liability insurance, corporate legal counsel, outside consulting
and professional services.
Travel and Entertainment
Fifty percent (50%) of these costs and expenses allocated to the SELLER by
Parent or Matrix Bancorp, Inc. shall be allocated to the Acquired Division. The
remaining fifty percent (50%) of all such allocated costs and expenses shall not
be included on or taken into account in connection with the preparation of the
Transition P&L Statement and will not impact the Monthly Anticipated Purchase
Price Adjustment Payment or Transition Period Gain or Loss. No travel or
entertainment expense shall be allocated to the Acquired Division if such travel
or entertainment relates to anything other than the business of the Seller.
Professional Liability Insurance
Seventy-five (75%) of these costs and expenses allocated to the SELLER by Parent
or Matrix Bancorp, Inc. shall be allocated to the Acquired Division. The
remaining twenty-five percent (25%) of all such allocated costs and expenses
shall not be included on or taken into account in connection with the
preparation of the Transition P&L Statement and will not impact the Monthly
Anticipated Purchase Price Adjustment Payment or Transition Period Gain or Loss.
Corporate Legal Counsel; Outside Consulting and Professional Services
The allocation of these costs will be the actual cost, tracked on a departmental
level, attributable to departments of the Acquired Division versus the
non-Acquired Division departments.
All allocations to SELLER by the Parent or Matrix Bancorp, Inc. shall be
determined, except as otherwise set forth herein, in a manner consistent with
the historic practices of Seller, Parent and Matrix Bancorp, Inc.
81
TRANSITION SERVICES AGREEMENT
Schedule 10
Miscellaneous Additional Services - (Seller to Acquired Division)
On a month-to month basis during the Transition Period, SELLER shall make
available to the Acquired Division the following services and systems:
1. Loan set-up onto the Seller's servicing system for
Countrywide AOT delivery and delivery to other third
parties as a result of sales commitments entered into
by the Acquired Division,
2. Loan servicing activities, to the extent required prior
to loan deliveries to third parties, for the loans
identified in paragraph 1 above, which shall include,
among other things, the issuance of IRS form 1098 to
the extent required.
The fees to be charged to PURCHASER for such services and systems shall be equal
to the fully loaded costs (i.e., overhead, but no profit, included) actually
incurred by SELLER in connection therewith.
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TRANSITION SERVICES AGREEMENT
Schedule 11
Miscellaneous Additional Services - (Acquired Division to Seller)
On a month-to-month basis during the Transition Period, the Acquired Division
shall make available to SELLER the following services and systems:
1. Management of mortgage loan assumption activities,
2. Management of SELLER's portfolio retention activities, and
3. Management of SELLER's bond loan activities.
The fees to be charged to SELLER for the preceding three services
and systems shall be equal to the fully loaded costs (i.e.,
overhead, but no profit, included) actually incurred by PURCHASER
in connection therewith.
4. Delivery of SELLER's loans (closed prior to the Initial Closing
Date).
The fees to be charged to SELLER for the preceding service shall
be as set forth on Appendix A to this Schedule 11.
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TRANSITION SERVICES AGREEMENT
Appendix A to Schedule 11
Loan Delivery Fee
----------------------------------------------
Cost per
Loan
----------------------------------------------
Shipping 412 $22.19
----------------------------------------------
Insuring 416 $74.72
----------------------------------------------
Post Closing 417 $37.70
----------------------------------------------
Loan Review 418 $21.51
----------------------------------------------
Overhead 411 $7.55
----------------------------------------------
Loan Delivery Fee for $88.96
conventional loans where all
functions completed after the
Initial Closing Date
----------------------------------------------
Loan Delivery Fee for government
loans where all functions
completed after the Initial
Closing Date $163.68
----------------------------------------------
It is understood and agreed by the parties that loans closed as of the Initial
Closing Date will be subject to the applicable Loan Delivery Fee, or appropriate
pro-rata amount of the applicable Loan Delivery Fee, as set forth herein.
Initial Closing Date closed loans may have already had certain of the identified
tasks performed, and therefore the applicable Loan Delivery Fee charged on those
loans would be less than the full Loan Delivery Fee shown.
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EXHIBIT D
EXHIBIT D-1
XXXX OF SALE
(Tangible Assets and Intangible Assets)
This XXXX OF SALE ("Xxxx of Sale") is made this 28 day of
February 2003 by Matrix Financial Services Corporation ("Seller"), in favor of
AMPRO Mortgage Corporation ("Purchaser").
RECITALS
Seller and Purchaser are parties to a Purchase and Assumption
Agreement (the "Agreement") dated as of February 28, 2003. Terms used in this
Xxxx of Sale and not otherwise defined herein shall have the same meaning as
they have in the Agreement unless the context provides otherwise.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged:
1. Seller hereby sells, transfers, conveys, assigns and
delivers to Purchaser the Tangible Assets and the Intangible Assets (hereinafter
the "Transferred Assets").
2. Seller hereby authorizes Purchaser, in the name of Seller
but on behalf of Purchaser, to demand and receive any and all of the Transferred
Assets, and to give receipts and releases for and in respect of the same, or any
part thereof, and, from time to time, to institute and prosecute in Seller's
name, for the benefit of Purchaser, any and all proceedings at law, in equity or
otherwise, which Purchaser may deem proper for the collection or reduction to
possession of any of the Transferred Assets or for the collection and
85
enforcement of any claim or right of any kind, sold, conveyed, transferred or
assigned, or intended so to be, by this Xxxx of Sale, and to perform such acts
and do such things with respect to the Transferred Assets as Purchaser shall
deem desirable, Seller hereby declaring that the foregoing powers are coupled
with an interest and are and shall be irrevocable.
3. Seller hereby agrees that, from time to time after delivery
of this Xxxx of Sale, it will, at the request of Purchaser and without further
consideration, promptly take such further action and execute and delivery such
additional assignments, bills of sale, consents or other similar instruments as
Purchaser may reasonably deem necessary to complete the transfer of the title or
possession of the Transferred Assets to, or vest them in, Purchaser and, in the
case of contracts and rights, if any, which cannot be effectively transferred to
Purchaser without the consent of third parties, to obtain such consents promptly
and, if any such consents are unobtainable, to assure the benefits thereof to
Purchaser.
4. Except as is set forth in Paragraph 6 below, nothing in
this instrument, express or implied, is intended or shall be construed to confer
upon any person or entity other than Purchaser any remedy or claim.
5. The provisions of this Xxxx of Sale, which are intended to
be binding upon Seller, its successors and assigns, and are for the benefit of
Purchaser, its successors and assigns, and all rights hereby granted Purchaser,
including the right to act for Seller, may be exercised by Purchaser, its
successors or assigns.
[SIGNATURE LINES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be
signed by its duly authorized officer on the date first above written.
MATRIX FINANCIAL SERVICES CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
STATE OF _________________:
CITY/COUNTY OF____________:
The foregoing instrument was acknowledged before me this 28th
day of February, 2003 by ________________________, known to me to be a duly
authorized officer of Matrix Financial Services Corporation.
-----------------------------------
Notary Public
My commission expires:_____________
87
EXHIBIT D-2
XXXX OF SALE
(Contract Rights, Leases and Equipment Leases)
This XXXX OF SALE ("Xxxx of Sale") is made this ___ day of
_________________, 2003 by Matrix Financial Services Corporation ("Seller"), in
favor of AMPRO Mortgage Corporation ("Purchaser").
RECITALS
Seller and Purchaser are parties to a Purchase and Assumption
Agreement (the "Agreement") dated as of February 28, 2003. Terms used in this
Xxxx of Sale and not otherwise defined herein shall have the same meaning as
they have in the Agreement unless the context provides otherwise.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged:
1. Seller hereby sells, transfers, conveys, assigns and
delivers to Purchaser the Contract Rights, Leases and Equipment Leases
identified on Appendix A hereto (hereinafter the "Transferred Assets").
2. Seller hereby authorizes Purchaser, in the name of Seller
but on behalf of Purchaser, to demand and receive any and all of the Transferred
Assets, and to give receipts and releases for and in respect of the same, or any
part thereof, and, from time to time, to institute and prosecute in Seller's
name, for the benefit of Purchaser, any and all proceedings at law, in equity or
otherwise, which Purchaser may deem proper for the collection or reduction to
possession of any of the Transferred Assets or for the collection and
88
enforcement of any claim or right of any kind, sold, conveyed, transferred or
assigned, or intended so to be, by this Xxxx of Sale, and to perform such acts
and do such things with respect to the Transferred Assets as Purchaser shall
deem desirable, Seller hereby declaring that the foregoing powers are coupled
with an interest and are and shall be irrevocable.
3. Seller hereby agrees that, from time to time after delivery
of this Xxxx of Sale, it will, at the request of Purchaser and without further
consideration, promptly take such further action and execute and delivery such
additional assignments, bills of sale, consents or other similar instruments as
Purchaser may reasonably deem necessary to complete the transfer of the title or
possession of the Transferred Assets to, or vest them in, Purchaser and, in the
case of contracts and rights, if any, which cannot be effectively transferred to
Purchaser without the consent of third parties, to obtain such consents promptly
and, if any such consents are unobtainable, to assure the benefits thereof to
Purchaser.
4. Except as is set forth in Paragraph 6 below, nothing in
this instrument, express or implied, is intended or shall be construed to confer
upon any person or entity other than Purchaser any remedy or claim.
5. The provisions of this Xxxx of Sale, which are intended to
be binding upon Seller, its successors and assigns, and are for the benefit of
Purchaser, its successors and assigns, and all rights hereby granted Purchaser,
including the right to act for Seller, may be exercised by Purchaser, its
successors or assigns.
[SIGNATURE LINES APPEAR ON FOLLOWING PAGE]
89
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be
signed by its duly authorized officer on the date first above written.
MATRIX FINANCIAL SERVICES CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
STATE OF _________________:
CITY/COUNTY OF____________:
The foregoing instrument was acknowledged before me this ___
day of _____________, 2003 by ________________________, known to me to be a duly
authorized officer of Matrix Financial Services Corporation.
-----------------------------------
Notary Public
My commission expires:_____________
90
EXHIBIT D-3
XXXX OF SALE
(Subsequently Acquired Tangible Assets
and Subsequently Acquired Intangible Assets)
This XXXX OF SALE ("Xxxx of Sale") is made this ___ day of
_________________, 2003 by Matrix Financial Services Corporation ("Seller"), in
favor of AMPRO Mortgage Corporation ("Purchaser").
RECITALS
Seller and Purchaser are parties to a Purchase and Assumption
Agreement (the "Agreement") dated as of February 28, 2003. Terms used in this
Xxxx of Sale and not otherwise defined herein shall have the same meaning as
they have in the Agreement unless the context provides otherwise.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged:
1. Seller hereby sells, transfers, conveys, assigns and
delivers to Purchaser the Subsequently Acquired Tangible Assets and the
Subsequently Acquired Intangible Assets identified on Appendix A hereto
(hereinafter the "Transferred Assets").
2. Seller hereby authorizes Purchaser, in the name of Seller
but on behalf of Purchaser, to demand and receive any and all of the Transferred
Assets, and to give receipts and releases for and in respect of the same, or any
part thereof, and, from time to time, to institute and prosecute in Seller's
name, for the benefit of Purchaser, any and all proceedings at law, in equity or
otherwise, which Purchaser may deem proper for the collection or reduction to
91
possession of any of the Transferred Assets or for the collection and
enforcement of any claim or right of any kind, sold, conveyed, transferred or
assigned, or intended so to be, by this Xxxx of Sale, and to perform such acts
and do such things with respect to the Transferred Assets as Purchaser shall
deem desirable, Seller hereby declaring that the foregoing powers are coupled
with an interest and are and shall be irrevocable.
3. Seller hereby agrees that, from time to time after delivery
of this Xxxx of Sale, it will, at the request of Purchaser and without further
consideration, promptly take such further action and execute and delivery such
additional assignments, bills of sale, consents or other similar instruments as
Purchaser may reasonably deem necessary to complete the transfer of the title or
possession of the Transferred Assets to, or vest them in, Purchaser and, in the
case of contracts and rights, if any, which cannot be effectively transferred to
Purchaser without the consent of third parties, to obtain such consents promptly
and, if any such consents are unobtainable, to assure the benefits thereof to
Purchaser.
4. Except as is set forth in Paragraph 6 below, nothing in
this instrument, express or implied, is intended or shall be construed to confer
upon any person or entity other than Purchaser any remedy or claim.
5. The provisions of this Xxxx of Sale, which are intended to
be binding upon Seller, its successors and assigns, and are for the benefit of
Purchaser, its successors and assigns, and all rights hereby granted Purchaser,
including the right to act for Seller, may be exercised by Purchaser, its
successors or assigns.
[SIGNATURE LINES APPEAR ON FOLLOWING PAGE]
92
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be
signed by its duly authorized officer on the date first above written.
MATRIX FINANCIAL SERVICES CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
STATE OF _________________:
CITY/COUNTY OF____________:
The foregoing instrument was acknowledged before me this ___
day of _____________, 2003 by ________________________, known to me to be a duly
authorized officer of Matrix Financial Services Corporation.
-----------------------------------
Notary Public
My commission expires:_____________
93
Schedule 2.1(c)
Assumed Obligations
The obligations of Seller under the terms of the following instruments that (i)
relate solely to the period after the date on which each such Lease, Sublease,
Equipment Lease and Contract Right is transferred and assigned by Seller to
Purchaser, (ii) do not relate to any period of time prior thereto, and (iii) do
not relate to or arise from any act or omission of Seller if (x) such act is
taken by the Acquired Division acting through the Executive Committee or
Seller's board of directors, (y) such act is in material variance with the
Operating Plan, and (z) Purchaser, within seven (7) days of its receipt of
written notice thereof (which notice must be provided promptly to Purchaser by
Seller), affirmatively notifies Seller of its objection thereto in writing:
1. Leases,
2. Sublease to be executed by the Parties regarding the portion of
the 0000 Xxxx Xxxxxx corporate office space that is allocated to
Purchaser under the final plan delivered by the Parties under
Section 3.3 of the Purchase and Assumption Agreement,
3. Equipment Leases,
4. Contract Rights,
5. New Pipeline Applications, and any Existing Pipeline Applications
not closed as of the Final Closing Date,
6. Final Closing Date Sales Commitments,
7. Loan Files related to New Pipeline Applications and any Existing
Pipeline Applications not closed as of the Final Closing Date.
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Schedule 6.14
Post-Final Closing Date Services
Services to be Provided
by Seller to Purchaser
On a month-to month basis after the Transition Period, for a period not to
exceed one year unless mutually agreed to, SELLER shall make available to
PURCHASER the following services and systems:
1. Loan set-up onto the Seller's servicing system for Countrywide
AOT delivery and delivery to other third parties as a result
of sales commitments entered into by the Acquired Division,
2. Loan servicing activities, to the extent required prior to
loan deliveries to third parties, for the loans identified in
paragraph 1 above, which shall include, among other things,
the issuance of IRS form 1098 to the extent required,
3. Records retention.
The fees to be charged to PURCHASER for such services and systems shall be equal
to the SELLER's fully loaded costs (i.e., overhead, but no profit, included)
actually incurred by SELLER in connection therewith plus a profit margin not to
exceed fifteen percent (15%).
Services to be Provided
by Purchaser to Seller
On a month-to-month basis after the Transition Period, for a period nto to
exceed one year unless mutually agreed to, PURCHASER shall make available to
SELLER the following services and systems:
1. Management of mortgage loan assumption activities,
2. Management of SELLER's portfolio retention activities,
3. Management of SELLER's bond loan activities,
4. QC/Compliance activities.
The fees to be charged to SELLER for such services and systems shall be equal to
the PURCHASER's fully loaded costs (i.e., overhead, but no profit, included)
actually incurred by PURCHASER in connection therewith, plus a profit margin not
to exceed fifteen percent (15%).
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