EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, including all attached Exhibits
and Schedules which are part of this Asset Purchase Agreement (the "Agreement"),
is made this 26th day of November, 1997 by and among Xxxx Xxxxxx & Co., Inc.,
Xxxx Xxxxxx Sons, Inc., Xxxx Xxxxxx & Co. and Xxxxxxx Corp. (collectively "Xxxx
Xxxxxx"), Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Personal Representative of the Estate
of Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxx Xxxxx, Trustees of the Marital
Trust under the Last Will and Testament of Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and
Xxxx Xxxxx, Trustees of the Bypass Trust under the Last Will and Testament of
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx Xxxxxxxxx, Trustees u/a Xxxxxx X.
Xxxxx dated May 14, 1997, FBO Xxxxxx X. Xxxxx, and Xxxxx X. Xxxxx and Xxxxxx
Xxxxxxxxx, Trustees u/a Xxxxxx X. Xxxxx dated May 14, 1997, FBO Xxxxxx X. Xxxxx,
and Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx, Trustees of the Xxxxxx X. Xxxxx Trust
Share of the Xxxxxxx Xxxxxx Trust, the Xxxxxxx X. Xxxxx Trust Share of the
Xxxxxxx Xxxxxx Trust, the Xxxxxx X. Xxxxx Trust Share of the Ely Shanis Trust,
and the Xxxxxxx X. Xxxxx Trust Share of the Ely Shanis Trust, (Xxxxxx X. Xxxxx
and Xxxxx X. Xxxxx, Personal Representative of the Estate of Xxxxxxx X. Xxxxx,
Xxxxx X. Xxxxx and Xxxxxx Xxxxxxxxx, Trustees u/a Xxxxxx X. Xxxxx dated May 14,
1997, FBO Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx Xxxxxxxxx, Trustees u/a
Xxxxxx X. Xxxxx dated May 14, 1997, FBO Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxx, Trustees of the Xxxxxx X. Xxxxx Trust Share of the Xxxxxxx
Xxxxxx Trust, the Xxxxxxx X. Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust, the
Xxxxxx X. Xxxxx Trust Share of the Ely Shanis Trust, and the Xxxxxxx X. Xxxxx
Trust Share of the Ely Shanis Trust, Xxxxx X. Xxxxx and Xxxx Xxxxx, Trustees of
the Marital Trust under the Last Will and Testament of Xxxxxxx X. Xxxxx, and
Xxxxx X. Xxxxx and Xxxx Xxxxx, Trustees of the Bypass Trust under the Last Will
and Testament of Xxxxxxx X. Xxxxx, are sometimes collectively called the
"Owners" and the foregoing trusts are sometimes collectively called the
"Trusts"), and Xxxxx-Xxxxx Bancshares, Inc.("Xxxxx-Xxxxx").
RECITALS
Xxxx Xxxxxx is engaged in the consumer finance and insurance
business (the "Business"). Xxxx Xxxxxx Sons, Inc., is a Maryland corporation
owned by Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Personal Representative of the Estate
of Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx Xxxxxxxxx, Trustees u/a Xxxxxx X.
Xxxxx dated May 14, 1997, FBO Xxxxxx X. Xxxxx, and Xxxxx X. Xxxxx and Xxxxxx
Xxxxxxxxx, Trustees u/a Xxxxxx X. Xxxxx dated May 14, 1997, FBO Xxxxxx X. Xxxxx.
Xxxx Xxxxxx & Co., Inc., is a Maryland corporation owned by Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxx, Personal Representative of the Estate of Xxxxxxx X. Xxxxx.
Xxxxxxx Corp. is a Maryland corporation owned by Xxxxxx X. Xxxxx and Xxxxx X.
Xxxxx, Personal Representative of the Estate of Xxxxxxx X. Xxxxx. Xxxx Xxxxxx &
Co. is a Maryland general partnership whose partners are Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxx, Trustees of the Xxxxxx X. Xxxxx Trust Share of the Xxxxxxx
Xxxxxx Trust, the Xxxxxxx X. Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust, the
Xxxxxx X. Xxxxx Trust Share of the Ely Shanis Trust, and the Xxxxxxx X. Xxxxx
Trust Share of the Ely Shanis Trust, Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx,
Personal Representative of the Estate of Xxxxxxx X. Xxxxx. Xxxxx-Xxxxx is a bank
holding company registered under the Bank Holding Company Act of 1956, as
amended, and the owner of all the issued and outstanding stock of Xxxxxxx County
Bank and Trust Company and Bank of Maryland ("Banks"), Maryland commercial
banks. Xxxxx-Xxxxx shall form a consumer finance subsidiary (the "Consumer
Finance Subsidiary") and an insurance agent subsidiary (the "Insurance Agent
Subsidiary") (collectively the "Subsidiaries"). Xxxx Xxxxxx and the Owners
desire to sell and Xxxxx-Xxxxx desires to acquire, through the Subsidiaries,
substantially all of the assets of Xxxx Xxxxxx on the terms and conditions
hereinafter set forth. The individuals named above as trustees under the Trusts
and the Personal Representative sign this Agreement solely in their fiduciary
capacities and shall have no personal liability hereunder.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Purchase of Assets.
1.1. On the terms and subject to the conditions set
forth in this Agreement, Xxxx Xxxxxx hereby agrees to sell, transfer and assign
to Xxxxx-Xxxxx and Xxxxx-Xxxxx hereby agrees to purchase from Xxxx Xxxxxx all of
its assets (the "Assets"), excluding the assets described in Section 1.2. All
actions contemplated by this Agreement to consummate this purchase and sale and
the assumption of liabilities described in Section 2 are called the
"Transactions." The Assets include all the assets set forth on Xxxx Xxxxxx'
internally prepared balance sheet dated September 30, 1997 ("Xxxx Xxxxxx'
Balance Sheet") attached as Exhibit 1.1, as increased or decreased by assets
disposed of or acquired in the ordinary course of business since the date of the
Xxxx Xxxxxx' Balance Sheet until Closing, including, but not limited to, the
following:
1.1.1. cash and cash equivalents, including
all bank accounts and funds contained therein or represented thereby,
certificates of deposit, money market accounts, securities, and investments;
1.1.2. all assets of and related to the
making and servicing of consumer loans and credit sales, including the consumer
loans and credit sales listed on Schedule 1.1.2 ("Loans"), and including
collateral, investments, receivables, residuals, contract rights, associated
income streams, dealer reserve agreements and accounts, and other assets and
rights that represent the Business (the "Consumer Loan Assets");
1.1.3. all assets of and related to the
selling and servicing of insurance and other products in connection with the
Consumer Loan Assets, including the assets listed on Schedule 1.1.3, including
collected premiums, investments, receivables, residuals, contract rights,
associated income streams, and other assets and rights that represent the
Business;
1.1.4. the complete list of the customers of
the Business ("Customer List"), and all rights to service such customers;
1.1.5. all equipment, furniture, and
fixtures (the "Equipment"), including all Equipment listed in Schedule 1.1.5,
and all office supplies;
1.1.6. leases of its office premises at the
locations listed in Schedule 1.1.6 (the "Facilities");
1.1.7. all other contracts and contract
rights, including all contracts and leases of personal property described in
Schedule 10.8;
1.1.8. all books, records, data and
information bases pertaining to the Business, and its assets and liabilities,
including all tapes, computer diskettes, or other storage media, whether
electronic or otherwise, but excluding corporate minute books, tax returns, and
files concerning lawsuits against Xxxx Xxxxxx;
1.1.9. all patents, copyrights, trademarks
and trade names (including the name "Xxxx Xxxxxx" and all variations thereof and
all goodwill associated therewith) ("Intellectual Property"), including the
Intellectual Property described in Schedule 1.1.9;
1.1.10. all computer systems, software and
programs owned by Xxxx Xxxxxx (the "Computer Systems"), including the Computer
Systems described on Schedule 1.1.10;
1.1.11. all choses in action and rights and
claims against third parties ("Claims"), including the claims listed and
described in Schedule 1.1.11;
1.2. Excluded from the Assets to be sold (the
"Excluded Assets") shall be the assets listed on Schedule 1.2.
1.3. All of the Assets shall be transferred to the
Subsidiary designated by Xxxxx-Xxxxx at Closing free and clear of all liens,
security interests, claims, taxes and encumbrances of any nature, except for any
transfer or sales tax as a result of the Transactions.
2. Assumption of Liabilities.
2.1. On the basis of the representations, warranties,
covenants and agreements and subject to the satisfaction of the conditions set
forth in this Agreement, one of the Subsidiaries shall assume and agree to pay,
perform, fulfill and discharge in accordance with its terms each of the
liabilities of Xxxx Xxxxxx listed on Schedule 2.1, and those liabilities
incurred in the ordinary course of business from September 30, 1997, to the date
of Closing (the "Assumed Liabilities").
2.2. Xxxx Xxxxxx and the Owners will make reasonable
efforts to obtain the consent of the appropriate parties so that the
Subsidiaries will be permitted to assume the Assumed Liabilities (except the
credit facility identified as Item B on Schedule 2.1) on terms no less favorable
than currently exist. Xxxx Xxxxxx and the Owners will take such action as is
necessary to obtain the consent of the Xxxxx and Xxxx Family Noteholders listed
on Schedule 2.1 to amend their notes as described in Section 7.1.16.
3. Closing.
Closing ("Closing") shall take place at the offices
of Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC, 000 Xxxx Xxxxxxx
Xxxxxx in Baltimore, Maryland at 11:00 o'clock a.m. on January 23, 1998,
("Closing Date") effective as of the close of business on that date, or at such
other time and date as the parties may mutually agree.
4. Purchase Price.
4.1. The Purchase Price for the Assets net of the
Assumed Liabilities shall be Sixteen Million Two Hundred and Fifty Thousand
Dollars ($16,250,000) plus or minus
the Adjustment Amount as determined in Section 5.2 (the "Purchase Price"). The
final Purchase Price shall be the Purchase Price less any amounts payable to
Xxxxx-Xxxxx under the Indemnity and Escrow Agreement.
4.2. Allocation of Purchase Price. The Purchase Price
shall be allocated by both Xxxx Xxxxxx and Xxxxx-Xxxxx among the Assets based on
the 1997 Financial Statements (as defined in Section 5.2.2). The next $1,000 of
the Purchase Price shall be allocated to the Customer List and then the excess
of Purchase Price over net Assets acquired shall be allocated to goodwill.
5. Payment of the Purchase Price.
5.1. Payment. The Purchase Price shall be payable as
follows:
5.1.1. $6,750,000 in cash payable at Closing
by delivery of a certified or bank cashier's check to Xxxx Xxxxxx or wire
transfer to an account designated by Xxxx Xxxxxx; and
5.1.2. $7,500,000 in cash, payable by
delivery of a certified or bank cashier's check to Escrow Agent (as defined in
the Indemnity and Escrow Agreement referred to in Section 7.1.11) or wire
transfer to an account designated by Escrow Agent at Closing (the "Indemnity
Escrow"); and
5.1.3. $2,000,000 in cash, payable by
delivery of a certified or bank cashier's check to Escrow Agent (as defined in
the Escrow Agreement referred to in Section 7.1.17 ) or wire transfer to an
account designated by Escrow Agent at Closing (the "Shareholders' Equity
Escrow").
5.2. Adjustment Amount.
5.2.1. The Adjustment Amount (which may be a
positive or negative number) will be computed based on the consolidated
stockholders' equity and partners' capital of Xxxx Xxxxxx as of December 31,
1997 determined in accordance with generally accepted accounting principles
consistently applied and in a manner consistent with the past practices and
policies of Xxxx Xxxxxx. To the extent liabilities for the following matters are
accrued as liabilities on the 1997 Financial Statements (as defined below), so
as to reduce stockholders' equity and partners' capital, stockholders' equity
and partners' capital shall be increased by the amount of the accruals and the
aggregate of these amounts shall be called "Stockholders' Equity": any liability
arising from Bay Country Consumer Finance, L.L.C. x. Xxxx Shanis & Co., Inc.
(Circuit Court for Baltimore City Case No. 96305016/CE219424); any liability
arising from Xxxxxxx x. Xxxx Shanis Sons, Inc., (Circuit Court for Xxxx Arundel
County) ; any liability arising from Xxxxx x. Xxxx Shanis Sons, Inc. (Circuit
Court for Xxxxx County) ; the obligation to pay the "pay to stay" retention
bonuses under the bonus program described in Item 4 of Schedule 10.14.7; the
obligation to pay the fees of BT Alex. Xxxxx Incorporated referred to in Section
20; any obligation to pay for the Grabush, Xxxxxx & Co., P.A. audit described in
Section 5.2.2; and the obligation to pay Xxxxxxx X. Xxxx the "special bonus"
described in Section 4.3 of his employment agreement with Xxxx Xxxxxx & Co.,
Inc., dated June 1, 1993. To the extent Stockholders' Equity is less than
$11,712,000, the Purchase Price will be reduced by the same amount, but shall
not be reduced below $14,250,000. To the extent
Stockholders' Equity exceeds $11,900,000, the Purchase Price shall be increased
by the same amount, but shall not be increased to more than $17,250,000.
5.2.2. Xxxx Xxxxxx will prepare and Xxxx
Xxxxxx and Xxxxx-Xxxxx will cause Grabush, Xxxxxx & Co., P.A. ("Grabush"), Xxxx
Xxxxxx' certified public accountants, to audit consolidated financial statements
("1997 Financial Statements") of Xxxx Xxxxxx as of December 31, 1997, including
a computation of consolidated stockholders' equity and partners' capital as of
December 31, 1997. Xxxx Xxxxxx and Xxxxx-Xxxxx shall jointly engage the services
of Grabush and Xxxxx-Xxxxx shall pay Grabush up to $50,000 for the audit and the
Owners shall pay the remainder, if any. The 1997 Financial Statements shall be
prepared in accordance with generally accepted accounting principles
consistently applied and in a manner consistent with the past practices and
policies of Xxxx Xxxxxx, shall be prepared and audited in accordance with
Regulation S-X as promulgated by the Securities Exchange Commission and shall be
accompanied by an unqualified opinion of Grabush. Xxxx Xxxxxx will deliver the
1997 Financial Statements to Xxxxx-Xxxxx within 60 days after the Closing Date.
The 1997 Financial Statements will be used to compute the Adjustment Amount.
5.2.3. On the 10th business day following
the determination of the Adjustment Amount, if the Purchase Price as adjusted is
greater than $16,250,000, Xxxxx-Xxxxx shall notify the Escrow Agent to release
the Shareholder's Equity Escrow to Xxxx Xxxxxx and shall pay the remainder of
the Purchase Price (not exceeding $1,000,000) to Xxxx Xxxxxx, and if the
Purchase Price as adjusted is less than $16,250,000, the difference shall be
paid to Xxxxx-Xxxxx from the Shareholders' Equity Escrow. Any payment by
Xxxxx-Xxxxx shall be made in immediately available funds and shall be allocated
to goodwill.
5.2.4. If Xxxx Xxxxxx fails to perform its
obligations under Section 5.2.2 in any respect, including, but not limited to,
failure to deliver to Xxxxx-Xxxxx an unqualified opinion of Grabush, Xxxxx-Xxxxx
shall give Xxxx Xxxxxx notice of such failure and Xxxx Xxxxxx shall have a
reasonable period of time, not exceeding 60 days after such notice is given, to
cure such failure and to comply with the requirements of this Agreement. If Xxxx
Xxxxxx fails to cure such failure within such time period, the entire
Shareholders' Equity Escrow shall be paid to Xxxxx-Xxxxx as the Adjustment
Amount, i.e., the Purchase Price shall be $14,250,000.
6. Organization of the Subsidiaries. Before Closing, and
subject to approval of the Maryland Commissioner of Financial Regulation and the
Federal Reserve Board, Xxxxx-Xxxxx will cause the formation of the Subsidiaries
and their adoption of this Agreement. Before Closing, Xxxxx-Xxxxx will invest in
each Subsidiary a sufficient amount of cash to permit the Subsidiary to
consummate the Closing.
7. Required Documents.
7.1. Xxxx Xxxxxx. At Closing, Xxxx Xxxxxx shall
deliver to Xxxxx- Xxxxx the following items:
7.1.1. Xxxx of Sale. A Xxxx of Sale of the
assets in the form of Exhibit 7.1.1, duly executed by Xxxx Xxxxxx.
7.1.2. Contracts, etc. An assignment of all
contracts, leases and similar rights, substantially in the form of Exhibit
7.1.2, together with any consents or waivers
of consent that are required including, but not limited to, the consent of
Xxxxxxx & Associates and Xxxx Xxxxxxx & Assoc., Inc. to the assignment of the
License and Support Agreements identified on Schedule 10.8., and such additional
assignments as are required to evidence the transfer of the Consumer Loan
Assets.
7.1.3. Opinion of Counsel. The opinion of
Adelberg, Rudow, Dorf, Xxxxxxx & Xxxxxx, LLC, counsel to Xxxx Xxxxxx, in
substantially the form of Exhibit 7.1.3.
7.1.4. Opinion of Counsel. The opinion of
Freishtat & Sandler, counsel to the Estate of Xxxxxxx X. Xxxxx, in substantially
the form of Exhibit 7.1.4.
7.1.5. Opinion of Counsel. The opinion of
Freishtat & Sandler, counsel to the Xxxxxxx X. Xxxxx Marital and Bypass Trusts,
in substantially the form of Exhibit 7.1.5.
7.1.6. Opinion of Counsel. The opinion of
Blades & Xxxxxxxxx, P.A., counsel to the Trust FBO Xxxxxx X. Xxxxx and the Trust
FBO Xxxxxx X. Xxxxx, and the opinion of Adelberg, Rudow, Dorf, Xxxxxxx & Xxxxxx,
LLC, counsel to Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx, Trustees of the Xxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust, the Xxxxxxx X. Xxxxx Trust Share
of the Xxxxxxx Xxxxxx Trust, the Xxxxxx X. Xxxxx Trust Share of the Ely Shanis
Trust, and the Xxxxxxx X. Xxxxx Trust Share of the Ely Shanis Trust, in
substantially the form of Exhibit 7.1.6.
7.1.7. Corporate Proceedings. Copies of the
articles of incorporation and bylaws as amended through the Closing Date and
minutes of the proceedings of the stockholders and Boards of Directors of each
corporate Xxxx Xxxxxx entity, certified as of the date of Closing by their
Presidents, approving the Transactions.
7.1.8. Partnership Documents. A copy of the
Partnership Agreement of Xxxx Xxxxxx & Co., as amended through the Closing Date.
7.1.9. Corporate Documents. A Certificate of
Good Standing of each corporate Xxxx Xxxxxx entity as of a recent date from the
State Department of Assessments and Taxation of Maryland ("SDAT").
7.1.10. Articles of Transfer. Articles of
Transfer that conform with the requirements of the Maryland General Corporation
Law and are substantially in the form of Exhibit 7.1.10 executed by the
Presidents of each corporate Xxxx Xxxxxx entity.
7.1.11. Indemnity and Escrow Agreement. An
Indemnity and Escrow Agreement in the form of Exhibit 7.1.11 executed by Xxxx
Xxxxxx and each of the Owners.
7.1.12. Xxxx Agreement. An agreement in the
form of Exhibit 7.1.12 signed by Xxxxxxx X. Xxxx ("Xxxx") .
7.1.13. Xxxx Xxxxxx Facilities' Leases.
Leases satisfactory to Xxxxx-Xxxxx for the Facilities located at 000 Xxxxx
Xxxxxx Xxxxxx and 0000 Xxxxx Xxxxxx, Xxxxxxxxx.
7.1.14. Xxxxxx X. Xxxxx Employment
Agreement. An employment agreement in a form satisfactory to Xxxxx-Xxxxx
executed by Xxxxxx X. Xxxxx.
7.1.15. Letters of Administration. Letters
of Administration appointing Xxxxx X. Xxxxx Personal Representative for the
Estate of Xxxxxxx X. Xxxxx dated within 30 days of Closing.
7.1.16. Xxxxx and Xxxx Family Notes and Note
Amendments. Amendments to each Xxxxx and Xxxx Family note identified on Schedule
2.1 which permit the assuming Subsidiary to prepay the note at any time and from
time to time without penalty and which provide a maturity date of no earlier
than June 30, 1998, a note evidencing each such loan which permits prepayment at
any time and from time to time in form satisfactory to Xxxxx-Xxxxx, provides a
maturity date of no earlier than June 30, 1998, and bears interest at the rate
set forth in Schedule 2.1 and a statement signed by each noteholder confirming
the amount of principal and interest due at Closing.
7.1.17. Shareholders' Equity Escrow
Agreement. A Shareholders' Equity Escrow Agreement in the form of Exhibit 7.1.17
executed by Xxxx Xxxxxx.
7.1.18. Other Documents. Such other
documents relating to Xxxx Xxxxxx as Xxxxx-Xxxxx reasonably may request.
7.2. Xxxxx-Xxxxx and the Subsidiaries. At Closing,
Xxxxx-Xxxxx and the Subsidiaries shall deliver to Xxxx Xxxxxx the following
items:
7.2.1. Opinion of Counsel. The opinion of
Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC, counsel to Xxxxx-Xxxxx
and the Subsidiaries, in substantially the form attached as Exhibit 7.2.1.
7.2.2. Proceedings. Copies of the minutes of
the proceedings of the Board of Directors of Xxxxx-Xxxxx and the Member of the
Subsidiaries, certified as of the date of Closing by the Secretary or Assistant
Secretary of Xxxxx-Xxxxx and the Secretary or Assistant Secretaries or other
authorized parties of the Subsidiaries, approving the Transactions.
7.2.3. Documents. A good standing
certificate for each of Xxxxx- Xxxxx and the Subsidiaries as of a recent date
from SDAT.
7.2.4. Assumption Agreement. An Assumption
Agreement with respect to the Assumed Liabilities in the form of Exhibit 7.2.4
duly executed by the appropriate Subsidiary.
8. Conditions of Closing for Xxxxx-Xxxxx and the Subsidiaries.
8.1. The obligations of Xxxxx-Xxxxx and the
Subsidiaries to close under this Agreement are contingent upon the following:
8.1.1. All of the representations and
warranties of Xxxx Xxxxxx and the Owners contained in this Agreement shall be
true and correct in all material respects when made and on the Closing Date as
if made on and as of such date (except to the extent they relate to a particular
date, in which case they shall remain true and correct as of such date.)
8.1.2. Neither Xxxx Xxxxxx nor the Owners
shall have breached or materially failed to comply with any of its or their
covenants and agreements contained herein in any material respect.
8.1.3. Xxxx Xxxxxx shall have delivered at
Closing all of the documents required to be delivered by it pursuant to Section
7.1, satisfactory in form and substance to counsel to Xxxxx-Xxxxx.
8.1.4. There shall not have been any
lawsuit, claim, action or other proceeding instituted or threatened by any
person or entity affecting the Owners or Xxxx Xxxxxx or relating to the Assets
or Business or in which it was sought to restrain or prohibit, or otherwise
challenge the legality of or affect, the Transactions.
8.1.5. All corporate and partnership
proceedings required to be taken by Xxxx Xxxxxx in connection with the
Transactions have been taken.
8.1.6. No event since December 31, 1996
(including the discovery of any previously unknown fact or circumstance by Xxxx
Xxxxxx or the Owners) shall have occurred which has or could have a material
adverse effect on Xxxx Xxxxxx, the Assets, or the Business, other than the
events disclosed on Schedule 10.5.1. Loan charge-offs required or requested by
Xxxxx-Xxxxx which are not also required by Section 3.17 of the Loan Agreement
identified in Item B of Schedule 2.1 shall not be included among such events.
8.1.7. Xxxxx-Xxxxx and Banks shall have
received all necessary approvals from the Maryland Commissioner of Financial
Regulation, the Board of Governors of the Federal Reserve, and from any other
governmental or regulatory body, to the Transactions to be consummated and any
waiting periods shall have expired.
8.1.8. The Subsidiaries shall have received
all necessary licenses from the Maryland Commissioner of Financial Regulation,
the Maryland Insurance Commissioner, and any other governmental or regulatory
body, to conduct the Business and consummate the Transactions.
8.1.9. The Subsidiaries shall have entered
into Facilities' leases which shall contain terms substantially similar to the
terms of the Facilities' leases currently in effect, where such leases are
currently in effect, and where leases are not currently in effect, such terms
shall be satisfactory to Xxxxx-Xxxxx.
8.1.10. The Consumer Finance Subsidiary
shall have entered into a credit facility with NationsBank, N.A., or other
lender or financing source replacing the credit facility identified in Item B of
Schedule 2.1, on terms substantially similar to the terms described on Schedule
8.1.10.
8.1.11. The employment of such Xxxx Xxxxxx
employees as shall be employed by the Subsidiaries shall have been terminated by
Xxxx Xxxxxx.
8.1.12. Xxxxx-Xxxxx shall have received a
"Year 2000" certification from Xxxxxxx & Associates substantially in the form
attached as Schedule 8.1.12.
9. Conditions of Closing for Xxxx Xxxxxx.
9.1. The obligations of Xxxx Xxxxxx to close under
this Agreement are contingent upon the following:
9.1.1. All of the representations and
warranties of Xxxxx-Xxxxx contained in this Agreement shall be true and correct
in all material respects when made and on the Closing Date as if made on and as
of such date (except to the extent they relate to a particular date, in which
case they shall remain true and correct as of such date.)
9.1.2. Xxxxx-Xxxxx shall not have breached
or failed to comply with any of its covenants and agreements contained herein in
any material respect.
9.1.3. Xxxxx-Xxxxx shall have delivered at
Closing all payments required at Closing pursuant to Sections 4 and 5 and
documents required to be delivered by it pursuant to Section 7.2.
9.1.4. There shall not have been any
lawsuit, claim, action or other proceeding instituted or threatened by any
person or entity affecting Xxxxx-Xxxxx or the Subsidiaries in any manner in
which it was sought to restrain or prohibit, or otherwise challenge the legality
of or affect, the Transactions.
9.1.5. All corporate and other proceedings
required to be taken by Xxxxx-Xxxxx and the Subsidiaries in connection with the
Transactions have been taken.
9.1.6. Xxxx Xxxxxx shall have been released
from liability for the bank indebtedness specified in Item B of Schedule 2.1.
9.1.7. Xxxx Xxxxxx shall have been released
from liability under the Facilities' leases currently in effect.
10. Warranties and Representations of Xxxx Xxxxxx.
Xxxx Xxxxxx represents and warrants to Xxxxx-Xxxxx
and the Subsidiaries that:
10.1. Organization.
10.1.1. Each corporate Xxxx Xxxxxx entity is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its Business
as is now being conducted.
10.1.2. Xxxx Xxxxxx & Co. is a general
partnership which exists pursuant to a general partnership agreement dated
January 31, 1942, among Ely Shanis, Xxxxxxx Xxxxxx, Xxxxx Xxxxx and Xxxx X.
Xxxxx which has not been amended. Xxxx Xxxxxx & Co. has all requisite power and
authority to own, lease and operate its Business as is now being conducted. All
partners of Xxxx Xxxxxx & Co. have approved this Agreement as evidenced by their
signatures hereto. The partners of Xxxx Xxxxxx & Co. are the Xxxxxx X. Xxxxx
Trust Share of the Ely Shanis Trust and the Xxxxxxx X. Xxxxx Trust Share of the
Ely Shanis Trust, the Xxxxxx X. Xxxxx
Trust Share of the Xxxxxxx Xxxxxx Trust and the Xxxxxxx X. Xxxxx Trust Share of
the Xxxxxxx Xxxxxx Trust, Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx, Personal
Representative of the Estate of Xxxxxxx X. Xxxxx (the "Partners"). The Partners
own their partnership interests in Xxxx Xxxxxx & Co. free and clear of all
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature.
10.1.3. Xxxx Xxxxxx is not required to
qualify as a foreign corporation in any jurisdiction.
10.1.4. Xxxx Xxxxxx has made available to
Xxxxx-Xxxxx accurate and complete copies of its Articles of Incorporation and
Bylaws as currently in effect and its Partnership Agreement as currently in
effect and has made available to Xxxxx-Xxxxx the minute books and stock records
of Xxxx Xxxxxx.
10.1.5. Xxxx Xxxxxx does not own an equity
interest in any corporation, partnership or other entity.
10.2. Authorization. Xxxx Xxxxxx has full corporate
and partnership power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the sale of its Business and
the other Transactions. The execution and delivery of this Agreement by Xxxx
Xxxxxx and the performance by Xxxx Xxxxxx of its obligations hereunder have been
duly and validly authorized by all necessary corporate or partnership action on
the part of Xxxx Xxxxxx. Xxxxxx X. Xxxxx in his individual capacity and the
other Owners in their representative capacities have full power and capacity to
execute and deliver this Agreement and perform their respective obligations
hereunder and to consummate the Transactions. This Agreement has been duly
executed and delivered by the Owners and Xxxx Xxxxxx and constitutes the legal,
valid and binding agreement of each, enforceable against each in accordance with
its terms, subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
10.3. Absence of Restrictions and Conflicts. The
execution, delivery and performance of this Agreement, and the fulfillment of
and compliance with the terms and conditions of this Agreement do not and will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation under,
(i) any term or provision of the Articles of Incorporation, Bylaws or
Partnership Agreement of Xxxx Xxxxxx, (ii) any of Xxxx Xxxxxx' Contracts
described in Section 10.8 except as noted in Schedule 10.8, (iii) any judgment,
decree or order of any court or governmental authority or agency to which Xxxx
Xxxxxx is a party or by which Xxxx Xxxxxx or any of its properties is bound, or
(iv) any statute, law, regulation or rule applicable to Xxxx Xxxxxx, so as to
have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of Xxxx Xxxxxx. Except
for compliance with the applicable requirements of filing and recording of
Articles of Transfer as required by the Maryland General Corporation Law, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit, agency, body
or authority with respect to Xxxx Xxxxxx is required in connection with the
execution, delivery or performance of this Agreement by Xxxx Xxxxxx or the
consummation of the Transactions by Xxxx Xxxxxx, the failure of which to obtain
would have a material adverse effect upon the assets, liabilities, results of
operations, financial condition, business or prospects of Xxxx Xxxxxx.
10.4. Capitalization. The authorized capital stock of
the corporate Xxxx Xxxxxx entities, the number of shares of capital stock of the
corporate Xxxx Xxxxxx entities issued and outstanding as of the date hereof and
the identities of the stockholders are set forth in Schedule 10.4. All of such
issued and outstanding shares of capital stock of Xxxx Xxxxxx are duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights; and no such shares have been issued in violation of any federal or state
securities law. Except as set forth in this Section 10.4, there are no shares of
capital stock of Xxxx Xxxxxx outstanding, and there are no subscriptions,
options, convertible securities, calls, rights, warrants or other agreements,
claims or commitments of any nature whatsoever obligating Xxxx Xxxxxx to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered or
sold, additional shares of capital stock or other securities of Xxxx Xxxxxx or
obligating Xxxx Xxxxxx to xxxxx, extend or enter into any such agreement or
commitment. No prior offer, issue, redemption, call, purchase, sale, transfer,
negotiation or other transaction of any nature with respect to the capital stock
or equity interests of Xxxx Xxxxxx has given or may give rise to any valid claim
or action by any person which is enforceable against either Xxxx Xxxxxx or the
Owners. The persons named on Schedule 10.4 are the owners of all of the issued
and outstanding shares of Xxxx Xxxxxx' capital stock free and clear of all
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature.
10.5. Absence of Certain Changes.
10.5.1. Except as otherwise described in
Schedule 10.5.1, since December 31, 1996, there has not been (i) any material
adverse change in the assets, liabilities, business, financial condition,
results of operations or prospects of Xxxx Xxxxxx, (ii) any damage, destruction,
loss or casualty to property or assets of Xxxx Xxxxxx, whether or not covered by
insurance, which property or assets are material to the operations or business
of Xxxx Xxxxxx, (iii) any amount declared, set aside or paid in a dividend or
any other distribution in cash, stock or property in respect to any shares of
Xxxx Xxxxxx' capital stock or any partnership interest in Xxxx Xxxxxx, (iv) any
redemption or other acquisition by Xxxx Xxxxxx of any of its capital stock or
any split, combination or reclassification of shares of capital stock declared
or made by Xxxx Xxxxxx, or (v) any agreement to do any of the foregoing. From
September 30, 1997, through the date hereof, Xxxx Xxxxxx has made no dividends
or distributions to or on behalf of the Owners.
10.5.2. Except as otherwise described in
Schedule 10.5.2., since December 31, 1996, there have not been (i) any
extraordinary losses suffered, (ii) any material assets mortgaged, pledged or
made subject to any lien, charge or other encumbrance, (iii) any liability or
obligation (absolute, accrued or contingent) incurred or any material bad debt,
contingency or other reserve increase suffered, except, in each such case, in
the ordinary course of business and consistent with past practice, (iv) any
claims, liabilities or obligations (absolute, accrued or contingent) paid,
discharged or satisfied, other than the payment, discharge or satisfaction, in
the ordinary course of business and consistent with past practice, of claims,
liabilities and obligations reflected or reserved against in Xxxx Xxxxxx'
Balance Sheet or incurred in the ordinary course of business and consistent with
past practice, (v) any guaranteed checks, notes or accounts receivable which
have been or should be written off as uncollectible, except write-offs in the
ordinary course of business and consistent with past practice, (vi) any write
down of the value of any asset or investment on the books or records of Xxxx
Xxxxxx, except for depreciation and amortization taken in the ordinary course of
business and consistent with past practice, (vii) any cancellation of any debts
or waiver of any claims or rights, or sale, transfer or other disposition of any
properties or assets (real, personal or mixed, tangible or intangible), except,
in each such case, in transactions in the ordinary course of business and
consistent with
past practice, (viii) any transactions entered into other than in the ordinary
course of business, (ix) any agreements to do any of the foregoing, or (x) to
the best knowledge of Xxxx Xxxxxx, any other events, developments or conditions
of any character that have had or are reasonably likely to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of Xxxx Xxxxxx. In this Agreement, Xxxx Xxxxxx
will be deemed to have "knowledge" of a particular fact or other matter if
Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx or Xxxxxx
Xxxxxxx has, or at any time had, actual knowledge of such fact or other matter.
10.6. Legal Proceedings. Other than as described in
Schedule 10.6, there are no suits, actions, claims, or proceedings pending, or,
to the best knowledge of Xxxx Xxxxxx, threatened against, relating to or
involving Xxxx Xxxxxx, and there are no investigations pending or threatened to
the best knowledge of Xxxx Xxxxxx, before any court, arbitrator or
administrative or governmental body, which, if finally determined adversely, are
reasonably likely, individually or in the aggregate, to have an adverse effect
on the assets, liabilities, results of operations, financial condition, business
or prospects of Xxxx Xxxxxx. All pending suits, actions, claims, proceedings or
investigations relating to or involving Xxxx Xxxxxx before any court, arbitrator
or administrative or governmental body are adequately provided for in Xxxx
Xxxxxx' Balance Sheet. Xxxx Xxxxxx is not subject to any judgment, decree,
injunction, rule or order of any court, and, to the best knowledge of Xxxx
Xxxxxx, Xxxx Xxxxxx is not subject to any governmental restriction, which is
reasonably likely (i) to have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of Xxxx Xxxxxx or (ii) to cause a limitation on Xxxxx-Xxxxx'x and the
Subsidiaries' ability to operate the business of Xxxx Xxxxxx after Closing.
10.7. Compliance with Law. Except as otherwise
described in Schedule 10.7, Xxxx Xxxxxx has all authorizations, approvals,
licenses and orders of and from all governmental and regulatory officers and
bodies necessary to carry on its business as it is currently being conducted, to
own or hold under lease the properties and assets it owns or holds under lease
and to perform all of its obligations under all agreements to which it is a
party, and Xxxx Xxxxxx has been and is in compliance with all applicable
federal, state and local laws, regulations and administrative orders to which
its business and its employment of labor or its use or occupancy of properties
or any part are subject, the failure to obtain or the violation of which would
have a material adverse effect upon the assets, liabilities, results of
operations, financial condition, business or prospects of Xxxx Xxxxxx.
10.8. Xxxx Xxxxxx Contracts. Schedule 10.8 contains a
true and complete list of all contracts of Xxxx Xxxxxx, including:
10.8.1. all bonds, debentures, notes,
mortgages, indentures or guarantees to which Xxxx Xxxxxx is a party or by which
any of its properties or assets (real, personal or mixed, tangible or
intangible) is bound;
10.8.2. all leases to which Xxxx Xxxxxx is a
party or by which any of its properties or assets (real, personal or mixed,
tangible or intangible) is bound;
10.8.3. all loans and credit commitments to
Xxxx Xxxxxx which are outstanding, together with a brief description of such
commitments and the name of each financial institution granting the same;
10.8.4. all contracts or agreements which
limit or restrict Xxxx Xxxxxx or any of Xxxx Xxxxxx' officers or employees from
engaging in any business in any jurisdiction;
10.8.5. all agreements for the purchase of
goods, services, equipment or other assets;
10.8.6. any agency, brokerage, sales
representative, marketing or other similar contract arrangement; and
10.8.7. all other existing contracts and
commitments to which Xxxx Xxxxxx is a party or by which any of its properties or
assets may be bound.
The contracts listed in Schedule 10.8 represent all
of the contracts to which Xxxx Xxxxxx is a party or by which any of its
properties or assets may be bound. True and complete copies of all of the
contracts have been made available to Xxxxx-Xxxxx and are valid and enforceable
in accordance with their respective terms with respect to Xxxx Xxxxxx, and are
valid and enforceable in accordance with their respective terms with respect to
any other party thereto, in each case to the extent material to the Business.
Xxxx Xxxxxx has physical possession of all equipment and other assets in which
Xxxx Xxxxxx is a lessee under a lease. Except for events or occurrences, the
consequences of which, individually or in the aggregate, would not have a
material adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of Xxxx Xxxxxx, there is not under
Xxxx Xxxxxx' contracts any existing breach, default or event of default by Xxxx
Xxxxxx, or event that with notice or lapse of time or both would constitute a
breach, default or event of default by Xxxx Xxxxxx.
10.9. Tax Returns; Taxes. Since January 1, 1987, the
corporate Xxxx Xxxxxx entities have been "small business corporations" and have
maintained a valid election to be an "S corporation" under Subchapter S of the
Internal Revenue Code of 1986, as amended (the "Code"). Xxxx Xxxxxx is not
subject to income, franchise, sales or use tax or any other form of taxation in
any state other than Maryland. Xxxx Xxxxxx has duly filed all federal, state,
and local tax returns required to be filed by it, all such returns are accurate
in all material respects, and Xxxx Xxxxxx or the Owners have duly paid or made
adequate provision for the payment of all taxes (including any interest,
penalties and additions to tax) which are due and payable pursuant to such
returns or which otherwise are due and payable in any jurisdiction, whether or
not in connection with such returns. The liability for taxes reflected in Xxxx
Xxxxxx' financial statements (excluding any portion of any deferred tax
liability attributable to timing differences in reporting income or deductions
for financial accounting and tax purposes) is sufficient for the payment of all
unpaid taxes (including any interest, penalties and additions to tax), whether
or not disputed, that are accrued or applicable for the period ended December
31, 1996 and for all years and periods ended prior thereto. No unpaid tax
deficiencies have been asserted against Xxxx Xxxxxx as a result of any
examination by the Internal Revenue Service or any other taxing authority. To
the best knowledge of Xxxx Xxxxxx, there are no pending claims asserted for
taxes of Xxxx Xxxxxx or outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return of Xxxx Xxxxxx for
any period. Xxxx Xxxxxx has made all estimated income tax deposits and all other
required tax payments or deposits and has complied for all prior periods in all
respects with the tax withholding provisions of all applicable federal, state,
local and other laws. All accounting periods and methods used by Xxxx Xxxxxx for
tax reporting purposes are permissible periods and methods under applicable law.
Xxxx Xxxxxx has not been a member of an affiliated group of corporations filing
a consolidated federal income tax return. Xxxx Xxxxxx
has made available to Xxxxx-Xxxxx true, complete and correct copies of its
federal income tax returns, state and local income tax returns and sales tax
returns for the taxable years ended on December 31 in 1994, 1995 and 1996 and
has made available such other tax returns requested by Xxxxx-Xxxxx.
10.10. Xxxx Xxxxxx Computer Software and Hardware.
10.10.1. Schedule 1.1.10 sets forth a true
and complete list of all software used in connection with the business of Xxxx
Xxxxxx (the "Xxxx Xxxxxx Software.") Xxxx Xxxxxx owns no software. The Xxxx
Xxxxxx Software consists of: (i) source and object code embodied in magnetic
media; and (ii) all development and procedural tools necessary to maintain the
Xxxx Xxxxxx Software, including licenses to use compilers, assemblers, libraries
and other aids. Xxxx Xxxxxx employs individuals who are familiar with the
business of Xxxx Xxxxxx and who are qualified to maintain the Xxxx Xxxxxx
Software and the related computer hardware used by Xxxx Xxxxxx in its operations
(the "Xxxx Xxxxxx Hardware")
10.10.2. The use of the Xxxx Xxxxxx Software
does not breach any terms of any license or other contract between Xxxx Xxxxxx
and any third party. Schedule 1.1.10 sets forth a true and complete list of all
license agreements in favor of Xxxx Xxxxxx relating to the Xxxx Xxxxxx Software
(the "Xxxx Xxxxxx License Agreements"). To the best knowledge of Xxxx Xxxxxx,
Xxxx Xxxxxx has been granted under the Xxxx Xxxxxx License Agreements valid and
subsisting license rights with respect to all software comprising the Xxxx
Xxxxxx Software. Xxxx Xxxxxx is in material compliance in all respects with each
of the terms and conditions of each of the Xxxx Xxxxxx License Agreements.
10.10.3. To the best knowledge of Xxxx
Xxxxxx, the Xxxx Xxxxxx Software does not infringe any United States patent,
copyright, trade secret or other intellectual property right of any third party.
10.10.4. Xxxx Xxxxxx has not granted rights
in the Xxxx Xxxxxx Software to any third party.
10.10.5. Xxxx Xxxxxx believes that the Xxxx
Xxxxxx Software and the Xxxx Xxxxxx Hardware are adequate in all material
respects with the other assets of Xxxx Xxxxxx to run the Business. Schedule
1.1.10 contains a summary description of any material problems experienced by
Xxxx Xxxxxx in the past twelve (12) months with respect to the Xxxx Xxxxxx
Software or the Xxxx Xxxxxx Hardware which resulted, or reasonably could be
expected to result, in any disruption of the Business.
10.11. Transactions with Affiliates. Other than as
specified on Schedule 10.11, no stockholder, officer or director of Xxxx Xxxxxx,
or any person with whom any such stockholder, officer or director has any direct
or indirect relation by blood, marriage or adoption, or any entity in which any
such person owns any beneficial interest (other than a publicly held corporation
whose stock is traded on a national securities exchange or quotation system or
in the over-the-counter market and less than 1% of the stock of which is
beneficially owned by all such persons), has any interest in: (i) any contract,
arrangement or understanding with, or relating to, the Business; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of Xxxx Xxxxxx; or (iii) any property (real, personal or mixed),
tangible or intangible, used or currently intended to be used in, the Business.
10.12. Insurance. Schedule 10.12 contains a list of
all insurance policies of Xxxx Xxxxxx (the "Insurance Policies"), setting forth
the name of the insurer, a description of the policy, the amount of coverage,
the amount of the premium and the expiration date of the policy. Xxxx Xxxxxx has
delivered to Xxxxx-Xxxxx true and correct copies of all Insurance Policies. Xxxx
Xxxxxx is not in breach of or in default under the provisions of any of the
Insurance Policies, and the Insurance Policies are not subject to any existing,
or, to the best knowledge of Xxxx Xxxxxx, threatened, notice of violation,
cancellation or material premium increase. The insurance premiums paid by Xxxx
Xxxxxx on such Insurance Policies are substantially the same as the insurance
premiums customarily charged to and paid by other similar businesses in the
State of Maryland.
10.13. ERISA and Benefit Plans.
10.13.1. For purposes of this Agreement,
"Employees" shall be defined as all of the employees employed by Xxxx Xxxxxx as
of the date hereof and all of the employees employed by Xxxx Xxxxxx as of the
Closing, and "Former Employees" shall be defined as all employees formerly
employed by Xxxx Xxxxxx as of the date hereof and/or as of the Closing.
10.13.2. Except as set forth on Schedule
10.13.2, neither Xxxx Xxxxxx nor any of its Affiliates sponsors, maintains or
contributes to, or has in the past sponsored, maintained or contributed to, (1)
any "employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or (2) any other
plan, contract or arrangement which provides to any Employee or Former Employee
any other compensation or benefits (collectively, the "Benefit Plans").
10.13.3. As used herein, the term
"Affiliate" means a member of a controlled group of corporations, a group of
trades or businesses under common control or an affiliated service group with
Xxxx Xxxxxx, under Section 414 of the Internal Revenue Code of 1986, as amended
(the "Code").
10.13.4. With respect to each Benefit Plan,
Xxxx Xxxxxx has delivered to Xxxxx-Xxxxx true, correct and complete copies,
including amendments, of the following (to the extent applicable): (i) the
current Plan document or other writing and all prior versions thereof, (ii) the
current and all prior Summary Plan Descriptions (including summaries of material
modifications thereto) (iii) the two most recently filed Form 5500s including
all schedules and attachments (iv) the two most recent determination letters
issued by the IRS, (v) the two most recent actuarial valuations and/or
allocation reports, and (vi) any current or prior employee handbooks or policy
manuals which refer to such Plan.
10.13.5. All Benefit Plans are currently in
full force and effect, and comply with all applicable agreements, arrangements
and understandings between Xxxx Xxxxxx and their Employees and Former Employees.
All contributions, premiums and other payments due in respect of each Benefit
Plan have been paid. Xxxx Xxxxxx is in compliance with the requirements of each
Benefit Plan, and no condition presently exists which, with the passage of time,
would cause any Benefit Plan to be in non-compliance with any applicable law,
regulation or order, or would cause Xxxx Xxxxxx to be in non-compliance with any
provisions of any Benefit Plan.
10.13.6. Xxxx Xxxxxx has no present or
contingent obligation or liability with respect to any Benefit Plan, including
any employee benefit plan previously maintained by Xxxx Xxxxxx or any Affiliate.
Xxxx Xxxxxx is not required to offer, contribute to, or maintain any employee
benefit plan other than the Benefit Plans either at the present time or in the
future.
10.13.7. With respect to each Benefit Plan:
no prohibited transaction (as defined in Section 4975 of the Code and Section
406 of ERISA) has occurred; each Benefit Plan is and at all times has been in
conformity with the Code, ERISA and all other applicable laws; all persons
and/or entities having any fiduciary responsibility are in compliance with the
applicable provisions of ERISA; there has not been a breach of any fiduciary
duty; there are no pending ruling requests or appeals (either formal or
informal), investigations, or audits by or before any Governmental Agency; there
have been no audits or investigations of any Benefit Plan by any governmental
agency except as set forth on Schedule 10.13.2; there is no dispute, claim,
demand, suit, proceeding or cause of action pending, threatened or anticipated
with respect to any Benefit Plan, and there is no liability except for
reasonable and customary administrative expenses and benefits payable pursuant
to the terms of each Benefit Plan. Each Retirement Plan that is or was intended
to constitute a qualified plan under Section 401(a) of the Internal Revenue Code
is, and has at all times been, qualified, in form and operation, under Section
401(a) of the Internal Revenue Code and is the subject of a favorable
determination letter from the IRS. No Benefit Plan is or was a "multiple
employer welfare arrangement" (within the meaning of ERISA Section 3(40)), nor
has Xxxx Xxxxxx or any Affiliate ever maintained, sponsored or been required to
make contributions to any such arrangement.
10.13.8. With respect to any Benefit Plan
which is unfunded, Xxxx Xxxxxx has adequately provided for, and its financial
statements accurately reflect (in accordance with GAAP consistently applied),
the amount of all accrued benefits under such Plan, and such accrued benefits
were computed based on actuarial methods, tables and assumptions, each of which
is itself reasonable.
10.13.9. If and to the extent Xxxxx-Xxxxx
assumes sponsorship of any Benefit Plan after Closing, there are no restrictions
on Xxxxx-Xxxxx'x right to terminate or decrease prospectively the level of
benefits under any Benefit Plan after the Closing Date without liability to any
Employee or Former Employee of Xxxx Xxxxxx or any Affiliates.
10.13.10. The Transactions will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any Benefit Plan, individual agreement or other arrangements that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, vesting or increase in benefits with respect to any Employee or
Former Employee, or present or former officer or director of Xxxx Xxxxxx.
10.13.11. With respect to any Benefit Plan
that is funded wholly or partially through an insurance policy, or if Xxxx
Xxxxxx is the beneficiary of an insurance policy with respect to the liabilities
or expenses of a Benefit Plan, there will be no liability of Xxxx Xxxxxx or any
Affiliate as of the Closing under any such insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a retroactive
rate adjustment, loss sharing arrangement or other actual contingent liability
arising wholly or partially out of events occurring prior to the Closing. The
consummation of the Transactions will not cause a revocation or material
modification of any such insurance policy, and all such policies can be
assumed by Xxxxx-Xxxxx at its option. Schedule 10.13.11 includes all insurance
policies described in this subsection.
10.13.12. Each "group health plan" (within
the meaning of Section 607(1) of ERISA) maintained by Xxxx Xxxxxx and its
Affiliates has been administered in compliance with all applicable requirements
of Sections 601-608 of ERISA and Section 4980B of the Code ("COBRA"). A list of
all persons who, as of Closing, (1) are eligible to elect to continue their
group health plan coverage under COBRA, or (2) have elected to continue their
group health plan coverage under COBRA and whose maximum required period of
continuation coverage has not yet expired, is attached as Schedule 10.13.12. The
list specifies the date such coverage or eligibility to elect coverage began for
each person and the date the maximum required period of coverage for such person
will end. No Benefit Plan provides health, medical, life insurance or similar
benefits to retirees or other former employees of Xxxx Xxxxxx or their
beneficiaries (except to the extent required under COBRA).
10.14. Employee Matters.
10.14.1. None of the Employees are
represented by a labor organization, no petition for representation has been
filed with the National Labor Relations Board with respect to the Employees, and
Xxxx Xxxxxx is not aware of any union organizational activity with respect to
the Employees.
10.14.2. Xxxx Xxxxxx has fully complied with
all applicable equal employment opportunity laws, wage and hour laws,
occupational safety and health laws, immigration laws, plant closing laws, and
all other federal, state or local laws (including common law) relating to
employment, except for immaterial violations which can be cured at no material
cost or expense to Xxxx Xxxxxx and/or Xxxxx-Xxxxx or the Subsidiaries and, with
or without being cured, will not prevent Xxxx Xxxxxx and/or Xxxxx-Xxxxx or the
Subsidiaries from fully continuing the Business. Xxxx Xxxxxx has provided to
Xxxxx-Xxxxx a full explanation of all claims, investigations, charges, and
employment-related suits or controversies which have occurred since January 1,
1990 or which are presently pending or threatened under any employment-related
federal, state, or local law (including common law). Xxxx Xxxxxx has satisfied
and performed fully all judgments, decrees, conciliation agreements, or
settlement agreements by which it is bound or to which it is subject concerning
employment-related matters, and has provided to Xxxxx-Xxxxx a copy of all such
judgments, decrees, or agreements.
10.14.3. Xxxx Xxxxxx has not adopted and is
not subject to any obligations under any affirmative action plan or similar
programs or arrangements.
10.14.4. Xxxx Xxxxxx has provided Xxxxx-
Xxxxx with a copy of all employee handbooks, manuals, and written policies and a
description of all employment policies.
10.14.5. Except as described on Schedule
10.14.5, Xxxx Xxxxxx has not entered into any employment or consulting agreement
or become obligated under any other document, policy or practice which gives to
any person a right to employment or compensation after the date of Closing; all
Employees can be terminated at will; and Xxxx Xxxxxx has no contractual
obligation nor any termination or severance arrangement with respect to any
Employee or Former Employee.
10.14.6. Xxxx Xxxxxx has paid all wages and
benefits due and payable (including all required taxes, insurance, and
withholding thereon) through the date hereof.
10.14.7. Schedule 10.14.7 is a complete and
accurate list of each of the Employees as of September 30, 1997, and includes:
10.14.7.1. the amounts of all
accrued leave (including vacation and sick leave), accrued severance
entitlement, and accrued bonuses due to the Employees and Former Employees as of
the date hereof and such amounts expected to be accrued as of the Closing Date;
10.14.7.2. such Employee's date of
hire, position, present salary, amounts and dates of salary increases and
bonuses since December 31, 1996, amounts and dates of any future salary
increases or bonus of which Xxxx Xxxxxx has made a commitment prior to the date
hereof, and announced termination date (if any); and
10.14.7.3. each lending, insurance
and other license currently in effect for such Employee and its expiration date.
10.14.8. Xxxx Xxxxxx has provided
Xxxxx-Xxxxx with access to the personnel files and employment records of all
Employees and Former Employees.
10.14.9. Each Employee has all
authorizations and licenses from all governmental bodies necessary to carry on
his or her job at Xxxx Xxxxxx.
10.15. Financial Statements. The audited Financial
Statements of Xxxx Xxxxxx as of, and for the years ended, December 31, 1994,
1995 and 1996 delivered to Xxxxx-Xxxxx present fairly, in all material respects,
the financial condition of Xxxx Xxxxxx, and the results of its operations, as of
such dates and for such years, and have been prepared in accordance with
generally accepted accounting principles consistently applied and in a manner
consistent with the past practices and policies of Xxxx Xxxxxx. Xxxx Xxxxxx has
also delivered to Xxxxx-Xxxxx interim financial statements prepared internally
by Xxxx Xxxxxx as of and for the period ending September 30, 1997, which present
fairly in all material respects the financial condition and results of operation
of Xxxx Xxxxxx as of and for the period ending September 30, 1997. The reserve
for possible loan losses at September 30, 1997 has been adjusted for chargeoff
and recovery activity and includes additions for provisions for loan losses
charged to Xxxx Xxxxxx' earnings through September 30, 1997. An annual review of
the adequacy of the reserve for possible loan losses by Xxxx Xxxxxx' external
audit firm has not been performed at the interim statement date.
10.16. Accounts Receivable (Excluding Loans). Except
as shown on Schedule 10.16, all Accounts Receivable (Excluding Loans) of Xxxx
Xxxxxx which are reflected on Xxxx Xxxxxx' Balance Sheet (i) are valid and
existing, (ii) represent monies due for goods sold and delivered or services
rendered in the ordinary course of business, (iii) are not subject to any
refunds or adjustments or any defenses, rights of set-off, assignment,
restrictions, security interests or other encumbrances, (iv) are current, and
(v) Xxxx Xxxxxx is not aware of any dispute regarding the collectibility of any
such accounts receivable.
10.17. Loans.
10.17.1. As of September 30, 1997, Xxxx
Xxxxxx holds not less than an aggregate principal balance of $47,000,000 million
of Loans. Xxxx Xxxxxx is the sole owner of each Loan and has the right to assign
and transfer the Loan to Xxxxx-Xxxxx. Xxxx Xxxxxx has not sold, assigned or
otherwise transferred any right or interest in or to the Loans to any other
person or entity and has not pledged the Loans as collateral for any loan or
obligation of Xxxx Xxxxxx.
10.17.2. Except as described on Schedule
1.1.2, each Loan is genuine and each is the legal and binding obligation of the
borrower or buyer ("borrower") as described therein, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium or similar laws and general principles of equity
affecting the rights of creditors generally. Each Loan was validly executed by
the borrower named therein. None of the Loans or guaranties, mortgages, security
agreements or other documents are forged, contain false information, or have
affixed any unauthorized signature or have been entered into by persons without
the required legal capacity.
10.17.3. Except as described on Schedule
1.1.2, Xxxx Xxxxxx has complied with any and all requirements of any federal,
state or local law, rule, regulation and administrative requirements applicable
to the making, holding, servicing and collecting of the Loans, including,
without limitation, disclosure and licensing laws. Except as specified on
Schedule 1.1.2, each Loan complies with applicable state and federal laws,
regulations, rules and other administrative requirements, including, without
limitation, the Federal Fair Credit Reporting Act and Regulations, the federal
Truth-in-Lending Act and Regulation Z, the federal Equal Credit Opportunity Act
and Regulation B, the federal Real Estate Settlement Procedures Act and
Regulations, the Federal Trade Commission Act , the federal Debt Collection
Practices Act, the federal Home Mortgage Disclosure Act, the Maryland Consumer
Protection Act, and Maryland credit and usury laws and regulations. All
disclosures required by law, federal, state or local, were properly made by Xxxx
Xxxxxx or the original creditor prior to the closing of each Loan.
10.17.4. The proceeds of each Loan have been
fully disbursed.
10.17.5. Each Loan originated by another
individual or entity or in which another individual or entity is named as the
original creditor has been duly transferred and assigned to Xxxx Xxxxxx by the
person or entity owning the entire beneficial interest of the creditor
thereunder pursuant to a valid assignment executed by an authorized signatory
transferring to Xxxx Xxxxxx the entire right, title and interest of the creditor
under such Loan.
10.17.6. Except as specified on Schedule
1.1.2, there is no agreement with any borrower regarding any variation of the
interest rate and schedule of payment (except as described in the Loan note) or
other terms and conditions of the Loan, no borrower has been released from
liability on the Loan, and no property has been released from any mortgage or
security agreement. If the Loan is a variable rate loan, Xxxx Xxxxxx represents
and warrants that all applicable notices required by law or regulation have been
provided to the borrower and that the right to future changes in the interest
rate and payment schedule has not been waived by Xxxx Xxxxxx or any previous
holder of the Loan.
10.17.7. Except as specified on Schedule
1.1.2, Xxxx Xxxxxx has a valid and enforceable security interest in each item of
collateral which secures a Loan. Except
when non-filing insurance has been sold in connection with the Loan, Xxxx Xxxxxx
has a perfected security interest in each item of collateral which secures each
Loan.
10.18. Title to Properties and Related Matters. Xxxx
Xxxxxx has good and marketable title to or valid leasehold interests in its
properties reflected in Xxxx Xxxxxx' Balance Sheet or acquired after the date
thereof (other than properties sold or otherwise disposed of in the ordinary
course of business), and all of such properties are held free and clear of all
title defects, liens, encumbrances and restrictions, except, with respect to all
such properties, (a) mortgages and liens securing debt reflected as liabilities
on Xxxx Xxxxxx' Balance Sheet and (b)(i) liens for current taxes and assessments
not in default, (ii) mechanics', carriers', workmen's, repairmen's, statutory or
capital law liens which have arisen in the ordinary course of business and which
are either not delinquent or being contested in good faith, and (iii) rights of
way, building or use restrictions, easements, exceptions, variances,
reservations and other similar matters or limitations, if any, which do not have
a material adverse effect on the use of the property affected.
10.19. Environmental Matters. The Facilities are in
substantial compliance with all environmental laws and pending, promulgated or
proposed regulations, and Xxxx Xxxxxx has not received notice of any claim or
obligation asserted against Xxxx Xxxxxx under any environmental law or
regulation.
10.20. Proprietary Rights. Xxxx Xxxxxx owns all of
the Intellectual Property. All of Xxxx Xxxxxx' rights in and to the Intellectual
Property are valid and enforceable. Xxxx Xxxxxx has not licensed, leased or
otherwise assigned, transferred or granted any right to use any of its
Intellectual Property to any other person or entity, and, to the best knowledge
of Xxxx Xxxxxx, no person or entity is infringing upon the Intellectual
Property. Xxxx Xxxxxx is not infringing upon or in violation of any patent,
trademark, trade name, service xxxx, copyright or registration of any other
person or entity.
10.21. Relationship with Dealers, Suppliers, Vendors.
Xxxx Xxxxxx is not aware of any occurrence which, with or without the giving of
notice or the lapse of time or both, would constitute a default under any
agreement or arrangement with any of its dealers and banks which would adversely
affect Xxxx Xxxxxx' relationship with any such party. Since January 1, 1997,
Xxxx Xxxxxx has not suffered the loss of any supplier(s), dealer(s), vendor(s),
customer(s) or bank(s) which has had or may have a material adverse effect on
Xxxx Xxxxxx' financial condition, results of operation, business or prospects.
10.22. Corporate Name. The use by Xxxx Xxxxxx of the
name "Xxxx Xxxxxx" and all variations does not infringe upon the rights of any
third party and Xxxx Xxxxxx has not granted any third party any right to use
such name or any variation.
10.23. Full Disclosure. This Agreement together with
all other agreements and documents executed by the parties in connection with
the Transactions does not contain any untrue statement of a material fact by
Xxxx Xxxxxx or omit to state any material fact necessary to make the statements
contained herein not misleading. Xxxx Xxxxxx has provided Xxxxx-Xxxxx access to
all relevant documents, materials and information relative to its Business and
Xxxx Xxxxxx has not withheld any documents, materials or information material to
the conditions and operations of its Business. There is no fact known to Xxxx
Xxxxxx which is not disclosed in this Agreement together with all other
agreements and documents executed by the parties in connection with the
Transactions which materially and adversely affects the accuracy of the
representations and warranties contained in this Agreement or Xxxx Xxxxxx'
financial condition, operations, business, earnings, assets, or liabilities.
11. Xxxxx-Xxxxx'x Warranties and Representations.
Xxxxx-Xxxxx represents and warrants to Xxxx Xxxxxx
that:
11.1. Xxxxx-Xxxxx is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland, and
has the corporate power and authority necessary to own and operate its
properties and carry on its business as now being conducted by it.
11.2. Xxxxx-Xxxxx has full power and authority to
enter into this Agreement, to consummate the Transactions and to take all other
actions required to be taken by it. The execution, delivery and performance of
this Agreement have been duly and properly authorized by its Board of Directors.
The execution and performance of this Agreement by it does not constitute a
violation or breach of its Articles of Incorporation or Bylaws. This Agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
11.3. The execution, delivery and performance of this
Agreement, and the fulfillment of and compliance with the terms and conditions
of this Agreement do not and will not, with the passing of time or the giving of
notice or both, violate or conflict with, constitute a breach of or default
under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, (i) any term or provision of its Articles
of Incorporation or Bylaws, (ii) any judgment, decree or order of any court or
governmental authority or agency to which Xxxxx-Xxxxx is a party or by which
Xxxxx-Xxxxx or any of its properties is bound, or (iii) any statute, law,
regulation or rule applicable to Xxxxx-Xxxxx, so as to have a material adverse
effect on the assets, liabilities, results of operations, financial condition,
business or prospects of Xxxxx-Xxxxx.
11.4. There is no litigation, claim, arbitration,
proceedings, or governmental investigation pending challenging its right to
perform under this Agreement to which it is a party, or to its knowledge,
threatened against it.
11.5. On the Closing Date, Xxxxx-Xxxxx shall have
financial capacity to consummate the Transactions and pay the Purchase Price.
11.6. On the Closing Date, the Subsidiaries shall be
limited liability companies duly organized and validly existing in good standing
under the laws of the State of Maryland, and have the power and authority
necessary to own and operate their properties and carry on their businesses.
11.7. On the Closing Date, the Subsidiaries shall
have full power and authority to consummate the Transactions and to take all
other actions required to be taken by them under this Agreement. Consummation of
the Transactions shall not constitute a violation or breach of their
organizational documents. The Assumption Agreements shall constitute their valid
and legally binding obligations, enforceable in accordance with their terms,
subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies.
12. Covenants of the Owners.
The Owners hereby covenant and agree to vote their
stock in Xxxx Xxxxxx in favor of the execution of this Agreement by Xxxx Xxxxxx
and of the Transactions and shall take such other actions as may be necessary or
appropriate to implement the provisions of this Agreement and the Transactions,
including, but not limited to, using their best efforts to obtain the Xxxx
Agreement referred to in Section 7.1.12.
13. Covenants of Xxxx Xxxxxx.
Xxxx Xxxxxx hereby covenants and agrees as follows:
13.1. In the period between the date hereof and
Closing, Xxxx Xxxxxx shall carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, and
shall use its best efforts to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, dealers, suppliers and others having
business dealings with it to the end that its goodwill and on-going business
shall be unimpaired at Closing. Xxxx Xxxxxx shall use its best efforts to
maintain insurance coverages and its books, accounts and records in the usual
manner consistent with prior practices; comply in all material respects with all
applicable laws, ordinances and regulations of governmental authorities;
maintain and keep its properties and equipment in good repair, working order and
condition, ordinary wear and tear excepted; and perform in all material respects
its obligations under all contracts and commitments to which it is a party or by
which it is bound.
13.2. In the period between the date hereof and
Closing, Xxxx Xxxxxx shall not and shall not propose to sell or pledge or agree
to sell or pledge any capital stock owned by it; amend its partnership
agreement, articles or certificate of incorporation or bylaws; split, combine or
reclassify its outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock; declare, set aside or pay any dividend or other
distribution payable in cash, stock or property; or directly or indirectly
redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise
acquire any shares of its capital stock.
13.3. In the period between the date hereof and
Closing, Xxxx Xxxxxx shall not issue, deliver or sell or agree to issue, deliver
or sell any additional shares of, or rights of any kind to acquire any shares
of, its capital stock of any class, any indebtedness (other than pursuant to
existing lines of credit, and renewals and extensions thereof, for use in the
ordinary course of business, and consistent with past practices) or any option,
rights or warrants to acquire, or securities convertible into, shares of capital
stock; acquire, lease or dispose or agree to acquire, lease or dispose of any
capital assets or any other assets other than in the ordinary course of
business, provided, however, Xxxx Xxxxxx may sell its 4 automobiles for the
higher of the average trade-in (wholesale) value in the October 1997 Edition of
the NADA Used Car Guidebook or the current book value; incur additional
indebtedness or encumber or grant a security interest in any asset, with the
exception of indebtedness and security described in Item B of Schedule 2.1 or
enter into any other material transaction other than in each case in the
ordinary course of
business; acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in, or by any other manner, any
business; or enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing.
13.4. In the period between the date hereof and
Closing, without the prior written consent of Xxxxx-Xxxxx, Xxxx Xxxxxx shall not
adopt, enter into, terminate or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or other benefit plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer or employee; pay
any benefit not required under any existing plan or arrangement; grant any
awards under any bonus, incentive, performance or other compensation plan or
arrangement or benefit plan (including, without limitation, the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any benefit plans or agreements or awards made thereunder); take any action
to fund or in any other way secure the payment of compensation or benefits under
any employee plan, agreement, contract or arrangement or benefit plan; or adopt,
enter into, amend or terminate any contract, agreement, commitment or
arrangement to do any of the foregoing. Consent of Xxxxx-Xxxxx is granted to the
following: Christmas bonuses as provided on Schedule 13.4; profit sharing plan
contributions consistent with past practices; and VIP employee incentive
payments as provided on Schedule 13.4. Following Closing, Xxxx Xxxxxx will
comply with the provisions of Section 14.5.1 regarding the Xxxx Xxxxxx and
Company, Inc. Profit Sharing Plan and Trust.
13.5. In the period between the date hereof and
Closing, the Owners shall not sell or pledge or agree to sell or pledge any
capital stock or interest in Xxxx Xxxxxx.
13.6. In the period between the date hereof and
Closing, Xxxx Xxxxxx shall not make any investments in non-investment grade
securities exceeding $5,000 or sell, at a loss of greater than $5,000, any debt
securities held for investment purposes.
13.7. Without the prior written consent of
Xxxxx-Xxxxx, in the period between the date hereof and Closing, Xxxx Xxxxxx
shall not sell or otherwise dispose of any Loans.
13.8. Xxxx Xxxxxx will cooperate with and make
available to Xxxxx-Xxxxx all of its books and records and access to its
premises, employees, attorneys and accountants at reasonable times and upon
reasonable notice.
13.9. In the period between the date hereof and
Closing, Xxxx Xxxxxx will use its best efforts to obtain all required consents
to assignments or written waivers of the provisions of any contract requiring
the consent of third parties.
13.10. During the period from the date of this
Agreement to the Closing Date, an individual designated by Xxxxx-Xxxxx shall
have the right to attend all meetings of the boards of directors or Partners of
Xxxx Xxxxxx in a nonvoting observer capacity, to receive notice of such meetings
and to receive the information provided by Xxxx Xxxxxx to its boards of
directors and Partners. Xxxx Xxxxxx shall consult with Xxxxx-Xxxxx regarding the
Business on a regular basis.
13.11. At or immediately following the Closing, Xxxx
Xxxxxx will execute and file all appropriate documents to be filed pursuant to
the laws of Maryland which are
necessary to implement the Transactions, including Articles of Transfer and
Articles of Amendment changing its name to a name which does not include the
name "Xxxx Xxxxxx" or any variation, in form and substance satisfactory to
counsel to Xxxxx-Xxxxx.
13.12. Xxxx Xxxxxx and the Owners will not use and
will keep and maintain the confidentiality of all confidential information
concerning Xxxxx-Xxxxx disclosed to Xxxx Xxxxxx or the Owners prior to Closing,
except to their directors, officers and employees, to their attorneys and
accountants, and to others to the extent necessary in connection with the
Transactions. If this Agreement does not close for any reason, Xxxx Xxxxxx and
the Owners shall promptly return to Xxxxx-Xxxxx all written and computer
documents, materials and discs in their possession dealing with Xxxxx-Xxxxx, and
shall retain no copies.
14. Covenants of Xxxxx-Xxxxx and the Subsidiaries.
Xxxxx-Xxxxx and the Subsidiaries hereby covenant and
agree as follows:
14.1. Xxxxx-Xxxxx agrees not to use and to keep and
maintain and to cause the Subsidiaries not to use and to keep and maintain the
confidentiality of all confidential information concerning Xxxx Xxxxxx disclosed
to Xxxxx-Xxxxx or the Subsidiaries prior to Closing, except to its directors,
officers and employees, to its attorneys and accountants, and to others to the
extent necessary in connection with the Transactions. If this Agreement does not
close for any reason, Xxxxx-Xxxxx shall promptly return and shall cause the
Subsidiaries to promptly return to Xxxx Xxxxxx all written and computer
documents, materials and discs in its possession dealing with Xxxx Xxxxxx, the
Assets or the Business, and shall retain no copies.
14.2. At or immediately following the Closing, the
Subsidiaries will execute and file all appropriate documents to be filed
pursuant to the corporate laws of Maryland which are necessary to implement the
Transactions, including Articles of Transfer.
14.3. Xxxxx-Xxxxx and the Subsidiaries shall take
such actions as may be necessary or appropriate to implement the provisions of
this Agreement and the Transactions, including, but not limited to, using their
best efforts to have the Consumer Finance Subsidiary enter into a credit
facility replacing the credit facility identified in Item B of Schedule 2.1 on
terms substantially similar to the terms described in Schedule 8.1.10. The
assumption of liabilities contained in Section 2 is deemed to be a covenant
hereunder.
14.4. Xxxxx-Xxxxx guarantees to Xxxx Xxxxxx the full
and timely payment and performance of all obligations to be performed by the
Subsidiaries hereunder.
14.5. Following Closing, and in accordance with
Sections 14.5.1 and 14.5.2 below, Xxxxx-Xxxxx or the Subsidiaries will provide
employee benefits to employees hired from Xxxx Xxxxxx in accordance with Section
15, with the exception of Xxxxxxx X. Xxxxxxxxx, which are comparable to the
benefits provided to those employees by Xxxx Xxxxxx immediately before Closing.
The Subsidiaries shall recognize the past service of the Employees with Xxxx
Xxxxxx to determine the waiting period or eligibility period for benefits under
the benefit plans of the Subsidiaries, however, the value of the benefits to be
offered the Employees by the Subsidiaries shall be determined solely by the
Subsidiaries. Notwithstanding this Section 14.5, nothing in this Agreement
restricts the right of Xxxxx-Xxxxx or the Subsidiaries to amend any employee
benefit plan for such employees in any manner Xxxxx-Xxxxx or the Subsidiaries
deem appropriate.
14.5.1. Neither Xxxxx-Xxxxx nor any of the
Subsidiaries will assume sponsorship of the Xxxx Xxxxxx and Company, Inc. Profit
Sharing Plan and Trust ("Profit Sharing Plan"). Xxxx Xxxxxx will remain sponsor
of the Profit Sharing Plan. Xxxx Xxxxxx will at its own expense terminate the
Profit Sharing Plan after Closing. When making distributions in connection with
the termination, Xxxx Xxxxxx will cooperate with Xxxxx-Xxxxx to make available
to participants a direct rollover of distributions to a tax qualified retirement
plan maintained by Xxxxx-Xxxxx or one of the Subsidiaries. For employees hired
from Xxxx Xxxxxx in accordance with Section 15, any tax qualified retirement
plan maintained by Xxxxx-Xxxxx or one of the Subsidiaries which covers such
employees will recognize all service those employees had with Xxxx Xxxxxx that
was recognized under the Profit Sharing Plan immediately before Closing.
14.5.2. Xxxxx-Xxxxx or the Subsidiaries will
make best efforts to assume and continue the insurance policies for any health,
dental, life and disability insurance coverages listed on Schedule 10.13.2 with
respect to employees hired from Xxxx Xxxxxx. In lieu thereof, Xxxxx-Xxxxx or the
Subsidiaries may cover employees hired from Xxxx Xxxxxx under other insurance
policies or funding arrangements that cover other employees of Xxxxx-Xxxxx (or
its subsidiaries).
15. Employees of Xxxx Xxxxxx.
Except as provided in this Agreement, neither
Xxxxx-Xxxxx nor the Subsidiaries shall be obligated to hire any Employee or
shall be responsible for any obligation of Xxxx Xxxxxx to its Employees. The
Subsidiaries covenant and agree to offer employment to substantially all of the
Employees.
16. No Solicitation.
Prior to Closing or termination of this Agreement,
the Owners and Xxxx Xxxxxx (through any of their officers, directors, employees
or agents) agree not to, directly or indirectly, without Xxxxx-Xxxxx'x consent,
solicit, encourage (including furnishing any information to any third person or
entity), respond to, negotiate or assist in any manner any other offer, bid, or
proposal involving the sale of any shares of stock of Xxxx Xxxxxx or any of its
assets other than in the ordinary course of business.
17. Publicity.
Xxxx Xxxxxx and the Owners shall not disseminate, or
cause any dissemination of, any press releases or other publicity concerning the
sale of the Business. Xxxxx-Xxxxx may disseminate any press releases and other
publicity concerning the sale of the Business as required by applicable law, and
with the approval of Xxxxxx X. Xxxxx, which approval shall not be unreasonably
withheld. Xxxxx-Xxxxx may make any public filing concerning the sale of the
Business as required by applicable law.
18. Termination.
18.1. Termination Events. This Agreement may, by
notice given prior to or at the Closing, be terminated:
(a) by either Xxxxx-Xxxxx or Xxxx Xxxxxx if
a material breach of any provision of this Agreement has been committed by the
other party and such breach has not been waived or cured within a reasonable
period of time not to exceed 60 days;
(b) (i) by Xxxxx-Xxxxx if any of the
conditions in Section 8 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Xxxxx-Xxxxx to comply with its obligations under this Agreement)
and Xxxxx-Xxxxx has not waived such condition on or before the Closing Date; or
(ii) by Xxxx Xxxxxx, if any of the conditions in Section 9 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Xxxx Xxxxxx to comply with
their obligations under this Agreement) and Xxxx Xxxxxx has not waived such
condition on or before the Closing Date;
(c) by mutual consent of Xxxxx-Xxxxx and
Xxxx Xxxxxx; or
(d) by either Xxxxx-Xxxxx or Xxxx Xxxxxx if
the Closing has not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its obligations under
this Agreement) on or before 60 days after the scheduled Closing, or such later
date as the parties may agree upon.
18.2. Effect of Termination. For purposes of this
Section, a "breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any document delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any material
inaccuracy in or material breach of, or any material failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision, or any claim (by any person) or other occurrence or circumstance that
is or was inconsistent with such representation, warranty, covenant, obligation,
or other provision. The exclusive effect of either party's termination under
Section 18.1 shall be limited to the remedies, if any, set forth below or in
Section 19, as applicable:
(a) If Xxxxx-Xxxxx terminates this Agreement
due to a breach of the Agreement by Xxxx Xxxxxx or the failure of Xxxx Xxxxxx to
satisfy one or more of the conditions to the Closing and such breach or failure
has not been due to any deliberate, willful and culpable act of Xxxx Xxxxxx
amounting to "bad faith," then Xxxx Xxxxxx shall not incur any liability to
Xxxxx-Xxxxx and termination shall be Xxxxx-Xxxxx'x sole remedy.
(b) If Xxxxx-Xxxxx terminates this Agreement
due to a breach of the Agreement by Xxxx Xxxxxx or the failure of Xxxx Xxxxxx to
satisfy one or more of the conditions to the Closing and such breach or failure
has been due to a deliberate, willful and culpable act of Xxxx Xxxxxx amounting
to "bad faith," then Xxxx Xxxxxx will be liable to Xxxxx-Xxxxx for damages;
provided, however, such damages shall be limited to Xxxxx-Xxxxx'x actual
out-of-pocket expenses incurred in the Transactions (excluding any allocated
cost of Xxxxx-Xxxxx'x management) unless Xxxxx-Xxxxx terminates because the
Owners or Xxxx Xxxxxx (through any of their officers, directors, employees or
agents) directly or indirectly, without Xxxxx-Xxxxx'x consent, agree or act to
solicit, encourage (including furnishing any information to any third party or
entity), respond to, negotiate or assist in any manner any other offer, bid or
proposal involving the sale of any shares of stock in or equity interests of
Xxxx Xxxxxx or any substantial portion of its assets other than in the ordinary
course of business. If Xxxxx-Xxxxx terminates because the Owners or Xxxx Xxxxxx
(through any of their officers, directors, employees or agents) directly or
indirectly, without Xxxxx-Xxxxx'x consent, agree or act to solicit, encourage
(including furnishing any information to any third party or entity), respond to,
negotiate or assist in any manner any other offer, bid or proposal involving the
sale of any shares of stock in or equity interests of Xxxx Xxxxxx or any
substantial portion of its assets other than in the ordinary course of business,
then the foregoing limitation on damages shall not apply.
(c) If Xxxx Xxxxxx terminates this Agreement
due to a breach of the Agreement by Xxxxx-Xxxxx or the failure of Xxxxx-Xxxxx to
satisfy one or more of the conditions to the Closing and such breach or failure
has not been due to any deliberate, willful and culpable act of Xxxxx-Xxxxx
amounting to "bad faith," then Xxxxx-Xxxxx shall not incur any liability to Xxxx
Xxxxxx and termination shall be Xxxx Xxxxxx' sole remedy.
(d) If Xxxx Xxxxxx terminates this Agreement
due to a breach of the Agreement by Xxxxx-Xxxxx or the failure of Xxxxx-Xxxxx to
satisfy one or more of the conditions to the Closing and such breach or failure
has been due to a deliberate, willful and culpable act of Xxxxx-Xxxxx amounting
to "bad faith," then Xxxxx-Xxxxx will be liable to Xxxx Xxxxxx for damages;
provided, however, such damages shall be limited to Xxxx Xxxxxx' out-of-pocket
expenses incurred in the Transactions (excluding any allocated cost of Xxxx
Xxxxxx' management). If Xxxx Xxxxxx terminates because Xxxxx-Xxxxx (through any
of its officers, directors, employees or agents, ) directly or indirectly,
without Xxxx Xxxxxx' and the Owners' consents, agrees or acts to, solicits,
encourages (including furnishing any information to any third party or entity),
responds to, negotiates or assists in any manner any offer, bid or proposal
involving the sale of any shares of its stock or any substantial portion of its
assets which transaction will preclude Xxxxx-Xxxxx from consummating the
Transactions on terms and conditions contained in this Agreement, then the
foregoing limitation on damages shall not apply.
(e) Except as otherwise specifically set
forth in this Agreement, all further obligations of the parties under this
Agreement will terminate, except that the obligations in Sections 13.12, 14.1
and 21 will survive.
19. Specific Performance.
The parties acknowledge that the provisions of this
Agreement are of particular importance for the protection and promotion of their
existing and future interests; that the relationships of the parties to each
other will be such that, in the unique and special circumstances set forth in
this Section 19, a claim for monetary damages may not constitute an adequate
remedy; and that it may therefore be necessary to apply for the specific
performance of this Agreement. Where authorized herein, the parties agree that
no objection to the form of the action or the relief prayed for in any
proceeding for specific performance of this Agreement shall be raised by any
party, in order that such relief may be expeditiously obtained by an aggrieved
party. The parties hereby authorize as a remedy specific performance of this
Agreement, only as set forth below:
(a) If prior to the Closing or termination
of this Agreement, the Owners or Xxxx Xxxxxx (through any of their officers,
directors, employees or agents) directly or indirectly, without Xxxxx-Xxxxx'x
consent, agree or act to, solicit, encourage (including furnishing any
information to any third party or entity), respond to, negotiate or assist in
any manner any other offer, bid or proposal involving the sale of any shares of
stock in or equity interests of Xxxx Xxxxxx or any substantial portion of its
assets other than in the ordinary course of business.
(b) If prior to the Closing or termination
of this Agreement, Mason- Dixon (through any of its officers, directors,
employees or agents,) directly or indirectly, without Rose Shanis' and the
Owners' consents, agrees or acts to, solicits, encourages (including furnishing
any information to any third party or entity), responds to, negotiates or
assists in any manner any offer, bid or proposal involving the sale of any
shares of its stock or any substantial portion of its assets which transaction
will preclude Mason-Dixon from consummating the Transactions on terms and
conditions contained in this Agreement.
(c) Specific performance herein as a remedy
by Mason-Dixon shall be available to Mason-Dixon only if Mason-Dixon tenders the
full Purchase Price (adjusted by the Adjustment Amount), without other
deductions or offsets. If specific performance herein shall be available as a
remedy by Rose Shanis and the Owners, Mason-Dixon shall be obligated to pay Rose
Shanis the full Purchase Price (adjusted by the Adjustment Amount), without
other deductions or offsets.
20. No Brokerage.
Except as disclosed in Schedule 20, each of the
parties represents that it employed no broker or finder in connection with any
of the Transactions, and, insofar as it knows, no other broker or other person
is entitled to any compensation including, without limitation, a commission or
finder's fee, in connection with any of these Transactions. The Owners shall pay
the fees of BT Alex. Brown Incorporated. Mason-Dixon shall pay the fees of
Friedman, Billings, Ramsey & Co., Inc.
21. Expenses.
Except as otherwise provided herein, the expenses of
the Owners shall be borne by the Owners, the expenses of Rose Shanis paid or
incurred after September 26, 1997, shall be borne by the Owners, the expenses of
Rose Shanis paid or incurred on or before September 26, 1997, shall be borne by
Rose Shanis, and the expenses of Mason-Dixon shall be borne by Mason-Dixon,
including the expenses of their respective attorneys and accountants in
connection with the Transactions. The costs, if any, of the transfer of the
Assets to the Subsidiaries shall be borne by Mason-Dixon.
22. Severability.
In case any of the provisions of this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein.
23. Entire Agreement and Amendment.
The Recitals are a substantive part of this
Agreement. This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement and all other documents and agreements executed
and delivered by the parties in connection with the Transactions) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
24. Binding Agreement.
This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, personal representatives,
successors and assigns. This Agreement shall not be assignable by any party
without the prior written consent of the other parties.
25. Further Assurances.
Rose Shanis, the Owners and Mason-Dixon each agree to
execute, acknowledge, seal and deliver, after the date hereof, such further
assurances, instruments and documents and to take such further actions as the
other may reasonably request in order to fulfill the intent of this Agreement
and the Transactions and Mason-Dixon agrees to cause the Subsidiaries to do the
same. Mason-Dixon and the Subsidiaries agree to cooperate with and make
available to Rose Shanis and the Owners from time to time after Closing books
and records transferred to the Subsidiary at Closing and former employees of
Rose Shanis which are employed by the Subsidiaries at reasonable times and upon
reasonable notice for the purpose of permitting Rose Shanis and the Owners to
defend or prosecute lawsuits currently pending against Rose Shanis. Rose Shanis
and the Owners agree to cooperate with and make available to Mason-Dixon and the
Subsidiaries from time to time after Closing all books and records, including
Minute Books, tax returns, and litigation papers, not transferred to the
Subsidiaries at Closing at reasonable times and upon reasonable notice.
26. Notices.
All notices, writings and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be given by hand-delivery or transmitted by United States certified
mail, return receipt requested, postage prepaid, or via overnight carrier, to
the address set forth below:
If to Rose Shanis or the Owners: Rose Shanis Financial Services
313 N. Howard Street
Baltimore, Maryland 21201
Attn: Norman J. Glick
With a copy to: Adelberg, Rudow, Dorf, Hendler & Sameth, LLC
600 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
Attn: David B. Rudow, Esquire
If to Mason-Dixon or the Mason-Dixon Bancshares, Inc.
Subsidiaries: 45 West Main Street
Westminster, Maryland 21157
Attn: Thomas K. Ferguson, President and CEO
With a copy to: Gordon, Feinblatt, Rothman, Hoffberger
& Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
Attn: Carla Stone Witzel, Esquire
Each notice shall be deemed to have been received: (i) for hand deliveries, on
the date of transmittal; (ii) for mailing, on the second day following such
mailing; and (iii) for overnight deliveries, on the day following such
transmittal. The parties shall have the right to change their respective
addresses set forth in this Section by giving notice of such change in
accordance with this Section.
27. Survival.
The warranties, covenants and agreements herein
contained shall survive the execution and delivery of this Agreement, and the
completion of the Transactions. The right to indemnification, payment of damages
or other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The Indemnity and Escrow
Agreement shall be the exclusive mechanism for exercising Mason-Dixon's right to
indemnification. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages, or other remedy based on such representations, warranties, covenants,
and obligations.
28. Counterparts.
This Agreement may be executed in any number of
counterparts, each of which will be an original, but all of which together will
constitute one agreement.
29. Governing Law.
This Agreement shall be construed under, governed by
and enforced pursuant to the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal, with the intention of making it a sealed instrument, as of the day
and year first above written.
ROSE SHANIS & CO., INC.
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
ROSE SHANIS SONS, INC.
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
STEPHEN CORP.
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
ROSE SHANIS & CO.
By: /s/ Susan M. Glick (SEAL)
-------------------------------------
Susan M. Glick, Trustee of the Norman J.
Glick Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Susan M. Glick (SEAL)
-------------------------------------
Susan M. Glick, Trustee of the Stephen J. Glick
Trust Share of the Bernice Shanis Trust,
General Partner
By:/s/ Susan M. Glick (SEAL)
-------------------------------------
Susan M. Glick, Trustee of the Stephen J. Glick
Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee of the Nor
Trust Share of the Bernice Shanis Trust,
General Partner
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
Norman J. Glick, Trustee of the Norman J.
Glick Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Norman J. Glick (SEAL)
--------------------------------------
Norman J. Glick, Trustee of the Stephen J. Glick
Trust Share of the Bernice Shanis Trust,
General Partner
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
Norman J. Glick, Trustee of the Stephen J. Glick
Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
Norman J. Glick, Trustee of the Norman J. Glick
Trust Share of the Bernice Shanis Trust,
General Partner
By:/s/ Norman J. Glick (SEAL)
-------------------------------------
Norman J. Glick, General Partner
By:/s/ Susan M. Glick (SEAL)
-------------------------------------
Susan M. Glick, Personal Representative of the
Estate of Stephen J. Glick, General Partner
NORMAN J. GLICK
/s/ Norman J. Glick (SEAL)
----------------------------------------
SUSAN M. GLICK, PERSONAL
REPRESENTATIVE OF THE ESTATE OF
STEPHEN J. GLICK
/s/ Susan M. Glick (SEAL)
----------------------------------------
/s/ Mitzi S. Glick (SEAL)
----------------------------------------
Mitzi S. Glick, Trustee u/a Norman J. Glick
dated May 14, 1997, FBO Robert S. Glick
/s/ Eugene Schreiber (SEAL)
----------------------------------------
Eugene Schreiber, Trustee u/a Norman J. Glick
dated May 14, 1997, FBO Robert S. Glick
/s/ Mitzi S. Glick (SEAL)
----------------------------------------
Mitzi S. Glick, Trustee u/a Norman J. Glick
dated May 14, 1997, FBO Bonnie G. Dubin
/s/ Eugene Schreiber (SEAL)
----------------------------------------
Eugene Schreiber, Trustee u/a Norman J. Glick
dated May 14, 1997, FBO Bonnie G. Dubin
/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee of the Norman J.
Glick Trust Share of the Ely Shanis Trust
/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee of the Stephen J. Glick
Trust Share of the Bernice Shanis Trust
/s/ Norman J. Glick (SEAL)
----------------------------------------
Norman J. Glick, Trustee of the Norman J.
Glick Trust Share of the Ely Shanis Trust
/s/ Norman J. Glick (SEAL)
----------------------------------------
Norman J. Glick, Trustee of the Stephen J. Glick
Trust Share of the Bernice Shanis Trust
/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee of the Stephen J.
Glick Trust Share of the Ely Shanis Trust
/s/ Norman J. Glick (SEAL)
----------------------------------------
Norman J. Glick, Trustee of the Stephen J. Glick
Trust Share of the Ely Shanis Trust
/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee of the Norman J.
Glick Trust Share of the Bernice Shanis Trust
/s/ Norman J. Glick (SEAL)
----------------------------------------
Norman J. Glick, Trustee of the Norman J. Glick
Trust Share of the Bernice Shanis Trust
SUSAN M. GLICK AND GAIL GLICK,
TRUSTEES OF MARITAL TRUST UNDER THE
LAST WILL AND TESTAMENT OF
STEPHEN J. GLICK
/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee
/s/ Gail Glick (SEAL)
----------------------------------------
Gail Glick, Trustee
SUSAN M. GLICK AND GAIL GLICK,
TRUSTEES OF BYPASS TRUST UNDER THE
LAST WILL AND TESTAMENT OF
STEPHEN J. GLICK
/s/ Susan M. Glick (SEAL)
----------------------------------------
Susan M. Glick, Trustee
/s/ Gail Glick (SEAL)
----------------------------------------
Gail Glick, Trustee
MASON-DIXON BANCSHARES, INC.
By:/s/ Thomas K. Ferguson (SEAL)
-------------------------------------
Thomas K. Ferguson, President
LIST OF SCHEDULES*
SCHEDULE 1.1.2 Loans
SCHEDULE 1.1.3 Insurance Assets
SCHEDULE 1.1.5 Furniture, Fixtures and Equipment
SCHEDULE 1.1.6 Facilities
SCHEDULE 1.1.9 Intellectual Property
SCHEDULE 1.1.10 Computer Systems
SCHEDULE 1.1.11 Claims
SCHEDULE 1.2 Excluded Assets
SCHEDULE 2.1 List of Assumed Liabilities
SCHEDULE 8.1.10 Credit Facility Terms
SCHEDULE 8.1.12 Year 2000 Certification
SCHEDULE 10.4 Rose Shanis -- Capital Stock Information
SCHEDULE 10.5.1 Adverse Changes, Dividends and Distributions
SCHEDULE 10.5.2 Losses and Liabilities
SCHEDULE 10.6 Legal Proceedings
SCHEDULE 10.7 Compliance with Law
SCHEDULE 10.8 Rose Shanis' Contracts
SCHEDULE 10.11 Transactions with Affiliates
SCHEDULE 10.12 Rose Shanis' Insurance Policies
SCHEDULE 10.13.2 Employee Benefit Plans
SCHEDULE 10.13.11 Insurance Policies Funding Benefit Plans
SCHEDULE 10.13.12 COBRA Beneficiaries
SCHEDULE 10.14.5 Employment and Consulting Agreements
SCHEDULE 10.14.7 Employee List
SCHEDULE 10.16 Accounts Receivable
SCHEDULE 13.4 VIP Employee Incentive Payments and Christmas Bonuses
SCHEDULE 20 Brokers
*Pursuant to Regulation S-K, Item 601(b)(2), Mason-Dixon will furnish
supplementally to the Commission upon its request copies of the schedules.
LIST OF EXHIBITS
EXHIBIT 1.1 - BALANCE SHEET
EXHIBIT 7.1.1 - BILL OF SALE
EXHIBIT 7.1.2 - ASSIGNMENT OF CONTRACTS
EXHIBIT 7.1.3 - OPINION OF COUNSEL TO ROSE SHANIS
EXHIBIT 7.1.4 - OPINION OF COUNSEL TO ESTATE OF STEPHEN J. GLICK
EXHIBIT 7.1.5 - OPINION OF COUNSEL TO THE MARITAL AND BYPASS TRUSTS
EXHIBIT 7.1.6 - OPINION OF COUNSEL TO THE _______ TRUST
EXHIBIT 7.1.10 - ARTICLES OF TRANSFER
EXHIBIT 7.1.11 - INDEMNITY AND ESCROW AGREEMENT
EXHIBIT 7.1.12 - KAHN AGREEMENT
EXHIBIT 7.1.17 - SHAREHOLDERS' EQUITY ESCROW AGREEMENT
EXHIBIT 7.2.1 - OPINION OF MASON-DIXON AND THE SUBSIDIARIES' COUNSEL
EXHIBIT 7.2.4 - ASSUMPTION AGREEMENT
EXHIBIT 1.1
BALANCE SHEET
[intentionally omitted]
EXHIBIT 7.1.1
BILL OF SALE
Rose Shanis _____________("Rose Shanis"), for good and
valuable consideration paid by ______________ ("Mason-Dixon"), at or before the
delivery of these presents, the receipt and sufficiency of which is hereby
acknowledged by Rose Shanis, hereby grants, bargains, sells, assigns, transfers
and delivers to Mason-Dixon, it successors and assigns, all of the assets owned
by Rose Shanis, as described on Schedule A attached hereto and incorporated
herein by reference (the "Assets"), to have and hold for its own use and benefit
forever.
Rose Shanis hereby warrants and represents that the Assets are
free and clear of all liens, security interests, claims, taxes, and encumbrances
of any nature whatsoever, excluding any lien for sales or transfer tax created
by this sale. Mason-Dixon is responsible for the payment of sales tax on the
transfer of the Assets.
Rose Shanis, for itself and its successors and assigns,
warrants and agrees to defend title to all of the Assets against any and every
person whomsoever for the benefit of Mason-Dixon, its successors and assigns.
In Witness Whereof, the undersigned has caused this Bill of
Sale to be executed under seal with the intention that this be a sealed
instrument on this ___ day of ____________, 1997.
Rose Shanis _____________
By:__________________________(Seal)
SCHEDULE A
To Bill of Sale
List of Assets
EXHIBIT 7.1.2
ASSIGNMENT OF CONTRACTS
This Assignment of Contracts (this "Assignment") is made this
___ day of ____, 1997, by and between Rose Shanis & Co., Inc., Rose Shanis Sons,
Inc., Rose Shanis & Co. and Stephen Corp. ( "Assignor") and _____________
("Assignee"), pursuant to an Asset Purchase Agreement (the "Asset Purchase
Agreement") dated _______, 1997, by, among others, Assignor and Assignee,
involving the sale of substantially all of the assets of the Assignor.
Assignor and Assignee desire by this Assignment for the
Assignor to assign to the Assignee, and for the Assignee to accept from the
Assignor, all of the rights and obligations of the Assignor under the provisions
of the contracts attached hereto as or listed in Schedule A (individually and
collectively referred to as the "Contracts"), all upon the terms and subject to
the conditions set forth below.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the foregoing, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Assignor and Assignee agree as follows:
Section 1. Assignment. The Assignor hereby assigns to the
Assignee all of the Assignor's rights, privileges, powers, liabilities and
immunities under the provisions of the Contracts and the Assignee hereby accepts
and assumes all of the obligations and expense under the provisions of the
Contracts. Assignee shall defend, indemnify and hold Assignor harmless against
and from any and all liability to any person, firm, corporation, political
subdivision, or other entity for any failure of Assignee to pay any obligations
assumed.
Section 2. Representation By Assignor and Assignee. The
Assignor and the Assignee represent and warrant to the other that each has been
duly authorized to execute and deliver this Assignment, and to perform its
obligations hereunder.
Section 3. General.
3.1. Amendment. This Assignment may not be amended or
terminated orally but only as expressly provided herein or by an instrument in
writing duly executed by all of the parties.
3.2. Waiver. No party hereto shall be deemed to have waived
the exercise of any right which it hold hereunder unless such waiver is made
expressly and in writing and, without limiting the generality of the foregoing,
no delay or omission by any party hereto in exercising any such right shall be
deemed a waiver of its future exercise. No such waiver made in any instance
involving the exercise of any such right shall be deemed a waiver as to any
other such instance, or any other such right.
3.3. Applicable law. The Assignment shall be given effect and
construed by application of the law of Maryland.
3.4. Headings. The headings of the sections and subsections
hereof are provided herein for and only for convenience of reference, and shall
not be considered in construing their contents.
3.5. Successors and Assigns. This Assignment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns hereunder.
3.6. Further Assurances. The parties agree that they will take
whatever action or actions are found to be reasonably necessary from time to
time to effectuate the provisions and intent of this Assignment, and, to that
end, the parties agree that they will execute any further documents or
instruments which may be necessary to give full force and effect to this
Assignment or to any of its provisions.
3.7. Binding Effect. This Assignment shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
3.8. Severability. In case any of the provisions of this
Assignment shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Assignment, but this Assignment
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
3.9. Counterparts. This Assignment may be executed in any
number of counterparts, each of which will be an original, but all of which
together will constitute one assignment.
IN WITNESS WHEREOF, the Assignor and the Assignee have each
executed under seal this Assignment or caused it to be executed under seal on
its behalf by its duly authorized representatives, as of the day and year first
above written.
-----------------------------
By:_______________________________(SEAL)
ROSE SHANIS & CO., INC.
By:_______________________________(SEAL)
ROSE SHANIS SONS, INC.
By:_______________________________(SEAL)
STEPHEN CORP.
By:_______________________________(SEAL)
ROSE SHANIS & CO.
By:________________________________(SEAL)
Trustee, Ely Shanis Trust,
General Partner
By:________________________________(SEAL)
Trustee, Bernice Shanis Trust,
General Partner
By:________________________________(SEAL)
Norman J. Glick, General Partner
By:________________________________(SEAL)
Susan M. Glick, Personal
Representative of the Estate
of Stephen J. Glick, General Partner
EXHIBIT 7.1.3
OPINION OF COUNSEL TO ROSE SHANIS
---------------, -----
Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, Maryland 21157
Re: Asset Purchase Agreement among Rose Shanis & Co.,
Inc., Rose Shanis Sons, Inc., Rose Shanis & Co. and
Stephen Corp., and their respective Owners, and
Mason-Dixon Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel to Rose Shanis & Co., Inc. ("RSC
Inc."), a Maryland corporation; Rose Shanis Sons, Inc. ("RSS Inc."), a Maryland
corporation; Stephen Corporation ("SC"), a Maryland corporation; and Rose Shanis
& Co. (the "Partnership"), a Maryland general partnership, in connection with
the purchase (the "Purchase") by Mason-Dixon Bancshares, Inc. ("Mason-Dixon"), a
Maryland corporation, of substantially all of the assets of RSC Inc., RSS Inc.,
SC, and the Partnership (the "Assets"), pursuant to an Asset Purchase Agreement
dated November ___, 1997, and all Exhibits and Schedules attached thereto (the
"Agreement"), among RSC Inc., RSS Inc., SC (collectively, the "Companies"), the
Partnership, and their respective owners, and Mason-Dixon. All capitalized terms
used in this letter that are not otherwise defined herein shall have the
meanings set forth in the Agreement.
In rendering the opinions expressed below, we have examined
the following documents:
1. The Agreement and the other documents executed in
connection therewith (collectively, the "Purchase Documents");
2. Copies of the Articles of Incorporation and Bylaws of each
of the Companies;
3. Copies of the Partnership Agreement (the "Partnership
Agreement") of the Partnership, dated January 31, 1942, among Bernice Shanis,
David Glick and Rose S. Glick, as amended through the date of this letter;
4. Copies of the resolutions adopted by the Board of Directors
and Owners of the Companies in connection with the Purchase, certified by the
Secretary of each of the Companies;
5. Copies of the records of the proceedings of, and of actions
taken by, the Partnership and its Partners in connection with the Purchase;
6. A Certificate of Good Standing from the Maryland State
Department of Assessments and Taxation ("SDAT") dated November __ , 1997, to the
effect that RSC Inc. is duly incorporated and is an existing corporation in
Maryland;
7. A Certificate of Good Standing from the Maryland State
Department of Assessments and Taxation ("SDAT") dated November __ , 1997, to the
effect that RSS Inc. is duly incorporated and is an existing corporation in
Maryland;
8. A Certificate of Good Standing from the Maryland State
Department of Assessments and Taxation ("SDAT") dated November __ , 1997, to the
effect that SC is duly incorporated and is an existing corporation in Maryland;
9. A Certificate of the Companies and the Partnership with
respect to each of the Companies' and the Partnership's representations in the
Agreement and with respect to certain facts concerning each of the Companies and
the Partnership (the "Certificate").
In basing the opinions and other matters set forth herein on
"our knowledge," the words "our knowledge" signify that, in the course of our
representation of the Companies and the Partnership in matters with respect to
which we have been engaged by them as counsel, no information has come to our
attention that would give us actual knowledge or actual notice that any such
opinions or other matters are not accurate or that any of the foregoing
documents, certificates, reports, and information on which we have relied are
not accurate and complete. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters. The words "our
knowledge" and similar language used herein are intended to be limited to the
knowledge of the lawyers within our firm who have recently worked on matters on
behalf of the Companies and the Partnership.
In reaching the opinions set forth below, we have assumed, and
to our knowledge there are no facts inconsistent with, the following:
(a) Each of the parties to the Purchase Documents
(other than the Companies and the Partnership) has duly and validly executed and
delivered each instrument, document, and agreement executed in connection with
the Purchase to which such party is a signatory, and such party's obligations
set forth therein are its legal, valid, and binding obligations, enforceable in
accordance with their respective terms;
(b) each person executing any such instrument,
document, or agreement on behalf of any such party (other than the Companies and
the Partnership) is duly authorized to do so;
(c) each natural person executing any such
instrument, document, or agreement is legally competent to do so;
(d) there are no oral or written modifications of or
amendments to the Purchase Documents, and there has been no waiver of any of the
provisions of the Purchase Documents, by actions or conduct of the parties or
otherwise;
(e) all documents submitted to us as originals are
authentic, all documents submitted to us as certified or photostatic copies
conform to the original document, all signatures on all documents submitted to
us for examination are genuine, and all public records reviewed are accurate and
complete.
Based on our review of the foregoing and subject to the
assumptions and qualifications set forth herein, it is our opinion that, as of
the date of this letter:
1. Each of the Companies is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland. Each
of the Companies has the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now conducted by it,
to execute and deliver the Agreement, and to consummate the sale of the Business
and all other Transactions, and to take all other actions required to be taken
by it. The execution and delivery of the Purchase Documents and performance by
each of the Companies of the obligations under the Purchase Documents and all
other documents executed in connection therewith have been duly and properly
authorized by the Owners and the Board of Directors of each of the Companies in
full compliance with their Articles of Incorporation, By-laws and the
corporation laws of the State of Maryland. To our knowledge, the Companies are
not qualified to conduct business in any jurisdiction other than the State of
Maryland, which is the only jurisdiction in which the nature of its business or
the ownership of the properties makes such qualification necessary.
2. The Partnership is a general partnership validly existing
under the Partnership Agreement and the laws of the State of Maryland. The
Partnership has all requisite power and authority to own, lease and operate its
business as is now being conducted. To our knowledge, the Partnership is not
qualified to conduct business in any jurisdiction other than the State of
Maryland, which is the only jurisdiction in which the nature of its business or
the ownership of the properties makes such qualification necessary.
3. The Purchase Documents have been duly executed and
delivered by the Companies and the Partnership and constitute the valid and
legally binding obligations of each, enforceable against the Companies and the
Partnership in accordance with their terms, subject to the following:
i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance and other laws affecting the
rights of creditors generally; and
ii) the exercise of judicial discretion in
accordance with general principles of
equity.
4. Based upon the Certificate and our knowledge, the execution
and delivery of the Purchase Documents and performance of the obligations under
the Purchase Documents, and the fulfillment of and compliance with the terms and
conditions of the Purchase Documents do not and will not, with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision in
any of the Companies' Articles of Incorporation or Bylaws or the Partnership's
Partnership Agreement, (ii) any contracts described in Section 10.8 of the
Agreement; (iii) any judgment, decree or order of any court or governmental
authority or agency to which any of
the Companies or the Partnership is a party or by which any of the Companies or
Partnership, or any of their properties, is bound or (iv) any statute, law,
regulation or rule applicable to any of the Companies or the Partnership, so as
to have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of any of the Companies
or the Partnership.
5. Except for compliance with the applicable requirements of
filing and recording of Articles of Transfer as required by the Maryland General
Corporation Law, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to the Companies or the
Partnership is required in connection with the execution, delivery or
performance of the Agreement by the Companies or the Partnership or the
consummation of the Transactions by the Companies or the Partnership.
6. All of the issued and outstanding shares of capital stock
of the Companies are duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights; and no such shares of capital stock
have been issued in violation of any federal or state securities law. To our
knowledge, there are no shares of capital stock of the Companies outstanding,
and there are no subscriptions, options, convertible securities, calls, rights,
warrants or other agreements, claims or commitments of any nature whatsoever
obligating the Companies to issue, transfer, deliver or sell, or cause to be
issued, transferred, delivered or sold, additional shares of capital stock or
other securities of the Companies or obligating the Companies to grant, extend
or enter into any such agreement or commitment. To our knowledge, no prior
offer, issue, redemption, call, purchase, sale, transfer, negotiation or other
transaction of any nature with respect to the capital stock or equity interests
of the Companies has given or may give rise to any valid claim or action by any
person which is enforceable against the Companies or the Clients. To our
knowledge, the persons who are the Owners of all of the issued and outstanding
shares of the Companies' capital stock are the owners of the of all of the
issued and outstanding shares of the Companies' capital stock free and clear of
all liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature.
7. Based upon the Certificate and our knowledge, there are no
suits, actions, claims or proceedings pending, or threatened against the
Companies or the Partnership relating to or involving the Companies or the
Partnership, and there are no investigations pending or threatened before any
court, arbitrator or administrative or governmental body, which, if finally
determined adversely, are reasonably likely, individually or in the aggregate,
to have an adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of the Companies or the Partnership.
To the best of our knowledge, the Companies and the Partnership are not subject
to any judgment, decree, injunction, rule or order of any court, and, the
Companies and the Partnership are not subject to any governmental restriction,
which is reasonably likely (i) to have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of the Companies or the Partnership, or (ii) to cause a limitation on
Mason-Dixon's or its subsidiaries ability to operate the business of the
Companies and the Partnership after the date of this letter.
8. The Companies and the Partnership have all authorizations,
approvals, licenses and orders of and from all governmental and regulatory
officers and bodies necessary
to carry on its business as it is currently being conducted, to own or hold
under lease the properties and assets it owns or holds under lease.
9. To our knowledge, the use by the Companies and the
Partnership of the name "Rose Shanis" and all variations does not infringe on
the rights of any third party.
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of Maryland and the laws of the United States of
America. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof.
The opinions expressed in this letter are solely for your use
and these opinions may not be relied on by any other persons without prior
written approval. The opinions expressed in this letter are limited to the
matters set forth in this letter, and no other opinions should be inferred
beyond the matters expressly stated.
Very truly yours,
Adelberg, Rudow, Dorf, Hendler
& Sameth, LLC
By:__________________________
David B. Rudow, Member
EXHIBIT 7.1.4
OPINION OF COUNSEL TO ESTATE OF STEPHEN J. GLICK
November __, 1997
Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, Maryland 21157
Re: Asset Purchase Agreement among Rose Shanis & Co.,
Inc., Rose Shanis Sons, Inc., Rose Shanis & Co. and
Stephen Corp., and their respective Owners, and
Mason-Dixon Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel to Susan M. Glick, as Personal
Representative to the Estate of Stephen J. Glick (the "Glick Estate"), with
respect to the asset purchase (the "Purchase") described in the Asset Purchase
Agreement dated November ___, 1997, and all Exhibits and Schedules attached
thereto (the "Agreement"), by and among Rose Shanis & Co., Inc. ("RSC Inc."), a
Maryland corporation; Rose Shanis Sons, Inc. ("RSS Inc."), a Maryland
corporation; Stephen Corporation ("SC"), a Maryland corporation; and Rose Shanis
& Co. (the "Partnership"), a Maryland general partnership, and their respective
Owners, and by Mason-Dixon Bancshares, Inc. ("Mason-Dixon"), a Maryland
corporation, whereby Mason-Dixon will acquire substantially all of the Assets of
RSC Inc., RSS Inc., SC, and the Partnership. The Glick Estate owns, inter alia,
shares of stock in RSS Inc., RSC Inc., and SC (the "Shares") and interests (the
"Interests") in the Partnership. All capitalized terms used in this letter that
are not otherwise defined herein shall have the meanings set forth in the
Agreement.
In rendering the opinions expressed below, we have examined
the following documents:
1. The Agreement, as well as all other documents executed or
required to be executed in connection therewith (collectively, the "Purchase
Documents");
2. The Last Will and Testament of Stephen J. Glick, as well as
any modifications, amendments, and other documents pertaining thereto;
3. All letters of administration issued by the Orphans' Court
of Baltimore City, Maryland pertaining to the Estate of Stephen J. Glick, Estate
Number A-40822; and
4. Such other documents and records as we have deemed
necessary as a basis for the opinions expressed below.
In basing the opinions and other matters set forth herein on "our knowledge,"
the words "our knowledge" signify that, in the course of our representation of
the Glick Estate in matters
with respect to which we have been engaged as counsel, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are not accurate or that any of the foregoing
documents, certificates, reports, and information on which we have relied are
not accurate and complete. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters. The words "our
knowledge" and similar language used herein are intended to be limited to the
knowledge of the lawyers within our firm who have recently worked with the Glick
Estate.
In reaching the opinions set forth below, we have assumed, and
to our knowledge there are no facts inconsistent with, the following:
(a) Each of the parties to the Purchase Documents
(other than the Glick Estate) has duly and validly executed and delivered each
instrument, document, and agreement executed in connection with the Purchase to
which such party is a signatory, and such party's obligations set forth therein
are its legal, valid, and binding obligations, enforceable in accordance with
their respective terms;
(b) each person executing any such instrument,
document, or agreement on behalf of any such party (other than the Glick Estate)
is duly authorized to do so;
(c) each natural person executing any such
instrument, document, or agreement is legally competent to do so;
(d) there are no oral or written modifications of or
amendments to the Purchase Documents, and there has been no waiver of any of the
provisions of the Purchase Documents, by actions or conduct of the parties or
otherwise;
(e) all documents submitted to us as originals are
authentic, all documents submitted to us as certified or photostatic copies
conform to the original documents, all signatures on all documents submitted to
us for examination are genuine, and all public records reviewed are accurate and
complete.
Based on our review of the foregoing and subject to the
assumptions and qualifications set forth herein, it is our opinion that, as of
the date of this letter:
1. Susan M. Glick has been appointed personal representative
of the Glick Estate by the Orphans' Court of Baltimore City, Maryland, pursuant
to letters of administration issued by the Orphans' Court for Estate Number
A-40822, and has the power and authority to execute and deliver the Agreement,
and to consummate the sale of the business and all other Transactions, and to
take all other actions required to be taken by or on behalf of the Glick Estate.
2. To our knowledge, the Glick Estate, as Partner in the
Partnership, owns its Interests in the Partnership free and clear of all liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature.
3. The Purchase Documents have been duly executed and
delivered by the Glick Estate and constitute its valid and legally binding
obligations, enforceable against the Glick Estate in accordance with its terms,
subject to the following:
i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance and other laws affecting the
rights of creditors generally; and
ii) the exercise of judicial discretion in
accordance with general principles of
equity.
4. Based upon our knowledge, the execution and delivery of the
Purchase Documents and performance of the obligations under the Purchase
Documents, and the fulfillment of and compliance with the terms and conditions
of the Purchase Documents do not and will not, with the passing of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, any judgment, decree or order of any court
or governmental authority or agency to which the Glick Estate is a party or by
which the Glick Estate, or any its properties, is bound or any statute, law,
regulation or rule applicable to the Glick Estate.
5. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to the Glick Estate is
required in connection with the execution, delivery or performance of the
Agreement by the Glick Estate or the consummation of the Transactions by the
Glick Estate.
6. No consent, approval or authorization of any kind from any
beneficiary of the Glick Estate, whether known or unknown, is required in
connection with the execution, delivery or performance of the Agreement or
consummation of the Transactions by the Glick Estate.
7. To our knowledge, the Glick Estate, as holder of the Shares
and Interests, holds such shares and Interests free and clear of all liens,
pledges, security interest, charges, claims, restrictions and encumbrances of
any nature.
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of Maryland and the laws of the United States of
America. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof.
The opinions expressed in this letter are solely for your use
and these opinions may not be relied on by any other persons without prior
written approval. The opinions expressed in this letter are limited to the
matters set forth in this letter, and no other opinions should be inferred
beyond the matters expressly stated.
Very truly yours,
Freishtat & Sandler
By:__________________________
----------------
EXHIBIT 7.1.5
OPINION OF COUNSEL TO THE MARITAL AND BYPASS TRUSTS
November __, 1997
Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, Maryland 21157
Re: Asset Purchase Agreement among Rose Shanis & Co.,
Inc., Rose Shanis Sons, Inc., Rose Shanis & Co. and
Stephen Corp., and their respective Owners, and
Mason-Dixon Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel to Susan M. Glick and Gail Glick, as
Trustees of (i) the Marital Trust under the Last Will and Testament of Stephen
J. Glick (the "Marital Trust"), and (ii) the Bypass Trust under the Last Will
and Testament of Stephen J. Glick (the "Bypass Trust"), with respect to an asset
purchase (the "Purchase") described in the Asset Purchase Agreement dated
November ___, 1997, and all Exhibits and Schedules attached thereto (the
"Agreement"), by and among Rose Shanis & Co., Inc. ("RSC Inc."), a Maryland
corporation; Rose Shanis Sons, Inc. ("RSS Inc."), a Maryland corporation;
Stephen Corporation ("SC"), a Maryland corporation; and Rose Shanis & Co. (the
"Partnership"), a Maryland general partnership, and their respective Owners, and
by Mason-Dixon Bancshares, Inc. ("Mason-Dixon"), a Maryland corporation, whereby
Mason-Dixon will acquire substantially all of the Assets of RSC Inc., RSS Inc.,
SC, and the Partnership. The Marital Trust and Bypass Trust (collectively, the
"Trusts") own, inter alia,* shares of stock in RSC Inc., RSS Inc., and SC (the
"Shares"), and interests (the "Interests") in the Partnership. All capitalized
terms used in this letter that are not otherwise defined herein shall have the
meanings set forth in the Agreement.
In rendering the opinions expressed below, we have examined
the following documents:
1. The Agreement, as well as all other documents executed or
required to be executed in connection therewith (collectively, the "Purchase
Documents");
* (If, in fact, the Trusts own shares at the Closing Date).
2. The Last Will and Testament, as well as any modifications,
amendments, and other documents pertaining thereto (collectively, the "Trust
Instrument"); and
3. Such other documents and records as we have deemed
necessary as a basis for the opinions expressed below.
In basing the opinions and other matters set forth herein on "our knowledge,"
the words "our knowledge" signify that, in the course of our representation of
the Trusts in matters with respect to which we have been engaged as counsel, no
information has come to our attention that would give us actual knowledge or
actual notice that any such opinions or other matters are not accurate or that
any of the foregoing documents, certificates, reports, and information on which
we have relied are not accurate and complete. Except as otherwise stated herein,
we have undertaken no independent investigation or verification of such matters.
The words "our knowledge" and similar language used herein are intended to be
limited to the knowledge of the lawyers within our firm who have recently worked
with the Trusts.
In reaching the opinions set forth below, we have assumed, and
to our knowledge there are no facts inconsistent with, the following:
(a) Each of the parties to the Purchase Documents
(other than the Trusts) has duly and validly executed and delivered each
instrument, document, and agreement executed in connection with the Purchase to
which such party is a signatory, and such party's obligations set forth therein
are its legal, valid, and binding obligations, enforceable in accordance with
their respective terms;
(b) each person executing any such instrument,
document, or agreement on behalf of any such party (other than the Trusts) is
duly authorized to do so;
(c) each natural person executing any such
instrument, document, or agreement is legally competent to do so;
(d) there are no oral or written modifications of or
amendments to the Purchase Documents, and there has been no waiver of any of the
provisions of the Purchase Documents, by actions or conduct of the parties or
otherwise; and
(e) all documents submitted to us as originals are
authentic, all documents submitted to us as certified or photostatic copies
conform to the original documents, all signatures on all documents submitted to
us for examination are genuine, and all public records reviewed are accurate and
complete.
Based on our review of the foregoing and subject to the
assumptions and qualifications set forth herein, it is our opinion that, as of
the date of this letter:
1. Susan M. Glick and Gail Glick, as Trustees of the Trusts,
collectively hold the requisite power and authority granted by the Trust
Instrument to act, by their unanimous consent, on behalf of the respective
Trusts to execute and deliver the Agreement, to consummate the sale of the
business and all other Transactions, and to take all other actions required to
be taken by or on behalf of the Trusts.
2. To our knowledge, the Trusts, as Partners in the
Partnership, own their respective Interests free and clear of all liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature.
3. To our knowledge, the Trusts, as holders of the Shares, own
their respective Shares free and clear of all liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any nature.
4. The Purchase Documents have been duly executed and
delivered by the Trustees on behalf of the Trusts and constitute valid and
legally binding obligations, enforceable against the Trusts in accordance with
their terms, subject to the following:
i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance and other laws affecting the
rights of creditors generally; and
ii) the exercise of judicial discretion in
accordance with general principles of
equity.
5. Based upon our knowledge, the execution and delivery of the
Purchase Documents and performance of the obligations under the Purchase
Documents, and the fulfillment of and compliance with the terms and conditions
of the Purchase Documents do not and will not, with the passing of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, any judgment, decree or order of any court
or governmental authority or agency to which the either of the Trusts is a party
or by which either of the Trusts, or any of their respective properties, is
bound or any statute, law, regulation or rule applicable to such Trust.
6. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to the Marital Trust or
Bypass Trust is required in connection with the execution, delivery or
performance of the Agreement by either Trust or the consummation of the
Transactions by either Trust.
7. No consent, approval or authorization of any kind from any
beneficiary of either of the Trusts, whether known or unknown, is required in
connection with the execution, delivery or performance of the Agreement or
consummation of the Transactions by either Trust.
8. To our knowledge, the Trusts, as the holders of the Shares
and Interests, each hold such Shares and Interests free and clear of all liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature.
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of Maryland and the laws of the United States of
America. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof.
The opinions expressed in this letter are solely for your use
and these opinions may not be relied on by any other persons without prior
written approval. The opinions
expressed in this letter are limited to the matters set forth in this letter,
and no other opinions should be inferred beyond the matters expressly stated.
Very truly yours,
---------------
By:__________________________
----------------
EXHIBIT 7.1.6
OPINION OF COUNSEL TO THE ________________ TRUST
November __, 1997
Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, Maryland 21157
Re: Asset Purchase Agreement among Rose Shanis & Co.,
Inc., Rose Shanis Sons, Inc., Rose Shanis & Co. and
Stephen Corp., and their respective Owners, and
Mason-Dixon Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel to ___________________, as Trustee(s)
of _______________ (the "Trust"), with respect to an asset purchase (the
"Purchase") described in the Asset Purchase Agreement dated November ___, 1997,
and all Exhibits and Schedules attached thereto (the "Agreement"), by and among
Rose Shanis & Co., Inc. ("RSC Inc."), a Maryland corporation; Rose Shanis Sons,
Inc. ("RSS Inc."), a Maryland corporation; Stephen Corporation ("SC"), a
Maryland corporation; and Rose Shanis & Co. (the "Partnership"), a Maryland
general partnership, and their respective Owners, and by Mason-Dixon Bancshares,
Inc. ("Mason-Dixon"), a Maryland corporation, whereby Mason-Dixon will acquire
substantially all of the Assets of RSC Inc., RSS Inc., SC, and the Partnership.
The Trust owns, inter alia, shares of stock in [RSC Inc., RSS Inc., and/or SC
(the "Shares"), and/or interests (the "Interests") in the Partnership]. All
capitalized terms used in this letter that are not otherwise defined herein
shall have the meanings set forth in the Agreement.
In rendering the opinions expressed below, we have examined
the following documents:
1. The Agreement, as well as all other documents executed or
required to be executed in connection therewith (collectively, the "Purchase
Documents");
2. The [ Trust Instrument ], as well as any modifications,
amendments, and other documents pertaining thereto (collectively, the "Trust
Instrument"); and
3. Such other documents and records as we have deemed
necessary as a basis for the opinions expressed below.
In basing the opinions and other matters set forth herein on "our knowledge,"
the words "our knowledge" signify that, in the course of our representation of
the Trust in matters with respect to which we have been engaged as counsel, no
information has come to our attention that would give us actual knowledge or
actual notice that any such opinions or other matters
are not accurate or that any of the foregoing documents, certificates, reports,
and information on which we have relied are not accurate and complete. Except as
otherwise stated herein, we have undertaken no independent investigation or
verification of such matters. The words "our knowledge" and similar language
used herein are intended to be limited to the knowledge of the lawyers within
our firm who have recently worked with the Trust.
In reaching the opinions set forth below, we have assumed, and
to our knowledge there are no facts inconsistent with, the following:
(a) Each of the parties to the Purchase Documents
(other than the Trust) has duly and validly executed and delivered each
instrument, document, and agreement executed in connection with the Purchase to
which such party is a signatory, and such party's obligations set forth therein
are its legal, valid, and binding obligations, enforceable in accordance with
their respective terms;
(b) each person executing any such instrument,
document, or agreement on behalf of any such party (other than the Trust) is
duly authorized to do so;
(c) each natural person executing any such
instrument, document, or agreement is legally competent to do so;
(d) there are no oral or written modifications of or
amendments to the Purchase Documents, and there has been no waiver of any of the
provisions of the Purchase Documents, by actions or conduct of the parties or
otherwise;
(e) all documents submitted to us as originals are
authentic, all documents submitted to us as certified or photostatic copies
conform to the original documents, all signatures on all documents submitted to
us for examination are genuine, and all public records reviewed are accurate and
complete.
Based on our review of the foregoing and subject to the
assumptions and qualifications set forth herein, it is our opinion that, as of
the date of this letter:
1. _________________, as Trustee(s) of the Trust, has(ve) the
requisite power and authority granted by the Trust Instrument to act on behalf
of the Trust to execute and deliver the Agreement, to consummate the sale of the
business and all other Transactions, and to take all other actions required to
be taken by or on behalf of the Trust.
2. To our knowledge, the Trust, as a Partner in the
Partnership, owns the Interests free and clear of all liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any nature.
3. To our knowledge, the Trust, as a holder of the Shares,
owns the Shares free and clear of all liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature.
4. The Purchase Documents have been duly executed and
delivered by the Trust and constitute its valid and legally binding obligations,
enforceable against the Trust in accordance with their terms, subject to the
following:
i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance and other laws affecting the
rights of creditors generally; and
ii) the exercise of judicial discretion in
accordance with general principles of
equity.
5. Based upon our knowledge, the execution and delivery of the
Purchase Documents and performance of the obligations under the Purchase
Documents, and the fulfillment of and compliance with the terms and conditions
of the Purchase Documents do not and will not, with the passing of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, any judgment, decree or order of any court
or governmental authority or agency to which the Trust is a party or by which
the Trust, or any of its properties, is bound or any statute, law, regulation or
rule applicable to such Trust.
6. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to the Trust is required
in connection with the execution, delivery or performance of the Agreement by
the Trust or the consummation of the Transactions by the Trust.
7. No consent, approval or authorization of any kind from any
beneficiary of the Trust, whether known or unknown, is required in connection
with the execution, delivery or performance of the Agreement or consummation of
the Transactions by the Trust.
8. To our knowledge, the Trust, as the holder of the Shares
and Interests, holds such Shares and Interests free and clear of all liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature.
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of Maryland and the laws of the United States of
America. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof.
The opinions expressed in this letter are solely for your use
and these opinions may not be relied on by any other persons without prior
written approval. The opinions expressed in this letter are limited to the
matters set forth in this letter, and no other opinions should be inferred
beyond the matters expressly stated.
Very truly yours,
---------------
By:__________________________
----------------
EXHIBIT 7.1.10
ARTICLES OF TRANSFER
FROM
-------------------------------
TO
___________________________, LLC
THESE ARTICLES OF TRANSFER, made and entered into this day of
November, 1997, by and between ___________________________, a Maryland
corporation (the "Transferor"), and __________________________, LLC, a Maryland
limited liability company (the "Transferee").
FIRST: The Transferor agrees to transfer substantially all of
its property and assets to the Transferee.
SECOND: The name, address and principal place of business of
the Transferee is _________, LLC, 233 East Redwood Street, Baltimore, Maryland
21202.
THIRD: (a) ________________________________, the Transferor,
was incorporated under the General Laws of the State of Maryland.
(b) ______________________ LLC, the Transferee, was
organized as a limited liability company under the General Laws of the State of
Maryland.
FOURTH:(a) The principal office in the State of Maryland of
the Transferor is located in County.
(b) The Transferor owns an interest in land in ________
County, Maryland. The interest in land is not being transferred to the
Transferee.
FIFTH: The amount of the consideration paid by the Transferee
for the transfer of the property and assets of the Transferor hereunder is
[allocation] Dollars ($----------).
SIXTH: (a) The terms and conditions of the transaction set
forth in these Articles of Transfer have been advised, authorized, and approved
by the Transferor in the manner and by the vote required by its Charter and the
laws of the State of Maryland by the execution of a Unanimous Consent of the
Board of Directors and Stockholders in Lieu of Special Meeting dated November
___, 1997.
(b) The terms and conditions of the transaction set
forth in these Articles of Transfer have been advised, authorized and approved
by the Transferee in the manner
and by the vote required by its Operating Plan and the laws of the State of
Maryland by the execution of a Consent by the Member dated _______________,
1997.
SEVENTH: The effective time of the transfer is the later of
_____, 1997, or the time the State Department of Assessments and Taxation
accepts the Articles of Transfer for record.
IN WITNESS WHEREOF, the Transferor, and the sole Member of the
Transferee, has caused these Articles to be signed and acknowledged in its name
and on its behalf by its President and its corporate seal to be affixed and
attested by its Secretary on the day and year first above written, and each such
signatory hereby acknowledges the same to be the act and deed of such
Corporation and that to the best of his knowledge, information and belief, all
matters and facts stated herein are true in all material respects, such
statements being made under the penalty of perjury.
TRANSFEROR: _________________________________
ATTEST: ____________________________
__________________________________ By:__________________________(SEAL)
, Secretary , President
TRANSFEREE: _________________________, LLC
ATTEST: Mason-Dixon Bancshares, Inc.
__________________________________ By:_________________________(SEAL)
, Secretary Thomas K. Ferguson, President
Mason-Dixon Bancshares, Sole Member
of ___________, LLC
EXHIBIT 7.1.11
INDEMNITY AND ESCROW AGREEMENT
THIS Indemnity and Escrow Agreement (this "Indemnity and
Escrow Agreement") is entered into as of the _________ day of ______________,
1997, by and among Rose Shanis & Co., Inc., Rose Shanis Sons, Inc., Rose Shanis
& Co. and Stephen Corp. (collectively "Rose Shanis"), Norman J. Glick, Susan M.
Glick, individually and as Personal Representative of the Estate of Stephen J.
Glick, Susan M. Glick and Gail Glick, Trustees of the Marital Trust under the
Last Will and Testament of Stephen J. Glick, Susan M. Glick and Gail Glick,
Trustees of the Bypass Trust under the Last Will and Testament of Stephen J.
Glick, Mitzi S. Glick and Eugene Schreiber, Trustees u/a Norman J. Glick dated
May 14, 1997, FBO Robert S. Glick, and Mitzi S. Glick and Eugene Schreiber,
Trustees u/a Norman J. Glick dated May 14, 1997, FBO Bonnie G. Dubin, the Ely
Shanis Trust, and the Bernice Shanis Trust (Norman J. Glick and Susan M. Glick,
individually and as Personal Representative of the Estate of Stephen J. Glick,
Mitzi S. Glick and Eugene Schreiber, Trustees u/a Norman J. Glick dated May 14,
1997, FBO Robert S. Glick, Mitzi S. Glick and Eugene Schreiber, Trustees u/a
Norman J. Glick dated May 14, 1997, FBO Bonnie G. Dubin, the Ely Shanis Trust,
the Bernice Shanis Trust, Susan M. Glick and Gail Glick, Trustees of the Marital
Trust under the Last Will and Testament of Stephen J. Glick, and Susan M. Glick
and Gail Glick, Trustees of the Bypass Trust under the Last Will and Testament
of Stephen J. Glick, are sometimes collectively called the "Owners"),
Mason-Dixon Bancshares, Inc. ("Mason-Dixon"), ____________ and ______________
(the "Subsidiaries") and ________________ ("Escrow Agent"). Capitalized terms
used and not otherwise defined herein shall have the meanings as defined in the
Asset Purchase Agreement as of ________________ , 1997 (the "Asset Purchase
Agreement").
RECITALS
Execution and delivery of this Indemnity and Escrow Agreement
by Rose Shanis and the Owners is a condition to the obligations of Mason-Dixon
and the Subsidiaries to close under the Asset Purchase Agreement. The Asset
Purchase Agreement provides that a portion of the Purchase Price shall be held
in escrow in accordance with the terms and conditions of this Indemnity and
Escrow Agreement. Rose Shanis and the Owners have approved the transactions
contemplated by the Asset Purchase Agreement ("Transactions") and desire to
enter into this Indemnity and Escrow Agreement to induce Mason-Dixon and the
Subsidiaries to consummate the Transactions. This Indemnity and Escrow Agreement
shall be the exclusive mechanism for exercising Mason-Dixon's right to
indemnification under the Asset Purchase Agreement. The Owners plan to liquidate
Rose Shanis shortly after the date of this Indemnity and Escrow Agreement. The
individuals named above as trustees under the Trusts identified above and the
Personal Representative sign this Indemnity and Escrow Agreement solely in their
fiduciary capacities and shall have no personal liability hereunder unless such
individuals also sign this Indemnity and Escrow Agreement individually. The
personal liability of Susan M. Glick is limited to the greater of the Escrowed
Amount (as defined in Section 4.2) or the amount of the Purchase Price she
receives as beneficiary of the Marital and Bypass Trusts under the Last Will and
Testament of Stephen J. Glick.
NOW, THEREFORE, in consideration of and in reliance upon the
promises and covenants in this Indemnity and Escrow Agreement, the parties agree
as follows:
1. Indemnification by Rose Shanis and the Owners.
1.1. Rose Shanis and the Owners, jointly and
severally, subject to the limitations of Section 1.3, shall be liable for,
indemnify Mason-Dixon and the Subsidiaries, their successors and assigns and
their affiliates and each director, officer, employee and agent of each of the
foregoing (each being sometimes called an "Indemnified Party" and collectively
the "Indemnified Parties") with respect to, hold the Indemnified Parties
harmless from, and reimburse the Indemnified Parties for, any claims, actions,
demands, proceedings, losses, liabilities, damages (including incidental and
consequential damages), expenses (including reasonable attorneys' fees), or
diminution of value, whether or not involving a third-party claim,
(collectively, the "Mason-Dixon Losses," and singly, a "Mason-Dixon Loss"),
which arise out of or are in respect of, directly or indirectly:
1.1.1. any breach of any representation or
warranty of Rose Shanis contained in the Asset Purchase Agreement;
1.1.2. the breach of any covenant, agreement
or obligation of the Owners or Rose Shanis contained in the Asset Purchase
Agreement; or
1.1.3. any claim by any third party arising
from any act or omission by Rose Shanis or its officers, employees, agents or
affiliates relating to or arising out of the Business, including, but not
limited to, claims relating to or arising out of the origination, purchase,
servicing, collection or sale of Loans by Rose Shanis prior to and including the
Closing Date, whether such a transaction was completed before, on or after the
Closing Date (except with respect to any liability or obligation arising out of
any action by Mason-Dixon or the Subsidiaries after the Closing Date).
The right to indemnification shall not be affected by an investigation conducted
with respect to or any knowledge acquired by Mason-Dixon at any time, whether
before or after the execution and delivery of this Indemnity and Escrow
Agreement, with respect to the accuracy or inaccuracy of or compliance with, any
representation, warranty, covenant or obligation of Rose Shanis.
1.2. Notice of Claim. Promptly after notice by
Mason-Dixon of any facts or events that may result in a Mason-Dixon Loss,
Mason-Dixon shall give written notice ("Notice of Claim") to the Owners and the
Escrow Agent. The Notice of Claim shall set forth the amount of the claim, or
Mason-Dixon's then best estimate of the amount of the claim. Mason-Dixon shall
furnish to the Owners, in reasonable detail, such information as Mason-Dixon may
have with respect to such claim (including copies of any summons, complaint or
other pleading which may have been served and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). No failure
or delay by Mason-Dixon in the performance of the foregoing shall reduce or
otherwise affect the obligation of Rose Shanis and the Owners to indemnify and
hold Mason-Dixon harmless, except to the extent that such failure or delay has
adversely affected Rose Shanis or the Owners' ability to defend against, settle
or satisfy the claim.
1.3. Limitations. The obligation of Rose Shanis and
the Owners to indemnify the Indemnified Parties is subject to the following
limitations:
1.3.1. The Indemnified Parties shall look
first to the Escrowed Amount (as defined in Section 4.2) for the discharge of
Rose Shanis and the Owners' obligations
hereunder. Such action by the Indemnified Parties, however, shall not release or
satisfy any of Rose Shanis' or the Owners' obligations hereunder to the
Indemnified Parties, except to the extent satisfied out of the Escrowed Amount.
1.3.2. From the date hereof until the first
anniversary of this Indemnity and Escrow Agreement (__________, 1999) ("First
Anniversary"), the obligation of Rose Shanis and the Owners to indemnify the
Indemnified Parties with respect to any Mason-Dixon Loss incurred as a result of
or in connection with any claim by any state or federal regulatory authority
arising out of or relating to 16 C.F.R. ss. 444.4 (1997), as it may be amended,
is limited to Notices of Claim made during this period in an aggregate amount of
the Purchase Price.
1.3.3. From the date hereof until the First
Anniversary, the obligation of Rose Shanis and the Owners to indemnify the
Indemnified Parties with respect to Mason-Dixon Losses not included in Section
1.3.2 is limited to Notices of Claim made during this period in an aggregate
amount of $7,500,000.
1.3.4. From the First Anniversary until the
second anniversary of this Indemnity and Escrow Agreement (__________, 2000)
("Second Anniversary"), the obligation of Rose Shanis and the Owners to
indemnify the Indemnified Parties with respect to Mason-Dixon Losses is limited
to Notices of Claim made during this period in an aggregate amount of
$4,000,000.
1.3.5. From the Second Anniversary until the
third anniversary of this Indemnity and Escrow Agreement (__________, 2001)
("Termination Date"), the obligation of Rose Shanis and the Owners to indemnify
the Indemnified Parties with respect to Mason-Dixon Losses is limited to Notices
of Claim made during this period in an aggregate amount of $2,000,000.
1.3.6. Notwithstanding any other provision
of this Indemnity and Escrow Agreement, the aggregate amount Rose Shanis and the
Owners are obligated to pay under this Indemnity and Escrow Agreement shall not
exceed $7,500,000 plus the amount paid under Section 1.3.2, but in no event
shall Rose Shanis and the Owners pay more than the Purchase Price.
2. Mason-Dixon's Obligation to Mitigate. Except for claims
asserted by third parties, Mason-Dixon shall exercise commercially reasonable
efforts to mitigate the amount of any Mason-Dixon Loss.
3. Rose Shanis and the Owners' Defense.
This Section applies only to claims asserted by third
parties. If the claim asserted by a Notice of Claim arises because of a claim or
demand that is asserted by a third party, including, but not limited to, any
governmental unit or a Rose Shanis borrower, Rose Shanis and the Owners shall
have 15 days after the date of the Notice of Claim to notify Mason-Dixon in
writing of their election to defend the claim on behalf of the Indemnified
Party. If Rose Shanis and the Owners elect to defend the claim, the Indemnified
Party shall make available to Rose Shanis and the Owners all records and other
materials which are reasonably required in the defense of the claim and shall
otherwise cooperate with and assist Rose Shanis and the Owners in the defense of
the claim. So long as Rose Shanis and the Owners are defending the claim in
good faith, the Indemnified Party shall not pay, settle or compromise the claim.
If Rose Shanis and the Owners elect to defend the claim, the Indemnified Party
shall have the right to participate in the defense of the claim, at its own
expense. If Rose Shanis and the Owners do not elect to defend the claim, or do
not defend the claim in good faith, then the Indemnified Party shall have the
right, in addition to any other right or remedy it may have hereunder, at Rose
Shanis and the Owners' expense, to defend the claim or to pay or settle the
claim. Notwithstanding any of the foregoing, (a) the Indemnified Party shall not
have any obligation to participate in the defense of, or defend, the claim; and
(b) the Indemnified Party's defense of or its participation in the defense of
the claim shall not in any way diminish the obligations of Rose Shanis and the
Owners. Rose Shanis and the Owners shall not make any settlement of the claim
without written consent of Mason-Dixon.
4. Creation of Escrow.
4.1. Appointment. Mason-Dixon, the Subsidiaries, Rose
Shanis and the Owners jointly appoint the Escrow Agent as the escrow agent for
purposes of and to act in accordance with the terms and conditions hereof, and
the Escrow Agent accepts such appointment.
4.2. Escrow Property. At Closing, Mason-Dixon shall
pay to the Escrow Agent a portion of the Purchase Price equal to $7,500,000
(such amount, less the amount of any payments by the Escrow Agent to Mason-Dixon
in accordance with the terms hereof, is referred to as the "Escrowed Amount").
Notwithstanding such payment to the Escrow Agent, Mason-Dixon shall be deemed to
have fully satisfied its obligation to pay such part of the Purchase Price
payable pursuant to the Asset Purchase Agreement. Rose Shanis (or the Owners)
will report all income earned on, or derived from, the Escrowed Amount as their
income. The Escrowed Amount shall be received and maintained by the Escrow Agent
in an account (the "Escrow Account") until paid out in accordance with the terms
of this Indemnity and Escrow Agreement.
4.3. Investments. The Escrow Agent shall invest the
amounts in the Escrow Account in the direct obligations of, or in the
obligations of any agency or authority of, the United States, any state of the
United States and any political subdivision thereof, in any fund that invests
only in such obligations, or in such other investments as are directed by a
writing signed by Rose Shanis, the Owners and Mason-Dixon. The Escrow Agent
shall not be required to invest any sums to the extent it reasonably determines
that it will be required to distribute, use or otherwise expend such funds
within 30 days. The Escrow Agent shall not be liable or otherwise responsible
for any losses resulting from any investments provided for pursuant to this
Indemnity and Escrow Agreement. All earnings in the Escrow Account shall be paid
out to the Owners not less frequently than quarterly, within 30 days after the
end of each calendar quarter.
4.4. Payment of Claims. The Indemnified Parties shall
be entitled to payment from the Escrow Account if Rose Shanis or the Owners are
obligated to indemnify the Indemnified Party as provided in Section 1.
4.5. Demand for Payment. From time to time,
Mason-Dixon may give written notice ("Demand for Payment") to the Owners and the
Escrow Agent specifying in reasonable detail the nature and dollar amount of any
claim an Indemnified Party may have under Section 1 for which a Notice of Claim
has been made and requesting payment of the claim from the Escrow Account.
4.6. Disputed Claims, Arbitration. If the Owners do
not object in writing to the Demand for Payment to the Escrow Agent and
Mason-Dixon within 30 days after the date the Demand for Payment is given, the
Escrow Agent shall pay the amount reported in the Demand for Payment to
Mason-Dixon to the extent the Escrow Account contains sufficient funds for that
purpose. If the Owners object to such payment, they shall give written notice to
the Escrow Agent and Mason-Dixon of their objection to the payment of the claim
(the "Objection Notice") within 30 days after the Demand for Payment was given.
If the Objection Notice is timely given, the Escrow Agent shall make no payment
to Mason-Dixon in respect of the claim reported in the Demand for Payment unless
Mason-Dixon and the Owners jointly in writing instruct the Escrow Agent to make
such payment. Mason-Dixon and the Owners shall make a good faith attempt to
resolve the dispute. In the absence of joint instructions from Mason-Dixon and
the Owners, upon written request by the Owners or Mason-Dixon made not earlier
than 30 days after the Objection Notice is given, the Escrow Agent promptly
shall refer the dispute concerning the Demand for Payment to the American
Arbitration Association for settlement by arbitration in accordance with the
Association's Commercial Arbitration Rules. Judgment upon any resulting
arbitration award may be entered in any court of competent jurisdiction. As part
of such award, the arbitrator may establish his fee and expenses in connection
therewith, which Mason-Dixon shall promptly pay. However, any award in an
Indemnified Party's favor shall be increased by a percentage of such fees and
expenses equal to the same percentage of an Indemnified Party's claim that is
awarded to an Indemnified Party in arbitration. Any award shall be a conclusive
determination of the matter and shall be final and binding upon all parties. The
Escrow Agent promptly shall pay the amount of any award in an Indemnified
Party's favor to Mason-Dixon, to the extent the Escrow Account contains
sufficient funds for that purpose. Arbitration proceedings shall be held in
Baltimore, Maryland, unless the Owners and Mason-Dixon agree upon another
location.
4.7. Periodic Determination of Escrowed Amount. On
the first anniversary hereof (the "First Determination Date"), the Escrow Agent
shall determine the amount of any Notices of Claim and Demands for Payment made
against the Escrow Account, the validity and amount of which have not been
determined or the validity and amount of which have been determined, but which
have not been paid. This amount is called the "Reserve." The Escrow Agent shall
pay to the Owners an amount from the Escrow Account equal to the Escrowed Amount
minus the Reserve and minus $4,000,000, to the extent the Escrow Account
contains sufficient funds for that purpose.
Each time an arbitration award is made regarding a
claim after the First Determination Date and before the Second Determination
Date (as defined below), the Escrow Agent shall pay to the Owners an amount from
the Escrow Account equal to the Escrowed Amount minus the then Reserve and minus
$4,000,000, to the extent the Escrow Account contains sufficient funds for that
purpose.
On the second anniversary hereof (the "Second
Determination Date"), the Escrow Agent shall determine the then amount of the
Reserve and shall pay to the Owners an amount from the Escrow Account equal to
the Escrowed Amount minus the Reserve and minus $2,000,000, to the extent the
Escrow Account contains sufficient funds for that purpose.
Each time an arbitration award is made regarding a
claim after the Second Determination Date and before the Termination Date (as
defined below), the Escrow Agent shall pay to the Owners an amount from the
Escrow Account equal to the Escrowed Amount minus
the then Reserve and minus $2,000,000, to the extent the Escrow Account contains
sufficient funds for that purpose.
On the Termination Date, the Escrow Agent shall
determine the then amount of the Reserve and shall pay to the Owners an amount
from the Escrow Account equal to the Escrowed Amount minus the Reserve, to the
extent the Escrow Account contains sufficient funds for that purpose. The Escrow
Agent shall hold all amounts withheld until the claims described above are
resolved. Upon resolution of any claims in favor of an Indemnified Party, the
amount thereof shall be paid to the Indemnified Party. Upon resolution of all
claims, the remaining amount shall be distributed to the Owner.
No transfer to the Owners under this Section shall
affect (i) any rights of any Indemnified Party with respect to pending claims
for which an amount is held under this paragraph, or (ii) the continuing
obligation of indemnity of Rose Shanis and Owners under Section 1 for the period
set forth therein.
4.8. Escrow Agent's Responsibility; Resignation;
Removal.
4.8.1. The Escrow Agent shall retain the
Escrowed Amount in accordance with the terms and conditions of this Indemnity
and Escrow Agreement, and shall be under no responsibility or obligation other
than to follow the provisions hereof.
4.8.2. The Escrow Agent may resign at any
time upon 30 days written notice to Mason-Dixon and the Owners; within 20 days
after receipt of such notice, Mason-Dixon shall select an independent bank or
trust company to serve as the successor Escrow Agent, subject to the reasonable
consent of the Owners (which consent shall not be unreasonably withheld or
delayed). In the event a successor is not selected and agreed upon within the
time described above, the Escrow Agent may deposit the Escrowed Amount into a
court of competent jurisdiction and request that the court appoint or cause the
parties to appoint a successor Escrow Agent. Upon such deposit, the Escrow Agent
shall be relieved of all future responsibilities under this Indemnity and Escrow
Agreement.
4.8.3. The Escrow Agent may be removed at
any time upon written notice from both Mason-Dixon and the Owners.
4.9. No Liability of Escrow Agent. The Escrow Agent
shall not be liable for any act or omission in good faith and in the absence of
fraud or willful misconduct. The Escrow Agent shall in all cases be entitled to
rely upon and be fully protected in acting or in refraining from acting under
this Indemnity and Escrow Agreement in accordance with any and all written
notifications received by it in accordance with this Indemnity and Escrow
Agreement.
4.10. Indemnification of Escrow Agent. Mason-Dixon
and the Owners hereby agree to indemnify and hold the Escrow Agent harmless from
and against any and all actions, suits, proceedings, losses, liabilities,
damages, costs and expenses (including attorneys' and experts' fees, costs of
investigation, court costs, and sums expended in settlement of claims or
litigation, pending or threatened) arising out of or in connection with this
Indemnity and Escrow Agreement, the failure of any party to perform its
obligations hereunder, or arising out of or in connection with any action or
failure to act in good faith by the Escrow Agent from and
after the date of this Indemnity and Escrow Agreement, save only any action or
failure to act by the Escrow Agent that constitutes fraud or willful misconduct.
4.11. Compensation. The Escrow Agent shall be
entitled to reasonable compensation for all services rendered by it under this
Indemnity and Escrow Agreement as provided for in Schedule A attached hereto.
Such compensation shall be borne 50% by Rose Shanis and the Owners and 50% by
Mason-Dixon and the Subsidiaries.
4.12. Successor Escrow Agent. If the Escrow Agent
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association, without any further act, shall be the successor Escrow
Agent with the same effect as if it had been named as the Escrow Agent herein,
unless Mason-Dixon and the Owners provide otherwise.
5. Miscellaneous.
5.1. Representations, Warranties and Covenants of
Rose Shanis and the Owners. Rose Shanis and the Owners hereby represent, warrant
and covenant to Mason-Dixon, the Subsidiaries and the Escrow Agent that they
have the full right, power and authority to enter into this Indemnity and Escrow
Agreement; this Indemnity and Escrow Agreement constitutes their valid, legal
and binding obligations, enforceable against them in accordance with its terms;
and no set-off, counterclaim or other defense to enforcement of this Indemnity
and Escrow Agreement exists or may be asserted by them in connection herewith.
5.2. Governing Law. This Indemnity and Escrow
Agreement shall be governed by and construed and enforced in accordance with the
internal, substantive laws of the State of Maryland without giving effect to the
conflict of law rules thereof.
5.3. Notices. All notices, writings and other
communications required or permitted to be given pursuant to this Indemnity and
Escrow Agreement shall be in writing and shall be given by hand-delivery or
transmitted by United States certified mail, return receipt requested, postage
prepaid, or via overnight carrier, to the addresses set forth below:
If to Rose Shanis
or the Owners: Norman J. Glick
With a copy to: Adelberg, Rudow, Dorf, Hendler & Sameth, LLC
600 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
Attn: David B. Rudow, Esquire
If to Mason- Mason-Dixon Bancshares, Inc.
Dixon or the 45 West Main Street
Subsidiaries Westminster, Maryland 21157
Attn: Thomas K. Ferguson, President and CEO
With a copy to: Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
Attn: Carla Stone Witzel, Esquire
If to Escrow Agent:
With a copy to:
Each notice shall be deemed to have been received: (i) for hand deliveries, on
the date of transmittal; (ii) for mailing, on the day following such mailing;
and (iii) for overnight deliveries, on the day following such transmittal. The
parties shall have the right to change their respective addresses set forth in
this Section by giving notice of such change in accordance with this Section.
5.4. Entire Agreement. The Recitals are a substantive
part of this Indemnity and Escrow Agreement. This Indemnity and Escrow Agreement
together with all other agreements and documents executed by the parties in
connection with the Transactions represents the entire agreement between the
parties and supersedes and cancels any prior oral or written agreement, letter
of intent or understanding related to the subject matter hereof.
5.5. Counterparts. This Indemnity and Escrow
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one and
the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties.
IN WITNESS WHEREOF, this Indemnity and Escrow Agreement has
been duly executed by the parties hereto as of the day and year first above
written.
ROSE SHANIS & CO., INC.
By:______________________________________(SEAL)
ROSE SHANIS SONS, INC.
By:______________________________________(SEAL)
ROSE SHANIS & CO.
By:______________________________________(SEAL)
Trustee, Ely Shanis Trust,
General Partner
By:______________________________________(SEAL)
Trustee, Bernice Shanis Trust,
General Partner
By:______________________________________(SEAL)
Norman J. Glick, General Partner
By:______________________________________(SEAL)
Susan M. Glick, Personal Representative
of the Estate of Stephen J. Glick,
General Partner
STEPHEN CORP.
By:______________________________________(SEAL)
NORMAN J. GLICK
_________________________________________(SEAL)
SUSAN M. GLICK
_________________________________________(SEAL)
SUSAN M. GLICK, PERSONAL
REPRESENTATIVE OF THE
ESTATE OF STEPHEN J. GLICK
_________________________________________(SEAL)
_________________________________________(SEAL)
Mitzi S. Glick, Trustee u/a Norman J.Glick
dated May 14, 1997, FBO Robert S. Glick
_________________________________________(SEAL)
Eugene Schreiber, Trustee u/a Norman J.
Glick dated May 14, 1997, FBO Robert S. Glick
_________________________________________(SEAL)
Mitzi S. Glick, Trustee u/a Norman J. Glick
dated May 14, 1997, FBO Bonnie G. Dubin
_________________________________________(SEAL)
Eugene Schreiber, Trustee u/a Norman J. Glick
dated May 14, 1997, FBO Bonnie G. Dubin
_________________________________________(SEAL)
, Trustee, Ely Shanis Trust
_________________________________________(SEAL)
, Trustee, Bernice Shanis Trust
_________________________________________(SEAL)
Susan M. Glick and Gail Glick, Trustees of
Marital Trust under the Last Will and Testament
of Stephen J. Glick
_________________________________________(SEAL)
Susan M. Glick, Trustee
_________________________________________(SEAL)
Gail Glick, Trustee
_________________________________________(SEAL)
Susan M. Glick and Gail Glick, Trustees under
Bypass Trust under the Last Will and Testament
of Stephen J. Glick
_________________________________________(SEAL)
Susan M. Glick, Trustee
_________________________________________(SEAL)
Gail Glick, Trustee
MASON-DIXON BANCSHARES, INC.
By:______________________________________(SEAL)
Thomas K. Ferguson, President
-----------------------------
By:______________________________________(SEAL)
, President
-----------------------------
By:______________________________________(SEAL)
, President
----------------------------
By:_________________________(SEAL)
Escrow Agent
EXHIBIT 7.1.12
KAHN AGREEMENT
THIS AGREEMENT, made as of the _____ day of ________________,
1998, by and between Bay Finance, LLC, a Maryland limited liability company
("Bay Finance") and William R. Kahn ("Kahn").
R E C I T A L S:
A. Bay Finance is engaged in the consumer finance business
("the Business"); and
B. Bay Finance desires to engage Kahn to perform certain
consulting services; and
C. Kahn desires to work for Bay Finance; and
D. Bay Finance and Kahn desire to set forth in writing the
terms and conditions of their agreements and understandings.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises contained in this Agreement, and other good and valuable consideration,
the receipt and adequacy of which are acknowledged, the parties, intending to be
legally bound, agree that the following terms and conditions shall apply:
1. ENGAGEMENT - Bay Finance agrees to engage Kahn, and Kahn
agrees to perform consulting services for Bay Finance, upon the terms and
conditions set forth in this Agreement.
2. TERM - The term of this Agreement (the "Term") shall be for
a period of two (2) years commencing on the date first written above, and ending
exactly two (2) years after such date.
3. DUTIES OF KAHN -
3.1 Kahn agrees to serve as a consultant for Bay
Finance and to perform the duties on behalf of Bay Finance as shall from time to
time be mutually agreed between Bay Finance and Kahn.
3.2 Kahn covenants and agrees that at all times
during the term of this Agreement, Kahn shall not, directly or indirectly:
engage or participate in any activities at any time during the term of this
Agreement which interferes with the performance of Kahn's duties or otherwise
conflicts with the best interests of Bay Finance, render services to or for, or
be employed by, any person, firm or corporation or other organization for
compensation, nor engage in any activity or maintain an interest in any
enterprise that competes with the interests of Bay Finance, whether Kahn is
acting individually or as an officer, director, employee, shareholder, partner
or fiduciary.
4. PAYMENTS TO KAHN - Subject to the provisions of this
Agreement, Bay Finance shall pay Kahn as his full payment for services rendered
under this Agreement at the rate of Fifty-five Thousand Dollars ($55,000)per
year, payable in equal monthly installments. Kahn will be an independent
contractor with respect to all services provided to Bay Finance under this
Agreement; it being the understanding of the parties that Kahn and not Bay
Finance shall be solely responsible for any and all wages, benefits, workers'
compensation and other insurance, FICA/FUTA, income tax withholding, etc.
Kahn agrees to indemnify and hold Bay Finance harmless for his
failure to pay taxes or insurance, with respect to services provided under this
Agreement.
5. RESTRICTIVE COVENANTS -
5.1 Organizing or Engaging in Competitive Business -
During the period Kahn provides services to Bay Finance, and for a period of two
(2) years following the date Kahn is last entitled to payments from Bay Services
hereunder, Kahn agrees that he will not directly or indirectly, either as an
officer, stockholder, director, employee, representative, agent, partner, sole
proprietor or in any other manner or capacity, undertake planning for or
organize or engage in any business activity within the "Restricted Areas", as
hereinafter defined, which is competitive with Bay Finance's Business, or
combine or act in concert with employees or representatives of Bay Finance's
sources of referrals for the purpose of organizing or engaging in any such
competitive business activity. "Restricted Areas" shall, for purposes of this
Agreement, mean the entire State of Maryland, the District of Columbia, and
those counties in states in which either (a) Bay Finance conducts any business
during the term of this Agreement, or (b) Bay Finance's sources of referral
during the term of this Agreement are located. During the first year of this
Agreement, for purposes of Article 5, the term of this Agreement shall be deemed
to include periods of Kahn's employment with Rose Shanis & Co., Inc. or any
entity affiliated with it.
5.2 Anti-Solicitation: Customers and Referral Sources
- Other than on behalf of Bay Finance during the period Kahn is entitled to
payments from Bay Finance, and for a period of two (2) years following the date
on which Kahn is last entitled to receive such payments, Kahn shall not within
the Restricted Areas, either as an officer, stockholder, director, employee,
representative, partner, sole proprietor or in any other manner or capacity,
solicit or accept business for the purpose of making loans, directly or
indirectly, from any of Bay Finance's customers, nor shall Kahn solicit or
accept customers from any of Bay Finance's sources of referral. For the purposes
of this Agreement, "Bay Finance's customers" shall mean any person, corporation
or other entity to which Bay Finance is providing financing or other lending
services as of the date on which Kahn ceases to be entitled to payment from Bay
Finance, or to which Bay Finance (or Rose Shanis & Co., Inc. or any entity
affiliated with it) provided such services during the one (1) year period
preceding such date. For the purposes of this Agreement, "Bay Finance's sources
of referrals" shall mean any person or corporation or other entity which has
referred a customer or customers for the purpose of making a loan from Bay
Finance (or Rose Shanis & Co., Inc. or any entity affiliated with it) during the
three year period preceding the last date on which Kahn is entitled to receive
payment from Bay Finance hereunder.
5.3 Anti-Solicitation. - During the period that Kahn
provides services to Bay Finance, and for a period of ten (10) years following
the date on which he is last entitled to receive payment from Bay Services
hereunder, Kahn agrees that he will not, directly or indirectly, induce or
influence or seek to induce or influence any person who has been engaged by Bay
Finance as an executive, employee, manager, salesman, independent contractor or
otherwise, to terminate his or her relationship with Bay Finance or employ or
have an interest in (as owner, stockholder, partner, co-venturer, director,
officer or employee) any person or entity who employs any person employed by Bay
Finance or Rose Shanis & Co., Inc. or any entity affiliated with it at any time
during the one (1) year period preceding the date hereof.
5.4 Business and Trade Secrets - Kahn specifically
agrees that he will not at any time, whether during or subsequent to the period
of time he is entitled to payment from Bay Finance hereunder, in any fashion,
form, or manner, unless specifically consented to in writing by Bay Finance,
either directly or indirectly, use or divulge, disclose or communicate to any
person, firm, or corporation, in any manner whatsoever, any confidential
information of any kind, nature, or description concerning any matters affecting
or relating to the business of Bay Finance, including, without limiting the
generality of the foregoing, the names, contact persons, habits, or practices of
any of its customers; the business, financial, and marketing strategies,
forecasts, methods, procedures, techniques, practices, and standards of Bay
Finance; or confidential business or financial information, including Bay
Finance's financial and planning data, compilations of business and financial
data, records, reports, studies, manuals, memoranda, notebooks, files,
documents, correspondence, and other confidential business or financial
information of, about, or concerning the business of Bay Finance, its manner of
operation, or other confidential data of any kind, nature or description, the
parties stipulating that as between them, the same are important, material and
confidential business and trade secrets and affect the successful conduct of Bay
Finance's business and its goodwill, and that any breach in whole or in part of
any term of this section is a material breach of this Agreement.
5.5 Corporate Opportunity - During the period that
Kahn provides services to Bay Finance, Kahn shall bring to the attention of Bay
Finance and shall use his best efforts to make available to Bay Finance any
opportunities related to Bay Finance's Business. Kahn may participate in any
such opportunity for his own account only if such opportunity is first brought
to the attention of the chief executive officer of Bay Finance who determines
that Bay Finance will not participate in such opportunity and who gives the Kahn
written approval to participate in such opportunity.
5.6 Ownership Covenant - All files, records,
compilations, reports, studies, manuals, memoranda, notebooks, documents,
databases, correspondence, and other confidential information or records and
similar items relating to the Business of Bay Finance, whether prepared by Kahn
or otherwise coming into his possession, are, and shall remain, the exclusive
property of Bay Finance, and shall be promptly delivered up to Bay Finance upon
the request of Bay Finance.
5.7 Enforcement - Bay Finance and Kahn acknowledge
that the parties have entered into this Agreement as an inducement to the
acquisition of the assets of Rose Shanis & Co., Inc. and related entities and
Kahn is engaged in a position where he will have access to business and trade
secrets, and will be rendering personal services of a special, unique, unusual
or extraordinary character. In recognition of these facts, Kahn agrees that the
breach by Kahn of the covenants of this Agreement could not reasonably or
adequately be compensated in damages in an action at law and that Bay Finance by
reason thereof shall be entitled to preliminary and permanent injunctive relief,
which may include, but shall not be limited to, restraining Kahn from rendering
any service that would breach such covenants. In addition, in the event of a
breach of such covenants by Kahn, Kahn agrees to pay Bay Finance for the
attorneys' fees and other costs incurred by Bay Finance in seeking damages
and/or injunctive relief on account of such breach. However, no remedy conferred
by the specific provisions of
this Section 5 is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
5.8 Modification of Restrictions - If any of the
provisions of this Section 5 shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though invalid or unenforceable parts had not been included
therein. In the event that any provision of this Section 5 relating to the time
period and/or the areas of restriction shall be declared by a court of competent
jurisdiction to exceed the maximum time period or areas such court deems
reasonable and enforceable, the time period and/or areas of restriction deemed
reasonable and enforceable by the court shall become and thereafter be the
maximum time period and/or areas.
5.9 Remedy for Breach - The parties recognize that
the services to be rendered under this Agreement by Kahn are of a special and
unique character, and that in the event of the breach by Kahn of the terms and
conditions of this Agreement to be performed by him, or in the event Kahn shall,
in violation of the restrictions set forth in this section, engage in any
business in competition with Bay Finance's Business or disclose to such person,
firm or corporation Bay Finance's methods, secrets or systems, then Bay Finance
shall be entitled, if it so elects, to institute and prosecute proceedings in
any court of competent jurisdiction, at law and/or in equity, to obtain damages
for any breach of this Agreement, and to enforce the specific performance hereof
and to enjoin Kahn from violating these Restrictive Covenants. Nothing herein
contained shall be construed to prevent Bay Finance's election of any such
remedy in the event of the breach of this Agreement by Kahn.
5.10 The provisions of this Section 5 are applicable
regardless of the reason for the termination of Kahn's services.
6. ABSENCE OF RESTRICTIONS - Kahn represents and warrants to
Bay Finance that:
6.1 As of the commencement date of the Term, Kahn is
not subject to any restrictive covenant.
6.2 Kahn is not under any obligation to any other
party inconsistent with or in conflict with this Agreement or which would
prevent, limit or impair in any way his performance of his obligations under
this Agreement.
7. TERMINATION -
7.1 Notwithstanding any other provision hereof, Bay
Finance may terminate Kahn's engagement under this Agreement at any time for
cause in which event its obligations to Kahn hereunder shall cease. Such a
termination shall be evidenced by written notice to Kahn, which shall specify
the cause for termination, which termination shall be effective immediately upon
giving such notice. For purposes hereof, the term "cause" shall include, without
limitation, the following: dishonesty; theft; conviction of a crime; unethical
business conduct; a material breach of this Agreement; willful insubordination;
or other action or omission to act that in the opinion of Bay Finance may
materially adversely affect Bay Finance's business or operations.
In the event Bay Finance terminates Kahn's services
under this Agreement for a reason other than for cause, then Kahn shall be
entitled to receive as his full remedy the amounts he would have received under
Section 4.1 had his engagement continued in effect for the remainder of the
Term, subject to standard principles of mitigation. Prior to receiving any
payment, Kahn shall be required to sign and become bound by a release prepared
by Bay Finance confirming that Kahn will accept such amount as the exclusive
remedy and shall not pursue any other claims against Bay Finance, entities
affiliated with Bay Finance, or their officers, employees, and agents arising
out of or related to Kahn's engagement hereunder (including the termination of
such engagement).
7.2 Upon termination of Kahn's engagement under this
Agreement, this Agreement and all of the rights, duties and obligations
hereunder shall terminate, except that the restrictions imposed on Kahn as set
forth in Section 5 and the remedies available to Bay Finance as set forth in
this Agreement shall remain in effect.
8. BURDEN AND BENEFIT - This Agreement shall be binding upon,
and shall inure to the benefit of Bay Finance and Kahn, and their respective
heirs, personal and legal representatives, successors and assigns.
9. GOVERNING LAW - In view of the fact that the principal
office of Bay Finance is located in the State of Maryland, it is understood and
agreed that the construction and interpretation of this Agreement shall at all
times and in all respects be governed by the laws of the State of Maryland. The
parties agree that the personal jurisdiction and venue of any action brought
under this Agreement shall be in courts in Maryland.
10. SEVERABILITY - The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any one or more of
the provisions of this Agreement shall not affect the validity and
enforceability of the other provisions.
11. BAY FINANCE - As used herein, the term "Bay Finance" shall
include any corporation or other entity which succeeds to the business of Bay
Finance and to which Bay Finance assigns its rights and obligations hereunder.
12. NOTICES -
12.1 All notices and communications hereunder shall
be in writing and shall be deemed given when either hand delivered or sent
postage prepaid by registered or certified mail, return receipt requested to the
parties as follows:
To Bay Finance:
With a copy to: Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
Attn: Carla Stone Witzel, Esquire
To Kahn:
With a copy to: Edward F. Patz, Esquire
39 Island Estates Parkway
Palm Coast, Florida 32137
12.2 Either party may change its address by written
notice in accordance with this section.
13. COVENANT NOT TO SUE - Kahn hereby covenants and agrees not
to make or assert any claim or commence or maintain any suit, action or
proceeding against Bay Finance, or any of Bay Finance's subsidiaries or
affiliates, in respect of any matter on account of or arising out of, related to
or concerning, whether directly or indirectly, proximately or remotely, Kahn's
employment by Rose Shanis & Co., Inc., or any of its affiliates prior to the
date hereof, except for a claim based on a default by Bay Finance under any
promissory note payable to Kahn which has been assumed in writing by Bay
Finance.
14. ENTIRE AGREEMENT - This Agreement contains the entire
agreement and understanding by and between Bay Finance and Kahn with respect to
the engagement of Kahn to perform consulting services and the obligations of Bay
Finance to Kahn and no representations, promises, agreements, or understandings,
written or oral, not contained herein shall be of any force or effect. No change
or modification of this Agreement shall be valid or binding unless it is in
writing and signed by the party intended to be bound. No waiver of any provision
of this Agreement shall be valid unless it is in writing and signed by the party
against whom the waiver is sought to be enforced. No valid waiver of any
provision of this Agreement at any time shall be deemed a waiver of any other
provision of this Agreement at such time or in any other time.
15. RECITALS - The foregoing recitals are made a substantive
part of this Agreement.
IN WITNESS WHEREOF, Bay Finance and Kahn have duly executed
this Agreement under seal as of the day and year first above written.
BAY FINANCE, LLC
______________________________ By:_________________________________(SEAL)
______________________________ ____________________________________(SEAL)
William R. Kahn
EXHIBIT 7.1.17
SHAREHOLDERS' EQUITY ESCROW AGREEMENT
This Shareholders' Equity Escrow Agreement, dated as of
____________, 199_ (the "Closing Date"), among Mason-Dixon Bancshares, Inc.,
__________ and __________ (collectively "Mason-Dixon") and Rose Shanis & Co.,
Inc., Rose Shanis Sons, Inc., Rose Shanis & Co. and Stephen Corp. (collectively
"Rose Shanis") and ___________, a ___________, as escrow agent ("Escrow Agent").
RECITALS
Capitalized terms used and not otherwise defined herein shall
have the meanings as defined in the Asset Purchase Agreement as of
________________ , 1997 (the "Asset Purchase Agreement"). Execution and delivery
of this Shareholders' Equity Escrow Agreement by Rose Shanis is a condition to
the obligations of Mason-Dixon to close under the Asset Purchase Agreement. The
Asset Purchase Agreement provides that a portion of the Purchase Price shall be
held in escrow in accordance with the terms and conditions of this Shareholders'
Equity Escrow Agreement. Rose Shanis has approved the transactions contemplated
by the Asset Purchase Agreement ("Transactions") and desires to enter into this
Shareholders' Equity Escrow Agreement to induce Mason-Dixon to consummate the
Transactions.
NOW, THEREFORE, in consideration of and in reliance upon the
promises and covenants in this Shareholders' Equity Escrow Agreement, the
parties agree as follows:
1. Establishment of Escrow
1.1. Mason-Dixon is depositing with Escrow Agent an
amount equal to $2,000,000 in immediately available funds (as increased by any
earnings thereon and as reduced by any losses on investments, the "Escrow
Fund"). Notwithstanding such payment to the Escrow Agent, Mason-Dixon shall be
deemed to have fully satisfied its obligation to pay such part of the Purchase
Price payable pursuant to the Asset Purchase Agreement. Rose Shanis (or the
owners of Rose Shanis) will report all income earned on, or derived from, the
Escrow Fund as their income. Escrow Agent acknowledges receipt thereof.
1.2. Escrow Agent hereby agrees to act as escrow
agent and to hold, safeguard and disburse the Escrow Fund pursuant to the terms
and conditions hereof.
2. Investment of Funds
Escrow Agent shall invest the Escrow Fund in the direct
obligations of, or in the obligations of any agency or authority of, the United
States, any state of the United States and any political subdivision thereof, in
any fund that invests only in such obligations, or in such other investments as
are directed by a writing signed by Rose Shanis and Mason-Dixon. Escrow Agent
shall not be required to invest any sums to the extent it reasonably determines
that it will be required to distribute, use or otherwise expend such funds
within 30 days. Escrow Agent shall not be liable or otherwise responsible for
any losses resulting from any investments provided for pursuant to this
Shareholders' Equity Escrow Agreement.
3. Claims
3.1. If Mason-Dixon gives a notice to Rose Shanis and
Escrow Agent stating that the Adjustment Amount has been determined in
accordance with Section 5.2 of the Asset Purchase Agreement and specifying the
dollar amount payable to Mason-Dixon pursuant to Section 5.2 of the Asset
Purchase Agreement as a result of such determination, on the 10th business day
following such notice Escrow Agent shall pay to Mason-Dixon the dollar amount so
specified from (and only to the extent of) the Escrow Fund. Escrow Agent shall
not inquire into or consider whether the Adjustment Amount has been determined
in accordance with the requirements of the Asset Purchase Agreement.
3.2. Escrow Agent shall pay and distribute the then
remaining amount of the Escrow Fund, including any income earned on the Escrow
Fund, to Rose Shanis.
3.3. If Rose Shanis gives a notice to Mason-Dixon and
Escrow Agent prior to the 10th business day following Mason-Dixon's notice
referred to in Section 3.1, Escrow Agent shall make no payment to Mason-Dixon in
the absence of joint instructions from Mason-Dixon and Rose Shanis. Mason-Dixon
and Rose Shanis shall make a good faith attempt to resolve their dispute. Upon
written request by Rose Shanis or Mason-Dixon made not more than 10 days after
Rose Shanis' notice, Escrow Agent promptly shall refer the dispute concerning
the Escrow Fund to the American Arbitration Association for settlement by
arbitration in accordance with the Association's Commercial Arbitration Rules.
Judgment upon any resulting arbitration award may be entered in any court of
competent jurisdiction. As part of such award, the arbitrator may establish his
fee and expenses in connection therewith, which Mason-Dixon shall promptly pay.
However, any award in a party's favor shall be increased by a percentage of such
fees and expenses equal to the same percentage of a party's claim that is
awarded to a party in arbitration. Any award shall be a conclusive determination
of the matter and shall be final and binding upon all parties. Escrow Agent
promptly shall pay the amount of any award to the prevailing party to the extent
the Escrow Fund contains sufficient funds for that purpose. Arbitration
proceedings shall be held in Baltimore, Maryland, unless Rose Shanis and
Mason-Dixon agree upon another location.
4. Termination of Escrow
On May 31, 1998, Escrow Agent shall pay and distribute the
then amount of the Escrow Fund to Rose Shanis, unless prior thereto Mason-Dixon
has notified Escrow Agent to make no disbursement of the Escrow Fund. In that
case the entire Escrow Fund shall be retained by Escrow Agent until it receives
joint written instructions of Rose Shanis and Mason-Dixon. Upon written request
by Rose Shanis or Mason-Dixon, Escrow Agent promptly shall refer the dispute to
arbitration as described above in Section 3.3.
5. Escrow Agent's Responsibility; Resignation; Removal.
5.1. Escrow Agent shall retain the Escrow Fund in
accordance with the terms and conditions of this Shareholders' Equity Escrow
Agreement, and shall be under no responsibility or obligation other than to
follow the provisions hereof.
5.2. Escrow Agent may resign at any time upon 30 days
written notice to Mason-Dixon and Rose Shanis; within 20 days after receipt of
such notice, Mason-Dixon shall select an independent bank or trust company to
serve as the successor Escrow Agent, subject to
the reasonable consent of Rose Shanis (which consent shall not be unreasonably
withheld or delayed). In the event a successor is not selected and agreed upon
within the time described above, Escrow Agent may deposit the Escrow Fund into a
court of competent jurisdiction and request that the court appoint or cause the
parties to appoint a successor Escrow Agent. Upon such deposit, Escrow Agent
shall be relieved of all future responsibilities under this Shareholders' Equity
Escrow Agreement.
5.3. Escrow Agent may be removed at any time upon
written notice from both Mason-Dixon and Rose Shanis.
5.4. No Liability of Escrow Agent. Escrow Agent shall
not be liable for any act or omission in good faith and in the absence of fraud
or willful misconduct. Escrow Agent shall in all cases be entitled to rely upon
and be fully protected in acting or in refraining from acting under this
Shareholders' Equity Escrow Agreement in accordance with any and all written
notifications received by it in accordance with this Escrow Agreement.
5.5. Indemnification of Escrow Agent. Mason-Dixon and
Rose Shanis hereby agree to indemnify and hold Escrow Agent harmless from and
against any and all actions, suits, proceedings, losses, liabilities, damages,
costs and expenses (including attorneys' and experts' fees, costs of
investigation, court costs, and sums expended in settlement of claims or
litigation, pending or threatened) arising out of or in connection with this
Shareholders' Equity Escrow Agreement, the failure of any party to perform its
obligations hereunder, or arising out of or in connection with any action or
failure to act in good faith by Escrow Agent from and after the date of this
Shareholders' Equity Escrow Agreement, save only any action or failure to act by
the Escrow Agent that constitutes fraud or willful misconduct.
5.6. Compensation. Escrow Agent shall be entitled to
reasonable compensation for all services rendered by it under this Shareholders'
Equity Escrow Agreement as provided for in Schedule A attached hereto. Such
compensation shall be borne 50% by Rose Shanis and 50% by Mason-Dixon.
5.7. Successor Escrow Agent. If Escrow Agent
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association, without any further act, shall be the successor Escrow
Agent with the same effect as if it had been named as Escrow Agent herein,
unless Mason-Dixon and Rose Shanis provide otherwise.
6. Miscellaneous.
6.1. Governing Law. This Shareholders' Equity Escrow
Agreement shall be governed by and construed and enforced in accordance with the
internal, substantive laws of the State of Maryland without giving effect to the
conflict of law rules thereof.
6.2. Notices. All notices, writings and other
communications required or permitted to be given pursuant to this Shareholders'
Equity Escrow Agreement shall be in writing and shall be given by hand-delivery
or transmitted by United States certified mail, return receipt requested,
postage prepaid, or via overnight carrier, to the addresses set forth below:
If to Rose Shanis: Norman J. Glick
With a copy to: Adelberg, Rudow, Dorf, Hendler & Sameth, LLC
600 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
Attn: David B. Rudow, Esquire
If to Mason-Dixon: Mason-Dixon Bancshares, Inc.
45 West Main Street
Westminster, Maryland 21157
Attn: Thomas K. Ferguson, President and CEO
With a copy to: Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
Attn: Carla Stone Witzel, Esquire
If to Escrow Agent:
With a copy to:
Each notice shall be deemed to have been received: (i) for hand deliveries, on
the date of transmittal; (ii) for mailing, on the day following such mailing;
and (iii) for overnight deliveries, on the day following such transmittal. The
parties shall have the right to change their respective addresses set forth in
this Section by giving notice of such change in accordance with this Section.
6.3. Entire Agreement. This Shareholders' Equity
Escrow Agreement together with all other agreements and documents executed by
the parties in connection with the Transactions represents the entire agreement
between the parties and supersedes and cancels any prior oral or written
agreement, letter of intent or understanding related to the subject matter
hereof.
6.4. Counterparts. This Shareholders' Equity Escrow
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one and
the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties.
IN WITNESS WHEREOF, this Shareholders' Equity Escrow Agreement
has been duly executed by the parties hereto as of the day and year first above
written.
ROSE SHANIS & CO., INC.
By: _______________________________(SEAL)
ROSE SHANIS SONS, INC.
By: _______________________________(SEAL)
ROSE SHANIS & CO.
By: _______________________________(SEAL)
Trustee, Ely Shanis Trust,
General Partner
By: _______________________________(SEAL)
Trustee, Bernice Shanis Trust,
General Partner
By: _______________________________(SEAL)
Norman J. Glick, General Partner
By: _______________________________(SEAL)
Susan M. Glick, Personal Representative
of the Estate of Stephen J. Glick,
General Partner
STEPHEN CORP.
By: _______________________________(SEAL)
MASON-DIXON BANCSHARES, INC.
By: _______________________________(SEAL)
Thomas K. Ferguson, President
-----------------------------
By: _______________________________(SEAL)
, President
-----------------------------
By: _______________________________(SEAL)
, President
Escrow Agent:
By:___________________________
EXHIBIT 7.2.1
OPINION OF MASON-DIXON AND THE SUBSIDIARIES' COUNSEL
--------------, ----
Owners of Rose Shanis & Co., Inc.,
Rose Shanis Sons, Inc., Rose Shanis & Co.
and Stephen Corp.
c/o Norman J. Glick
313 N. Howard Street
Baltimore, Maryland 21201
Re: Asset Purchase Agreement among Rose Shanis & Co.,
Inc., Rose Shanis Sons, Inc., Rose Shanis & Co. and
Stephen Corp., and their respective Owners, and
Mason-Dixon Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel to Mason-Dixon Bancshares, Inc., a
Maryland corporation ("Mason-Dixon"), and two of its subsidiaries, Bay Finance,
LLC, a Maryland limited liability company ("Consumer Finance Subsidiary"), and
Bay Insurance, LLC, a Maryland limited liability company ("Insurance Agent
Subsidiary") (collectively, the "Subsidiaries") in connection with the purchase
(the "Purchase") by Mason-Dixon and the Subsidiaries of substantially all of the
Assets of Rose Shanis & Co., Inc., a Maryland corporation, Rose Shanis Sons,
Inc., a Maryland corporation, Rose Shanis & Co., a Maryland general partnership,
and Stephen Corp., a Maryland corporation (collectively, "Rose Shanis"),
pursuant to an Asset Purchase Agreement dated November ___, 1997, and all
Exhibits and Schedules attached thereto (the "Agreement"), among Mason-Dixon,
Rose Shanis, and all of the Owners of Rose Shanis. All capitalized terms used in
this letter that are not otherwise defined herein shall have the meanings set
forth in the Agreement.
In our capacity as counsel to Mason-Dixon and the Subsidiaries
and for purposes of this opinion, we have examined the following documents:
1. The Agreement and the other documents executed in
connection therewith (collectively, the "Purchase Documents").
2. A copy of the Articles of Incorporation and Bylaws of
Mason-Dixon;
3. A copy of the Articles of Organization and Operating Plan
of Consumer Finance Subsidiary;
4. A copy of the Articles of Organization and Operating Plan
of Insurance Agent Subsidiary;
5. Copies of the resolutions adopted by the Board of Directors
of Mason- Dixon in connection with the Purchase, certified by Mason-Dixon's
Secretary;
6. Copies of the records of the proceedings of, and of actions
taken by, the single member of Consumer Finance Subsidiary with respect to the
Purchase;
7. Copies of the records of the proceedings of, and actions
taken by, the single member of Insurance Agent Subsidiary with respect to the
Purchase;
8. A Certificate of Good Standing from the Maryland State
Department of Assessments and Taxation ("SDAT") dated November __ , 1997, to the
effect that Mason-Dixon is duly incorporated and is an existing corporation in
Maryland;
9. A Certificate of Good Standing from SDAT dated November __,
1997, to the effect that Consumer Finance Subsidiary is a limited liability
company existing under the laws of the State of Maryland and is in good standing
to transact business in the State of Maryland;
10. A Certificate of Good Standing from SDAT dated November
__, 1997, to the effect that Insurance Agent Subsidiary is a limited liability
company existing under the laws of the State of Maryland and is in good standing
to transact business in the State of Maryland;
11. A Certificate of Mason-Dixon, Consumer Finance Subsidiary,
and Insurance Agent Subsidiary with respect to Mason-Dixon's representations in
the Agreement and with respect to certain facts concerning Mason-Dixon, Consumer
Finance Subsidiary and Insurance Agent Subsidiary (the "Certificate").
In basing the opinions and other matters set forth herein on
"our knowledge," the words "our knowledge" signify that, in the course of our
representation of Mason-Dixon and the Subsidiaries in matters with respect to
which we have been engaged by Mason-Dixon and the Subsidiaries as counsel, no
information has come to our attention that would give us actual knowledge or
actual notice that any such opinions or other matters are not accurate or that
any of the foregoing documents, certificates, reports, and information on which
we have relied are not accurate and complete. Except as otherwise stated herein,
we have undertaken no independent investigation or verification of such matters.
The words "our knowledge" and similar language used herein are intended to be
limited to the knowledge of the lawyers within our firm who have recently worked
on matters on behalf of Mason-Dixon and the Subsidiaries.
In reaching the opinions set forth below, we have assumed, and
to our knowledge there are no facts inconsistent with, the following:
(a) each of the parties to the Purchase Documents
(other than Mason- Dixon and the Subsidiaries) has duly and validly executed and
delivered each instrument, document, and agreement executed in connection with
the Purchase to which such party is a signatory, and such party's obligations
set forth therein are its legal, valid, and binding obligations, enforceable in
accordance with their respective terms;
(b) each person executing any such instrument,
document, or agreement on behalf of any such party (other than Mason-Dixon and
the Subsidiaries) is duly authorized to do so;
(c) each natural person executing any such
instrument, document, or agreement is legally competent to do so;
(d) there are no oral or written modifications of or
amendments to the Purchase Documents, and there has been no waiver of any of the
provisions of the Purchase Documents, by actions or conduct of the parties or
otherwise;
(e) all documents submitted to us as originals are
authentic, all documents submitted to us as certified or photostatic copies
conform to the original document, all signatures on all documents submitted to
us for examination are genuine, and all public records reviewed are accurate and
complete.
Based on our review of the foregoing and subject to the
assumptions and qualifications set forth herein, it is our opinion that, as of
the date of this letter:
1. Mason-Dixon is a corporation duly organized and validly
existing in good standing under the laws of the State of Maryland. Mason-Dixon
has the corporate power and authority necessary to own and operate its
properties and carry on its business as now conducted by it, to enter into the
Agreement, and to consummate the Transactions and to take all other actions
required to be taken by it. The execution and delivery of the Purchase Documents
and performance by Mason-Dixon of the obligations under the Purchase Documents
and all other documents executed in connection therewith have been duly and
properly authorized by Mason-Dixon's Board of Directors in full compliance with
its Articles of Incorporation, Bylaws and the corporation laws of the State of
Maryland.
2. Each of the Subsidiaries is a limited liability company
duly organized and validly existing in good standing under the laws of the State
of Maryland. Each of the Subsidiaries has the full power and authority to own
and operate its properties and to carry on its business as and where such
business is now conducted, to execute, acknowledge, seal and deliver the
Purchase Documents and to consummate the Transactions contemplated by the
Purchase Documents. The execution and delivery of the Purchase Documents and
performance by each of the Subsidiaries and all other documents executed in
connection therewith have been duly authorized by all necessary action in full
compliance with each Subsidiaries' Articles of Organization, Operating Plan, and
the limited liability company laws of the State of Maryland.
3. The Purchase Documents, including the Assumption
Agreements, have been duly executed and delivered by Mason-Dixon and the
Subsidiaries and constitute the valid and legally binding obligations of each,
enforceable against Mason-Dixon and the Subsidiaries in accordance with its
terms, subject to the following:
i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance and other laws affecting the
rights of creditors generally; and
ii) the exercise of judicial discretion in
accordance with general principles of
equity.
4. Based upon the Certificate and our knowledge, the execution
and delivery of the Purchase Documents and performance of the obligations under
the Purchase Documents, and the fulfillment of and compliance with the terms and
conditions of the Purchase Documents do not and will not, with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision in
Mason-Dixon's
Articles of Incorporation or Bylaws, (ii) any judgment, decree or order of any
court or governmental authority or agency to which Mason-Dixon is a party or by
which Mason-Dixon or any of its properties is bound, or (iv) any statute, law,
regulation or rule applicable to Mason-Dixon, so as to have a material adverse
effect on the assets, liabilities, results of operations, financial condition,
business or prospects of Mason-Dixon.
5. Based upon the Certificate and our knowledge, Mason-Dixon
and Subsidiary have taken all actions, and obtained all consents, approvals,
authorizations, and made all required filings with all governmental authorities
which is required for the execution and delivery by them of the Purchase
Documents.
6. Based upon the Certificate and our knowledge, Mason-Dixon
has the financial capacity to consummate the Transactions and pay the Purchase
Price.
7. Based upon the Certificate and our knowledge, there is no
litigation, claim, arbitration, proceedings, or governmental investigation
pending challenging Mason-Dixon's right to perform under the Purchase Documents
to which Mason-Dixon is a party, or, based on our knowledge, threatened against
Mason-Dixon.
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of Maryland and the laws of the United States of
America. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof.
The opinions expressed in this letter are solely for your use
and these opinions may not be relied on by any other persons without prior
written approval. The opinions expressed in this letter are limited to the
matters set forth in this letter, and no other opinions should be inferred
beyond the matters expressly stated.
Very truly yours,
Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC
By:__________________________
Carla Stone Witzel, Member
EXHIBIT 7.2.4
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (the "Agreement") is made this _____
day of ______________, 1997, by and between Rose Shanis & Co., Inc., Rose Shanis
Sons, Inc., Rose Shanis & Co. and Stephen Corp. (collectively "Seller"),
Mason-Dixon Bancshares, Inc. ("Mason-Dixon) and _____________ ("Purchaser"),
pursuant to an Asset Purchase Agreement (the "Asset Purchase Agreement") dated
_______, 1997, by, among others, Seller and Purchaser, involving the sale of
substantially all of the assets of the Seller (the "Assets"). Capitalized terms
used and not otherwise defined herein shall have the meanings as defined in the
Asset Purchase Agreement.
WHEREAS, pursuant to the Asset Purchase Agreement, Seller has
agreed to transfer to Purchaser the Assets used by Seller in its business in
exchange for, among other things, the assumption of certain of the Seller's
liabilities and obligations;
WHEREAS, Mason-Dixon owns Purchaser and desires to guaranty
Purchaser's performance of the assumed liabilities;
NOW, THEREFORE, in consideration of the transfer to Purchaser
of the Assets, and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, Seller, Purchaser and Mason-Dixon agree as
follows:
1. Assumption of Obligations. Subject to the terms of this
Agreement, effective on the date hereof, Purchaser, for itself and its
successors and assigns, hereby covenants and agrees to assume and accept those
debts, liabilities and obligations of Seller as are listed or described on
Schedule A to this Agreement (the "Assumed Liabilities").
2. Indemnification. Purchaser shall defend, indemnify and hold
Seller and the Owners harmless against and from any and all liability to any
person, firm, corporation, political subdivision, or other entity for any
failure of Purchaser to pay the Assumed Liabilities.
3. Representations of Seller. All representations and
warranties of Seller relating to the Assumed Liabilities contained in the Asset
Purchase Agreement are hereby incorporated by reference herein. Seller hereby
further represents and warrants to Purchaser that, as of the effective date of
this Agreement, Seller has not received notice of any default by Seller in
connection with the Assumed Liabilities, and to the best of Seller's knowledge,
information and belief, Seller is not in default in connection with the Assumed
Liabilities.
4. Further Assurances. The parties agree that they will take
whatever action or actions are found to be reasonably necessary from time to
time to effectuate the provisions and intent of this Agreement, and, to that
end, the parties agree that they will execute any further documents or
instruments which may be necessary to give full force and effect to this
Agreement or to any of its provisions.
5. Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
6. Severability. In case any of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein.
7. Amendment. This Agreement may not be amended or terminated
orally but only as expressly provided herein or by an instrument in writing duly
executed by all of the parties.
8. Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be an original, but all of which together
will constitute one agreement.
9. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland.
10. Mason-Dixon's Guaranty. Mason-Dixon unconditionally and
irrevocably guarantees to Seller and the Owners the full and timely performance
by Purchaser of all obligations to be performed by Purchaser hereunder,
including, but not limited to, the payment by Purchaser of the Assumed
Liabilities. Mason-Dixon shall defend, indemnify and hold Seller and the Owners
harmless against and from any and all liability to any person, firm,
corporation, political subdivision, or other entity for any failure of Purchaser
to pay the Assumed Liabilities.
IN WITNESS WHEREOF, Seller and Purchaser have each executed
under seal this Assumption Agreement or caused it to be executed under seal on
its behalf by its duly authorized representatives, as of the day and year first
written above.
-----------------------------
By:________________________________(SEAL)
ROSE SHANIS & CO., INC.
By:________________________________(SEAL)
ROSE SHANIS SONS, INC.
By:________________________________(SEAL)
STEPHEN CORP.
By:________________________________(SEAL)
ROSE SHANIS & CO.
By:________________________________(SEAL)
Trustee, Ely Shanis Trust,
General Partner
By:________________________________(SEAL)
Trustee, Bernice Shanis Trust,
General Partner
By:________________________________(SEAL)
Norman J. Glick, General Partner
By:________________________________(SEAL)
Susan M. Glick, Personal
Representative of the Estate
of Stephen J. Glick, General Partner
MASON-DIXON BANCSHARES, INC.
By:________________________________(SEAL)
Thomas K. Ferguson, President
SCHEDULE A
TO ASSUMPTION AGREEMENT
ASSUMED LIABILITIES
