SHAREHOLDERS' AGREEMENT
THIS AGREEMENT is dated as of the 2nd day of October, 1996, by
and among XXXXXX X. XXXXX, an individual ("Xxxxx"), XXXX XXXXXX, an individual
("Xxxxxx"), CRUSADER BANK, FSB ("Crusader") and CRUSADER SERVICING CORPORATION
("CSC") (Crusader, Xxxxx and any other person who subsequently becomes a
shareholder of CSC are sometimes hereinafter collectively called the
"Shareholders" or individually called a "Shareholder").
BACKGROUND
I. CSC was incorporated on July 30, 1996. As of the date
hereof, CSC is authorized to issue 1,000 shares of common stock at a par value
of $1.00 (the "Shares") and no Shares are issued and outstanding.
II. Xxxxx and Xxxxxx are experienced in the
identification, lien searching, purchase and collection of
delinquent property tax certificates.
III. Crusader, Xxxxx and Xxxxxx desire to create a business to
purchase and service delinquent property tax certificates to be conducted by
CSC.
IV. It is the intention of the parties hereto for Crusader to
fund $12,000 and Xxxxx and Xxxxxx to each fund $4,000 of capital to CSC.
V. In connection with such capital contributions, CSC will
issue 120 shares of common stock to Crusader and 40 shares of common stock to
each of Xxxxx and Xxxxxx.
VI. The parties desire to set forth their agreement as to the
issues of restrictions on transfer of stock, to provide for the continuity and
maintenance of the management, control, and operation of the business of CSC,
and to provide for certain other matters, all as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and agreements herein contained, the parties hereto, each intending
to be legally bound hereby, agree as follows:
1. CSC Stock Issuance.
(a) Promptly following the execution of this Agreement and
the funding of the specified capital contributions
by Crusader and Xxxxx, CSC will issue 120 shares of common stock to Crusader and
40 shares of common stock to each of Xxxxx and Xxxxxx.
(b) The By-laws of CSC will provide for a five person Board
of Directors. The initial Board shall consist of Stein, Snyder, Xxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxx.
(c) In the event that the capital of CSC shall fall below
$1,000 at any time, Crusader, Xxxxx and Xxxxxx shall ratably contribute the
amount of additional capital necessary to bring the capital of CSC to $1,000
(each such event, a "Capital Call"). In the event that a Capital Call is
required, each party shall fund its respective pro rata share of the Capital
Call within thirty (30) days following the request therefor. In the event that
either party fails to timely fund its respective pro rata share of such Capital
Call as outlined above, the other may fund such pro rata share on behalf of the
non-contributing party. Such contribution shall be deemed to be a loan by the
contributing party to the non-contributing party. Such loan shall be due and
payable within thirty (30) days following the date of contribution, together
with interest at twelve percent (12%) per annum. If such sums are not then paid
when due, the contributing party shall, in addition to other remedies at law or
in equity, be automatically entitled, without the consent of the
non-contributing party, to the issuance by CSC of a note bearing interest at 12%
per annum, payable quarterly, and which shall be convertible into common stock
of CSC for up to three (3) years following the issuance thereof. The amount of
stock that can be converted under such notes shall be an amount equal to the
principal balance of the said notes, together with all accrued and unpaid
interest thereon, divided by the per share book value of the common stock of CSC
at the time of the issuance of the notes.
(d) Xxxxx and Xxxxxx each agrees to use his best efforts to
make CSC a profitable entity in accordance with the mutually agreed upon
standards for the purchase of Tax Certificates.
2. Representations and Warranties of Xxxxx and Xxxxxx. Xxxxx
and Xxxxxx each hereby makes the following representations and warranties to
Crusader and CSC, with knowledge of their reliance thereon:
(a) Each of Xxxxx'x and Xxxxxx'x, as the case may be,
decision to invest in CSC is based solely upon his own investigation of CSC and
Crusader and not upon any representations or warranties of CSC or Crusader
except as expressly set forth herein.
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(b) Xxxxx and Xxxxxx each acknowledges that CSC is a
closely held company and, accordingly that his investment therein is illiquid
and there is no established market for the sale of his investment interest
therein. Each party further acknowledges that the Shares have not been
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, nor is CSC under any applicable obligation to effect any
such registrations. The sale or other disposition of the shares is restricted as
stated in this Agreement.
(c) Each of Xxxxx and Xxxxxx is acquiring the common stock
of CSC for his own account and for investment purposes, and not with a view for
resale or distribution thereof.
3. Representations and Warranties of Crusader. Crusader and
CSC hereby make the following representations and warranties to each of Xxxxx
and Xxxxxx, with knowledge of his reliance thereon:
(a) Crusader is a duly chartered federal savings bank and
is duly organized, validly existing and in good standing under applicable
federal laws and regulations.
(b) Crusader and CSC have full power and authority to enter
into and perform this Agreement.
(c) Crusader representatives attended a meeting on June 4,
1996 with a representative of the Office of Thrift Supervision ("OTS") and
disclosed that Crusader, or an operating subsidiary of Crusader, intended to
purchase delinquent property tax certificates in New Jersey. The OTS
representative did not disclose any adverse regulatory action that would result
from such activity, except for the potential adverse impact of any real estate
acquired through foreclosure on Crusader's capital requirements. Crusader did
not request any written advice from the OTS with respect to its position on this
activity.
4. Restrictions on Transfer and Issuance. Except as expressly
provided in this Agreement, no Shareholder shall sell, assign, transfer, give,
bequeath, devise, donate or otherwise dispose of, or pledge, deposit or
otherwise encumber, in any way or manner whatsoever, whether voluntarily or
involuntarily (a "Transfer"), any of the Shares now or hereafter owned (of
record or beneficially) by him without the express prior written consent of the
other Shareholders. Shareholders shall Transfer Shares only in accordance with
the provisions of this Agreement.
(a) Restrictions on Shareholders. No Transfer permitted by
this Agreement shall be effective to vest any right, title or ownership of
Shares unless (i) the board of directors of CSC approves the Transfer, having
knowledge of the prospective
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transferee and (ii) the proposed transferee agrees to become bound by the terms
of this Agreement by signing a counterpart hereof and delivering the same to the
board of directors of CSC. For purposes of this Agreement, "person~ means any
individual, partnership, corporation, association, trust, estate, government or
other entity.
(b) Restriction on CSC. Except as expressly provided in
this Agreement, CSC shall not (i) cause or permit a Transfer of any Shares to be
made on its books, (ii) issue any shares of capital stock of CSC, whether by
original issue or in connection with the sale of shares now or hereafter held in
CSC's treasury, whether by sale, pursuant to a merger or otherwise, (iii) issue
any warrants, options or other rights to subscribe to or purchase additional
capital stock of CSC, (iv) create any securities, instruments or rights
convertible into capital stock of CSC, or (v) purchase, redeem or otherwise
acquire any shares of capital stock of CSC, unless any of the foregoing are
expressly permitted by the terms of this Agreement, subject in any event to the
rights of the Shareholders hereunder, if any.
5. Permitted Transfers. Subject to the restrictions contained
in paragraph 4(a) above, the other express provisions of this Agreement and
applicable law, (a) any Shareholder may Transfer his Shares to CSC or to any
existing Shareholder, or (b) Crusader may Transfer its shares to an Affiliate
without other Shareholder consent or to any related party with other Shareholder
prior consent, which such consent shall not be unreasonably withheld, or (c) any
Shareholder may transfer by creation of trust instruments, by will or other
estate planning device his Shares to members of his immediate family or (d)
shares may be transferred by succession to a guardian ad litem or other personal
representative in the event of a disability of a Shareholder, all without the
prior consent thereto of CSC or of any other Shareholder. For purposes of this
subparagraph, an Affiliate shall mean any person or entity with at least 80%
common voting ownership with Crusader, including constructive ownership.
6. Optional Purchases by the Other Shareholders and
Redemptions by CSC. In the event of an occurrence described in subparagraph 6(a)
or (b) below with respect to a Shareholder, the other Shareholders shall have
the right, but not the obligation, to purchase the Shares owned by such
Shareholder that are the subject of subparagraph 6(a) or (b) below, in
accordance with the terms set forth in Paragraph 9 below, while CSC, if such
other Shareholders fail to exercise such right to purchase such Shares, shall
have the right but not the obligation to purchase such Shares, in accordance
with the terms set forth in Paragraph 7 below.
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(a) Legal Proceedings Against Shareholders. The parties
agree that the interests of CSC and its Shareholders would be seriously affected
by any sale or disposition of any Shareholder's Shares by any legal or equitable
proceedings against such Shareholder, except as expressly permitted herein.
Accordingly, it is hereby covenanted and agreed that in the event that (i) any
Shareholder shall be adjudicated a bankrupt or make an assignment for the
benefit of creditors, or (ii) bankruptcy, insolvency, reorganization,
arrangement, debt, adjustment, liquidation or receivership proceedings in which
any Shareholder is alleged to be insolvent or unable to pay his debts as they
mature are instituted by or against such Shareholder and, if instituted against
such Shareholder, such Shareholder shall consent thereto or admit in writing the
material allegations of the petitions filed in said proceedings or said
proceedings shall remain undismissed for ninety days after commencement thereof,
or (iii) there is any entry of a decree or order for relief by a court having
jurisdiction in respect of any Shareholder in an involuntary case under the
federal bankruptcy laws against any Shareholder not dismissed within ninety days
or any Shareholder commences a voluntary case under such laws, or (iv) any of
the Shares of any Shareholder are attached and such attachment is not removed
within ninety days, or (v) any judgment is obtained in any legal or equitable
proceeding against any Shareholder, which judgment is not dismissed, stayed,
bonded or satisfied (other than by sale of the Shares) within ninety days of the
entry thereof or which is executed upon and the sale of any of such
Shareholder's Shares is contemplated or threatened under legal process as a
result of such judgment, or (vi) any execution process is issued against any
Shareholder or against any of his Shares and not dismissed, stayed, bonded or
satisfied within ninety days, or (vii) there is instituted by or against any
Shareholder any other form of legal proceeding or process by which any of the
Shares of such Shareholder may be sold, either voluntarily or involuntarily,
which is not dismissed within ninety days; provided, however, that an occurrence
described in preceding clauses (v) through (vii) shall not be deemed to have
occurred if it resulted from any legal proceeding between CSC and the
Shareholders or between Shareholders if such proceeding entails disputes of
ownership relating to CSC or the Shares.
(b) Voluntary Sale by a Shareholder. The voluntary sale of
Shares owned by any Shareholder.
7. Purchase Option Procedures in Case of Legal Proceedings or
Voluntary Sale. If any Shareholder shall at any time be subject to subparagraphs
6(a) or (b) above, the other Shareholders shall have options to purchase all of
such Shareholder's (the "Selling Shareholder") Shares and CSC shall have the
next option to redeem the Selling Shareholder's Shares as follows:
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(a) Options of the Offeree Shareholders. Upon the
occurrence of an event described in Paragraph 7 above, the Selling Shareholder
shall so notify the other Shareholders and CSC. Upon receipt of such notice by
the other Shareholders ("Offeree Shareholders") from the Selling Shareholder
that an event under Paragraph 6 has occurred, the Selling Shareholder shall be
deemed to have offered in writing to sell all, but not less than all, of his
Shares to the Offeree Shareholders at the price and upon the terms set forth in
Paragraph 8 below. For a period of thirty days after such offer by the Selling
Shareholder to the Offeree Shareholders, the Offeree Shareholders shall have
options, exercisable by written notice to the selling Shareholder with a copy to
CSC and to each of the other Offeree Shareholders, to accept the Selling
Shareholder's offer. Each Offeree Shareholder who shall exercise this option
shall agree, by doing so, to purchase that proportionate part of the Selling
Shareholder's Shares which the number of Shares owned by such Offeree
Shareholder bears to the total number of Shares owned by all Offeree
Shareholders (or in such other proportions as the Offeree Shareholders may agree
among themselves).
(b) Optional Redemption by CSC. In the event that one or
more of the Offeree Shareholders does not exercise his option in accordance with
subparagraph 7(a) above, CSC may provide the Selling Shareholder with a notice
of redemption of all of the Selling Shareholder's remaining Shares, within a
period of fifteen days following expiration of the thirty day period set forth
in subparagraph 7(a), at the price and upon the terms set forth in Paragraph 8
below.
(c) Acceptance of a Bona Fide Offer. If, at the end of the
option period described in subparagraph 7(a) above and the redemption period set
forth in the notice of redemption described in subparagraph 7(b) above, options
have not been exercised by the Offeree Shareholders to purchase all of the
Selling Shareholder's Shares, and a redemption by CSC of all of the Selling
Shareholder's Shares has not occurred, then at the election of the Selling
Shareholder, any Shares not so purchased or redeemed may be offered for sale by
the Selling Shareholder free and clear of the options of the Shareholders and
CSC set forth herein (but otherwise subject to the restrictions on
transferability contained in this Agreement) for a period of sixty days
thereafter, such sale to be for all, but not less than all, of his Shares to a
prospective purchaser at the price and upon the terms and conditions set forth
in such prospective purchaser's offer.
(d) Notwithstanding anything herein to the contrary, in the
event of Xxxxx'x or Xxxxxx'x death or total and permanent disability (as defined
for Social Security purposes), or the termination of Xxxxx'x or Xxxxxx'x
employment by CSC for
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cause, CSC shall be required to purchase such party's shares of CSC and such
party shall be required to sell his shares of CSC to CSC in accordance with the
price and terms set forth in Paragraph 8 hereunder.
8. Purchase Price and Terms.
(a) Time and Place for Settlement. Settlement for the
purchase of Shares by CSC or by a Shareholder pursuant to the options granted in
or the redemption permitted by Paragraph 7 above shall be made within sixty days
following (i) the date of exercise of the last option exercised or (ii) delivery
of a notice of redemption within the fifteen-day period described in
subparagraph 7(b) above. All settlements for the purchase or redemption of
Shares shall, unless otherwise agreed to by all of the purchasers and sellers,
be held at the principal executive offices of CSC during regular business hours.
The precise date and hour of settlement shall be fixed by the purchaser or
purchasers and/or the board of directors of CSC with respect to redemptions
(within the time limits allowed by the provision of this Agreement) by notice in
writing to the Selling Shareholder given at least five days in advance of the
Settlement date specified. In the event that more than one purchaser is involved
in a settlement and the purchasers cannot agree on a precise time of settlement,
the precise time of settlement (within the time limits allowed by the provisions
of this Agreement) shall be fixed by the board of directors of CSC by five or
more days' written notice to the purchasers and seller on the sixtieth day
following the date of exercise of the last option or election exercised.
(b) Delivery of Stock Certificates. At settlement, the
stock certificate or certificates representing the Shares being sold shall be
delivered to the purchaser or purchasers and/or CSC, as appropriate, duly
endorsed for transfer or with executed stock powers attached, with any necessary
documentary and transfer tax stamps affixed by the seller. The Selling
Shareholder, if a personal representative of a Shareholder, shall, upon request
of a purchaser, provide prior to the date of settlement evidence reasonably
satisfactory to the purchaser of the seller's legal status as personal
representative of such Shareholder. The terms of payment shall be in cash or by
certified check.
(c) Purchase Price. The purchase price per Share shall be
equal to the fair market value thereof. The fair market value shall be
determined jointly by the parties. In the event the parties are unable to agree
on the fair market value, it shall be determined by an independent appraiser
experienced in the valuation of financial service entities and the valuation of
delinquent property tax certificates. Such appraiser shall be
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mutually agreed upon by and between all Shareholders of CSC, or failing an
agreement, the Selling Shareholder and the purchaser will each choose its own
appraiser who will then select the appraiser to determine fair market value.
9. Copy of Agreement To Be Kept on File. CSC shall keep on
file at its principal executive offices, and will exhibit to any Shareholder or
his duly authorized representative at any and all reasonable times, an executed
copy of this Agreement and all amendments thereto.
10. Stock Certificates to Be marked With Legend. All
certificates representing Shares now outstanding or hereafter issued by CSC
shall be marked with the following legend:
"This certificate and the shares represented hereby are held
subject to the terms, covenants and conditions of an agreement
by and among this Company and its then shareholders, as it may
be amended from time to time, and may not be transferred or
disposed of except in accordance with the terms and provisions
thereof. A copy of said agreement and all amendments thereto
is on file and may be inspected at the principal executive
offices of the Company."
CSC shall issue replacement stock certificates without the foregoing legend to
any Shareholder upon request following termination of this Agreement.
11. Term of Agreement. This Agreement shall terminate upon the
first to occur of the following events:
(a) the written agreement by all of the Shareholders of CSC
who are, at that time, bound by the terms of this Agreement;
(b) the dissolution, bankruptcy, or receivership of CSC; or
(c) the cessation of CSC's business, whether by sale of
assets, liquidation, or otherwise.
12. Rights, Obligations and Remedies. Each Shareholder shall
assist in causing CSC to act so as to accomplish the corporate actions
contemplated by this Agreement. The rights and obligations under, and the
remedies to enforce, this Agreement are joint and several as to CSC and each of
its Shareholders with each being completely free to enforce any or all of the
rights or obligations under this Agreement against any of the others with
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or without the concurrence or joinder of any of the others. The Shares are
unique, and recognizing that the remedy at law for any breach or threatened
breach by a party hereto of the covenants and agreements set forth in this
Agreement would be inadequate and that any such breach or threatened breach
would cause such immediate and permanent damage as would be irreparable and the
exact amount of which would be impossible to ascertain, the parties hereto agree
that in the event of any breach or threatened breach of any such covenant or
agreement, in addition to any and all other legal and equitable remedies which
may be available, any party hereto may specifically enforce the terms of this
Agreement and may obtain temporary and/or permanent injunctive relief without
the necessity of proving actual damage by reason of any breach or threatened
breach hereof and, to the extent permissible under the applicable statutes and
rules of procedure, a temporary injunction may be granted immediately upon the
commencement of any such suit and without notice.
13. Resignations. If any Selling Shareholder is an officer,
director, employee of or under a consulting agreement with CSC, he must, at the
request of the non-resigning members of the board of directors of CSC, submit to
the Secretary of CSC his resignation as an officer and/or director, as the case
may be, before the sale of his Shares becomes effective, and the Secretary is
hereby authorized to refuse to effect a transfer of the Selling Shareholder's
Shares on the books of CSC until such resignation as aforesaid is delivered to
said Secretary.
14. Subsequent Shareholders to Become Bound. Any person or
entity not an original signatory hereto who becomes a Shareholder (of record or
beneficially) shall be bound by all of the terms and provisions of this
Agreement. Before any person or entity not a party to this Agreement, including
any person or entity to whom transfers of Shares may be made hereunder, may be
entitled to be a Shareholder (of record or beneficially) of CSC, such person or
entity shall be required first to execute and deliver to CSC an agreement
pursuant to which such person or entity agrees to be bound by all of the terms
and conditions of this Agreement (as it may have then been amended), and the
failure of any such person or entity so to do shall preclude such person or
entity from becoming a Shareholder (of record or beneficially) of CSC.
15. Entire Agreement; Amendment, Modification and Termination.
This Agreement contains the entire understanding among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms
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hereof. This Agreement may be amended, modified or terminated at any time or
times by the unanimous agreement in writing of CSC and its then Shareholders. No
such amendment, modification or termination, nor any termination pursuant to the
terms hereof, shall affect the right of any person or entity to receive, or the
obligation of any person or entity to pay, on the terms and conditions of this
Agreement, the purchase price for Shares sold pursuant to this Agreement prior
to such amendment, modification or termination, or the right or obligation of
any person or entity to sell or purchase Shares, on the terms and conditions of
this Agreement, if the event giving rise to such right or obligation to sell or
purchase Shares has in fact taken place prior to such amendment, modification or
termination.
16. Indulgences, Waivers. Neither the failure nor any delay on
the part of any party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
17. Controlling Law. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any conflict-of-laws doctrines of such state or any other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman. Each Shareholder hereby
consents to the exclusive jurisdiction of the Courts of the Commonwealth of
Pennsylvania and the United States District Court for the Eastern District of
Pennsylvania in any and all actions, disputes or controversies relating to this
Agreement and irrevocably consents to the service of process by certified or
registered mail, return receipt requested, to such Shareholder at his address
set forth in the books and records of CSC.
18. Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
delivered (personally, by courier service such as Federal Express, or by other
messenger) or when deposited in the United States mails, registered or certified
mail, postage prepaid, return receipt requested, addressed if to any
Shareholder, to the most current residence address to such
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Shareholder reflected in the books and records of CSC, and if to CSC, to the
attention of the Chairman of the board of directors. Any party may alter the
address to which communications or copies are to be sent by giving notice of
such change of address in conformity with the provisions of this paragraph for
the giving of notice.
19. Binding Nature of Agreement; No Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except that
no party may assign or transfer its rights or obligations under this Agreement,
other than the permitted assignment by Crusader, at Crusader's option, of its
interest in CSC to an affiliated company or related party of Crusader.
20. Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
21. Paragraph Headings. The paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
22. Gender. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other general, masculine, feminine or
neuter, as the context indicates is appropriate.
23. Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday on which Federal banks are or may
elect to be closed, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or such holiday.
24. Arbitration. In the event that a dispute arises under the
terms of this Agreement, the parties hereto agree to resolve such dispute first
through arbitration before resorting to litigation. In such event, the dispute
shall be submitted to arbitration utilizing the prevailing rules and procedures
of the American Arbitration Association. The Arbitration shall be conducted in
Pennsylvania.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on the date first above written.
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ATTEST: CRUSADER SERVICING CORPORATION, a
Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------- --------------------------
Title: Secretary Title: President
[CORPORATE SEAL]
CRUSADER BANK, FSB,
By: [illegible] By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- --------------------------
Title: Secretary Title: President
[CORPORATE SEAL]
WITNESSED:
/s/ Xxxx Xxxxxx /s/ Xxxxxx X. Xxxxx
------------------------ -------------------------
XXXXXX X. XXXXX
WITNESSED:
/s/ Xxxxxx X. Xxxxx /s/ Xxxx Xxxxxx
------------------------ -------------------------
XXXX XXXXXX
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