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EXHIBIT 10.17
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT is made effective as of the ___th day of
August, 1995, by and among XXXXXXXX BANCORP, INC., a Delaware corporation
("XXXXXXXX") and UNIVERSITY BANK, a Michigan Banking Corporation ("BANK")
collectively, the "Purchasers"; and XXXXXX XXXXXX, an individual residing in
Michigan ("BURGER"), BAY LOAN BROKERS, INC., a California corporation ("BAY"),
and NORTHERN MICHIGAN BIDCO, INC., a Michigan corporation ("BIDCO"),
collectively, the "Sellers").
WITNESSETH:
WHEREAS, Sellers own all of the Interests in the Midwest Loan
Services, Inc., a Michigan corporation, the "Company", which Sellers desire to
sell all or a part of to Purchasers as hereinafter provided (the "Interests");
and
WHEREAS, Purchasers desire to acquire the Interests for cash, shares
of common stock and certain other consideration in Purchasers, as hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed:
1. CONSIDERATION; EXCHANGE OF CONSIDERATION.
1.1 Interests. The "Interests" of the Sellers which are being sold
are: (a) for BURGER, 1,200 shares of Common Stock of the Company, (b) for BAY,
5,100 shares of Common Stock of the Company, and (c) for BIDCO, 900 shares of
Common Stock of the Company.
1.2 Consideration. The "Consideration" for the Interests shall consist
of (a) for BURGER, 25,000 shares of Common Stock of XXXXXXXX, and a Contingent
Payment as defined in 1.3, below; (b) for BAY, $200,000 cash, the title to the
Company's ownership of improved land in Dallas, Texas (the "Texas Property"),
25,000 shares of Common Stock of XXXXXXXX, and a Contingent Payment as defined
in 1.3, below; and (c) for BIDCO, 23,000 shares of Common Stock of XXXXXXXX.
Burger, Bay and BIDCO, as part of the Consideration, shall be entitled to
require Xxxxxxxx to repurchase all or a part of the shares of Common Stock of
Xxxxxxxx paid to them as part of the Consideration at a price of $5.00 per
share on the first anniversary date following the Closing.
1.3 Contingent Payment. The following contingent payment shall be
paid in cash to each of BAY, BIDCO and BURGER in the event that the Company has
an audited pre-tax profit in any given calendar year until the year ending
December 31, 2000 in excess of $375,000: (a) to BAY, an amount equal to 100%
of the amount in excess of $375,000 by which the Company's audited financial
statements show an audited pre-tax profit in any given calendar year, up to a
cumulative sum of $250,000 in total Contingent Payments; and (b) to BURGER, an
amount equal to 24% of the amount in excess of $375,000 by which the Company's
audited financial statements show an audited pre-tax profit in any given
calendar year, up to a cumulative sum of $60,000 in total Contingent
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Payments. Such Contingent Payments, if any, shall be paid promptly within 60
days of the completion of the Company's audited financial statements by the
Company's auditors.
1.4 Deliveries at Closing. On the Closing Date, Sellers shall deliver
to Purchasers (a) Certificates of Transfer evidencing the transfer of the
Interests to Purchasers, duly executed by Sellers; and (b) the certificates and
other documents to be delivered by Sellers pursuant to this Agreement; and
Purchasers shall deliver to Sellers (a) the Consideration specified in section
1.2 above; and (b) the certificates and other documents to be delivered by
Purchasers pursuant to this Agreement.
2. CLOSING.
The exchange of documents, cash and shares referred to in Section 1 hereof,
hereinafter referred to as the "Closing," shall take place at 1 P.M. at the
offices of University Bank on October 1, 1995, or at such other time and date
as Purchasers and Sellers may in writing designate, such time and date are
herein referred to as the "Closing Date." Time is of the essence of this
Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS.
Purchasers do hereby expressly acknowledge that BAY has not been involved or
had any control over the day-to-day financial or management operations of the
Company, nor has BAY been involved or had control over the maintenance of
corporate or financial records of the Company. Subject to this express
acknowledgment of Purchasers, Sellers represent, warrant and covenant to
Purchasers as follows:
3.1 Interests. The authorized capital stock of the Company consists of
100,000 shares of Common Stock, of which 9,000 shares have been issued and are
outstanding, all of which have been duly authorized and validly issued and are
fully paid and nonassessable. All of the Common Stock of the Company are owned,
and at the Closing will be owned, by Sellers free and clear of all liens,
encumbrances, restrictions, claims, options, calls and commitments of every
kind; Sellers have full legal right, power and authority to enter into this
Agreement and to exchange, assign and transfer the Interests to Purchasers;
and, on the Closing Date, the delivery to Purchasers of the Interests pursuant
to the provisions of this Agreement will transfer valid title thereto, free and
clear of all liens, encumbrances, claims, options, calls and commitments of any
kind.
3.2 Existence and Good Standing. The Company is a corporation duly
organized and validly existing in good standing under the laws of the State of
Michigan, and is duly authorized, qualified, permitted and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now conducted except
where the failure to do so would not have a material adverse effect on the
Company's business. True and complete copies of the organizational documents
and by-laws of the Company, as amended to the date hereof, certified as of a
recent date (x) in the case of the organizational documents of the Company, by
the Secretary of State of Michigan, and (y) in the case of the operating
agreement, by the Secretary of the Company, have been
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delivered to Purchasers. The books and records of the Company (containing the
records of meetings of the shareholders and the board of directors) are correct
and complete. The Company is not in default under or in violation of any
provision of its organizational documents or by-laws.
3.3 Subsidiaries. The Company does not have any subsidiaries nor own
any securities (i.e., stock, warrants, calls, options, limited liability company
interests, notes, bonds or other evidences of ownership or indebtedness) of any
other person, firm or corporation, or if any such securities do exist, they
shall be redeemed or sold by the Company for an amount equal to their carrying
value at June 30, 1995 prior to or at the Closing.
3.4 Financial Statements. Sellers have delivered to Purchasers true
and complete copies of the following statements of the Company (Schedule 3.4):
(a) Unaudited Balance Sheet as of June 30, 1995 (hereinafter referred
to as the "Balance Sheet Date") and applicable notes;
(b) Unaudited Statements of Income, Changes in Sellers' Equity, and
Cash Flow for the six months ended on the Balance Sheet Date, and applicable
notes; and
(c) Audited Balance Sheets, Statements of Income and Retained Earnings and
Statements of Changes in Financial Position, and applicable notes, for its most
recent fiscal year.
All such financial statements are in accordance with the books and records of
the Company; are complete and correct in all material respects; are correct and
complete and are consistent with the books and records of the Company (which
books and records are correct and complete); and have been prepared in
accordance with generally accepted accounting principles consistently applied.
3.5 Liabilities. Sellers have delivered to Purchasers an accurate
description (Schedule 3.5) as of the date hereof of all liabilities of the
Company not reflected on the Balance Sheet. The Company has no liabilities
other than as set forth on Schedule 3.5 and on the Balance Sheet, and there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any liability.
3.6 Receivables. Sellers have delivered to Purchasers an accurate list
(Schedule 3.6) as of the Balance Sheet Date of the accounts and notes
receivable of the Company.
3.7 Permits. Licenses. etc. Sellers have delivered to Purchasers an
accurate list (Schedule 3.7) as of the Balance Sheet Date of all permits,
licenses, franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights (excluding only radio and usual motor vehicle
licenses) owned or held by the Company, all of which are now valid and in good
standing. Such permits, licenses, orders, approvals, variances, franchises,
etc., are adequate for the operation of the Company's business as presently
constituted, except
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where the failure to have such would not have a material adverse effect on the
Company's business.
3.8 Fixed Assets. Sellers have delivered to Purchasers an accurate
list of the book value of the major categories of all the fixed assets of the
Company as of the Balance Sheet Date (Schedule 3.8). Substantially all of the
machinery and equipment of the Company are in good working order and condition,
subject to normal life expectancy. Since the Balance Sheet Date the Company has
not acquired or sold or otherwise disposed of any fixed assets. Except as
described on Schedule 3.8, all fixed assets used by the Company in the
operation of its business are owned by the Company. Schedule 3.8 contains,
without limitation, copies of all title reports and title insurance policies
received or owned by the Company,
3.9 Other Assets. Sellers have delivered to Purchasers an accurate
list (Schedule 3.9) as of the Balance Sheet Date of all properties and assets
of the Company with values in excess of $1,000 other than those shown on
Schedules 3.6, 3.7, and 3.8. Except as indicated on Schedule 3.9, since the
Balance Sheet Date, the Company has not acquired or sold or otherwise disposed
of any of such properties or assets which would be considered material singly
or in the aggregate to the Company. The Company has good and marketable title
to, or a valid leasehold interest in, the properties and assets used by them
located on their premises, or shown on the most recent Balance Sheet provided
pursuant hereto or acquired after the Balance Sheet Date, free and clear of all
liens and encumbrances, except for properties and assets disposed of in the
ordinary course of business since the Balance Sheet Date.
Management of the Company has not devoted any significant effort or
expenditure in the two year period prior to the execution hereof to any plans
or projects involving the opening of new operations or the acquisition of any
real property or existing business nor does management have any plans or
projects which, if pursued, would require any such significant effort or
expenditure.
3.10 Contracts and Agreements; Adverse Restrictions.
(a) Sellers have delivered to Purchasers an accurate list (Schedule
3.10, Part I) as of the date hereof of all contracts and agreements to which
the Company is a party or by which it or any of its property is bound
(including, but not limited to, joint venture or partnership agreements,
contracts with any labor organizations, loan agreements, bonds, mortgages,
liens, pledges or other security agreements) and have made available for
inspection by Purchasers all of said contracts and agreements. None of such
contracts or agreements unduly burdens or restricts the Company in the ordinary
course of its business. Except to the extent set forth on Schedule 3.10, Part
II, the Company has complied in all material respects with all commitments and
obligations under all such contracts and agreements.
(b) Except to the extent set forth on Schedule 3. 10, Part III, the
Company is not a party to any contract, agreement or other commitment or
instrument or subject to any charter or other corporate restriction or subject
to any restriction or condition contained in
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any permit, site assignment, license, judgment, order, writ, injunction, decree
or award which materially adversely affects or in the future is expected to (so
far as Sellers now believe) materially adversely affect, the business,
operations, properties, assets or condition (financial or otherwise) of the
Company considered as a whole.
3.11 Insurance. Sellers have delivered to Purchasers an accurate list
(Schedule 3.11) as of the date hereof of all insurance policies carried by the
Company (including all policies issued within the last three years whether or
not currently in effect) specifying, in each case, the name of the insurer, a
summary description of the property or interest insured and the type of risks
insured, the deductible and limits of coverage, and the annual premium
therefor; and have made available for inspection by Purchasers copies of all of
such policies. The Company carries insurance which Sellers believe to be
adequate in character and amount, with reputable insurers in respect of its
properties, assets and business and such insurance policies are still in full
force and effect and shall remain in effect at least until the Closing Date.
3.12 No Pension Plan. The Company does not have, nor has it ever had,
any pension, profit sharing, deferred compensation, option, employee membership
interest purchase or other employee benefit plan or agreement.
3.13 Laws and Regulations; Litigation. The Company is not in violation
of or in default under any law or regulation, or under any order of any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over the Company
and, except to the extent set forth on Schedule 3.13, there are no claims,
actions, suits, proceedings, or responses to or rejections of any required or
voluntary filing or submission, pending, or threatened against or affecting the
Company, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission board, bureau, agency or
instrumentality having jurisdiction over the Company. The Company has
conducted and is conducting its business in compliance with, and is in
compliance with the requirements, standards, criteria and conditions set forth
in applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations and is not in violation of
any of the foregoing and has incurred no liability under the foregoing which
might materially adversely affect the business, operations, affairs, prospects,
properties, assets, profits or condition (financial or otherwise) of the
Company. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein, nor the compliance with
the terms and provisions hereof or thereof will conflict with or result in a
breach of any of the terms, conditions or provisions of any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Company or any Seller is subject, including but not limited to federal and
state securities laws, or any provision of the organizational documents or
operating agreement of the Company; or conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to
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accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any Seller or the Company is a party or by which any of them is bound or to
which any of any of their assets is subject.
3.14 Taxes. The Company has filed all federal, state, local and other
tax and information returns that it was required to file. All such tax returns
were correct and complete in all respects. All taxes owed by the Company
(whether or not shown on any tax return) have been paid. The Company is not
currently the beneficiary of any extension of time within which to file any tax
return. No claim has ever been made by an authority in a jurisdiction where
the Company does not file tax returns that it is or may be subject to taxation
by that jurisdiction. There are no security interests on any of the assets of
the Company that arose in connection with any failure or alleged failure to pay
any tax. The Company has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor or other third party. There are no claims
against the Company of which the Company has been notified or of which any
Seller is aware for federal, state, local or other taxes. The amounts shown as
provisions and reserves for taxes on the financial statements of the Company as
of the Balance Sheet Date and for the periods then ended delivered to
Purchasers as a part of Schedule 3.4 are sufficient for the payment of all
taxes of all kinds for all fiscal periods ended on or before that date.
3.15 Copies Complete; No Default. The certified copies of the
organizational documents and by-laws, both as amended to date, of the Company
and the copies of all leases, instruments, agreements, licenses, permits,
certificates or other documents, which have been examined by or delivered to
Purchasers in connection with the transactions contemplated hereby, are
complete and correct; except as disclosed on Schedule 3.5, Part I or Schedule
3.10, Part I hereto, to the best of the knowledge of Sellers no party thereto
is in default thereunder; the rights and benefits of the Company thereunder
will not be materially adversely affected by the transactions contemplated
hereby; and the execution of this Agreement and the performance of the
obligations hereunder will not violate or result in a breach or constitute a
default under any of the terms or provisions thereof. Except as provided
herein, none of such leases, instruments, agreements, licenses, site
assignments, permits, certificates or other documents requires notice to, or
the consent or approval of, any governmental agency or other third party
regarding any of the transactions contemplated hereby; any consents or
approvals required shall be obtained by Sellers and the Company prior to
Closing.
3.16 No Governmental Contracts. The Company is not now nor has it ever
been a party to any governmental contracts subject to price redetermination or
renegotiation.
3.17 No Change. Since the Balance Sheet Date there has not been, other
than in the ordinary course of business:
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(a) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income, operations or business of the
Company;
(b) any material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the properties or business of the Company;
(c) any change or agreement to change the ownership of any interests
in the Company;
(d) any declaration or payment of, or any agreement to declare or pay,
any dividend or distribution in respect of an equity interest or any direct or
indirect redemption, purchase or other acquisition of any interest in the
Company;
(e) any increase in the compensation payable or to become payable by
the Company to any of its directors, officers, employees or agents, or any
accrual or arrangement for or payment of a bonus or other special compensation
to any employee or any severance or termination pay paid to any present or
former officer or other key employee of the Company;
(f) any labor trouble affecting the business or future prospects of
the Company;
(g) (i) any sale or transfer, or any agreement to sell or transfer,
any assets, property or rights of the Company to any other person, including,
without limitation, any Seller and their affiliates (other than in the ordinary
course of business) or (ii) the cancellation, or agreement to cancel, any
indebtedness or other obligation of any Seller or any affiliate of its to the
Company, other than as contemplated by this Agreement;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the Company or requiring consent of any party to the transfer and
assignment of any such assets, property or rights, other than as contemplated
by this Agreement;
(i) any purchase or acquisition, or agreement, plan or arrangement by
the Company to purchase or acquire, any property, rights or assets; any
incurrence of indebtedness by the Company or agreement, plan or arrangement by
the Company to incur any indebtedness;
(j) any waiver by the Company of any material rights or claims;
(k) any material amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party; or
(l) any material transaction or commitment to undertake any material
transaction by the Company not disclosed to Purchasers herein.
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3.18 Binding Obligation. BURGER is an individual of legal age and
capacity to execute this contract. BIDCO is a corporation duly organized under
the laws of the state of Michigan, and BAY is a corporation duly organized
under the laws of the state of California, and are each validly existing and in
good standing under the law of said state. Each Seller has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement is a legal, valid and binding obligation of each
Seller and is enforceable against each Seller in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally. No Seller need give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
3.19 No Misleading Statements. The representations and warranties
contained in this Agreement, the exhibits and schedules hereto and all other
documents and information furnished to Purchasers and its representatives
pursuant hereto, when taken as a whole, do not and will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made not misleading.
3.20 Foreign Corrupt Practices Act. The Company has not incurred any
liability under the Foreign Corrupt Practices Act of 1978 or Section 999 of the
Internal Revenue Code of 1954, as amended, and the Treasury Regulations and
Rules promulgated thereunder (whether temporary or final).
3.21 No Adverse Conditions. To the best of Sellers' knowledge, other
than general business and market conditions, no condition or conditions exist
or will exist on the Closing Date which may materially impair the operations of
the Company or may materially impair the future revenue or profitability of the
Company.
3.22 No Adverse Changes. Except as set forth on Schedule 3.15 or
Schedule 3.5, no material adverse change has occurred within the last three
years in the financial condition, assets, liabilities (contingent or
otherwise), income, operations or business of the Company.
3.23 Accurate and Complete Statements. The books, ledgers, financial
records and other records of the Company:
(a) have been fully, properly and accurately maintained, are in the
possession of the Company and contain true and accurate records of all matters
required to be entered therein by law;
(b) do not contain or reflect any material discrepancies, and;
(c) give and reflect a true and fair representation of the matters
which ought to appear therein.
3.24 No Registration. Sellers understand that the shares of Common
Stock of XXXXXXXX have not been registered under the Securities Act or any
state securities law, by reason of their issuance in a private transaction
exempt from the registration requirements of the
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Securities Act and such laws, and that they must be held indefinitely unless it
is subsequently registered under the Securities Act and such laws or a
subsequent disposition thereof is exempt from registration. Each Seller shall
have a one-time right to opt to have such shares registered under the
Securities Act in the event that XXXXXXXX opts to register any such shares
whether newly issued or held by other third-parties for sale. XXXXXXXX shall
notify each Seller no less than thirty days in advance of such opportunity to
register such shares, and each Seller shall notify XXXXXXXX no less than ten
days after such notice is given of its intent to opt to register its shares for
sale.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Purchasers represent and warrants as follows:
4.1 Binding Obligation. XXXXXXXX is a corporation duly organized under
the laws of the state of Delaware and BANK is a banking corporation duly
organized under the laws of the state of Michigan and both are validly existing
and in good standing under the law of said state. Purchasers have full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement is a legal, valid and binding obligation
of Purchasers and is enforceable against Purchasers in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally. Purchasers need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement, except as listed in Schedule 4.1. SELLERS AND
PURCHASERS EACH UNDERSTAND THAT IF ANY REGULATORY PERMISSIONS REQUIRED TO
CONSUMMATE THE CLOSING ARE NOT FORTHCOMING, THAT THIS AGREEMENT SHALL BE NULL
AND VOID AND NEITHER THE PURCHASERS NOR THE SELLERS SHALL HAVE ANY LIABILITY
WHATSOEVER THEREUNDER AS A RESULT.
4.2 No Default. Neither the execution and delivery of this Agreement,
the consummation of the transactions contemplated herein, nor the compliance
with the terms and provisions hereof or thereof will conflict with or result in
a breach of any of the terms, conditions or provisions of any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Purchaser is subject, including but not limited to federal and state securities
laws, or any provision of the charter or by-laws of Purchasers; or conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Purchasers are a party or by
which Purchasers are bound or to which any of Purchasers' assets are subject.
4.3 Litigation. There is no litigation, administrative proceeding or
other action or proceeding pending or threatened against Purchasers which would
prevent or hinder performance by Purchasers of their obligations under this
Agreement.
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4.4 Investment. Purchasers are acquiring the Interests for their own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and Purchasers have no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.
4.5 No Registration. Purchasers understand that the Interests have not
been registered under the Securities Act or any state securities law, by reason
of their issuance in a transaction exempt from the registration requirements of
the Securities Act and such laws, and that they must be held indefinitely
unless it is subsequently registered under the Securities Act and such laws or
a subsequent disposition thereof is exempt from registration.
4.6 Access to Records. Purchasers agree that until January 1, 2001,
BAY shall be entitled to receive monthly financial statements of the Company,
and shall be entitled to full access to the financial books and records of the
Company (except confidential customer information) and auditor management
reports.
5. COVENANTS OF THE PARTIES PRIOR TO CLOSING
Between the date of this Agreement and the Closing Date:
5.1 Access; Confidential Information. Sellers will, in accordance with
the agreement of the Company which Sellers hereby represent that the Company
has made, afford to the officer and authorized representatives of Purchasers
access to the plants, properties, books and records of the Company and will
furnish Purchasers with such additional financial and operating data and other
information as to the business and properties of the Company as Purchasers may
from time to time request. Purchasers' investigations will not unreasonably
interfere with the Company's normal operations. Sellers will cooperate with
Purchasers, their representatives and counsel in the preparation of any
documents or other material which may be required in connection with any
documents or materials required by any governmental agency. Purchasers will
cause all information obtained from Sellers or the Company in connection with
the negotiation and performance of this Agreement to be treated as confidential
(except such information as Purchasers may be required to disclose to any
governmental agency) and will not use, and will not knowingly permit others to
use, any such information other than in connection with the transaction
contemplated hereby.
5.2 Operations. Sellers will cause the Company to:
(a) carry on its business in substantially the same manner as it has
heretofore and not introduce any new method, or discontinue any existing
method, of management, operation or accounting;
(b) maintain its properties and facilities in as good working order
and condition as at present, ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to or
affecting its assets, properties and rights;
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(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its relationship
with suppliers, customers and others having business relations with it;
(f) advise Purchasers promptly in writing of any change in any
document, schedule or other information delivered pursuant to this Agreement;
and
(g) file on a timely basis all notices, reports or other filings
required to be filed with or reported to any federal, state, municipal or other
governmental department, commission, board, bureau, agency or any
instrumentality of any of the foregoing wherever located necessary to maintain,
renew or extend any permit, license, variance or any other approval required by
any governmental authority or otherwise necessary and/or required for the
continuing operation of the Company.
5.3 No Change. Sellers will not allow the Company, without prior
written consent of Purchasers, to:
(a) make any change in its organizational documents or operating
agreement;
(b) authorize, issue, transfer or distribute any interests in the
Company;
(c) enter into any contract or commitment or incur or agree to incur
any debt or any other liability, except in the ordinary course of business;
make any capital expenditures; or enter into any arrangement with respect to
the accrual of bonuses to employees;
(d) create, assume or otherwise voluntarily permit the imposition of
any mortgage, pledge or other lien or encumbrance upon any assets or properties
whether now owned or hereafter acquired;
(e) sell, assign, lease or otherwise transfer or dispose of any
property or equipment other than in the ordinary course of business;
(f) merge or consolidate or agree to merge or consolidate with or into
any other Person, firm or entity;
(g) waive any material rights or claims;
(h) amend or terminate any contract, agreement, license or other right
to which the Company is a party; or
(i) enter into any transaction outside the ordinary course of its
business.
5.4 Required Certificates. A "Certificate of Good Standing" for the
Company issued by the Secretary of State of Michigan will be delivered to
Purchasers by Sellers not later than the Closing Date. Certificates showing
that all state franchise (and or income) taxes
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for the Company for all periods prior to the Closing, issued by the appropriate
state agency in Michigan and in each state in which the Company is authorized
to do business, will be delivered to Purchasers by Sellers, no later than the
Closing Date.
5.5 Public Statements. Before the Company or any Seller shall release
any information concerning this Agreement or the transactions contemplated by
this Agreement which is intended for or may result in public dissemination
thereof, they shall cooperate with Purchasers, shall furnish drafts of all
documents or proposed oral statements to Purchasers for comments, and shall not
release any such information without the written consent of Purchasers, which
consent shall not be unreasonably withheld. Before Purchasers shall release any
information concerning this Agreement or the transactions contemplated by this
Agreement which is intended for or may result in public dissemination thereof,
it shall cooperate with Sellers, shall furnish drafts of all documents or
proposed oral statements to Sellers for comments, and shall not release any
such information without the written consent of Sellers, which consent shall
not be unreasonably withheld. Nothing contained herein shall prevent the
Company, Sellers or Purchasers from releasing any information to any
governmental authority if required to do so by law.
6. INDEMNIFICATION.
6.1 General. Subject to the other terms of this Section 6, Sellers,
jointly and severally, agree to defend, indemnify and hold harmless Purchasers
from against and in respect of:
(a) any federal, state or local tax liability with respect to the
Company arising out of any period ended on or before the Closing Date, but not
reflected on the most recent balance sheet in Schedule 3.4 or listed on
Schedule 3.5;
(b) any accrued or absolute liability of or claim against the Company
(other than for taxes) existing or contingent at the Closing Date that is in
excess of the actual aggregate liability of the Company for the sum of the
liabilities listed on Schedule 3.5 and those reflected in the most recent
balance sheet in Schedule 3.4;
(c) any and all damages, loss, deficiency, costs or expenses resulting
from any misrepresentation, breach of warranty, or nonfulfillment of any
agreement or covenant on the part of any Seller under this Agreement (other
than one included in (a) or (b) above) or any misrepresentation in or omission
from any list, schedule, certificate, or other instrument furnished or to be
furnished to Purchasers pursuant to the terms of this Agreement; and including
in each case all costs and expenses of all actions, suits, proceedings,
demands, assessments and adjustments (including specifically, but without
limitation, attorneys' fees and expenses of investigation) incident to any of
the foregoing.
6.2 Notice. Notice shall be given promptly to each Seller of any claim
or litigation the existence of which gives rise to the operation of the
foregoing indemnity. Sellers shall investigate and defend such claim at their
expense. Any settlement shall be with the consent of Purchasers. If Sellers
fail to defend the claim, Purchasers may
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defend such claim with power to settle and Sellers shall pay the costs and
expenses thereof and the amount of any settlement or judgment.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASERS
Except as otherwise provided in this Section 7, the obligations of Purchasers
hereunder are, at its option, subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions.
7.1 Accuracy of Representations; Performance of Covenants. The
representations and warranties of Sellers contained in this Agreement shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; each and
all of the agreements of Sellers to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed; and Sellers shall have
delivered to Purchasers a certificate dated the Closing Date and signed by
Sellers to all such effects.
7.2 Opinion of Counsel. Purchasers shall have received opinions from
the counsel to the Company, dated the Closing Date, in form and substance
satisfactory to Purchasers, to the effect that: (i) the Company has been duly
organized and is validly existing in good standing under the laws of the state
of Michigan, (ii) the Company is duly authorized, qualified and licensed under
all applicable laws, regulations, ordinances or orders of public authorities to
carry on its business in the places and in the manner as now conducted, except
where the failure to do so would not have a material adverse effect on the
Company's business; (iii) the stockholder interests in the Company are as
represented by Sellers in this Agreement and each such interest has been duly
and validly obtained and was not obtained in violation of the by-laws or the
rights of any stockholder; (iv) other than as set forth in this Agreement or on
a Schedule hereto, the Company does not have any outstanding options, calls or
other commitments of any kind to issue or sell any stockholder interest
(excluding the warrant of the Company to sell stock to BIDCO and the option
held by the BIDCO to buy stock from BURGER); (v) this Agreement has been duly
executed and delivered by Sellers and constitutes a valid and binding agreement
of Sellers in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally; (vi) upon
consummation of the purchase contemplated by this Agreement, Purchasers will
receive good title to the Interests, free and clear of all liens, encumbrances
and claims of every kind known to counsel; (vii) the Company is not in
violation of or default under any law or regulation, or under any order of any
court, commission, board, bureau, agency or instrumentality wherever located
and there are no claims, actions, suits or proceedings pending, or threatened
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality wherever located; (viii) no notice to,
consent, authorization, approval or order of any court or governmental agency
or body or of any other third party is required in connection with the
execution, delivery or consummation of this Agreement by Sellers or for the
transfer to Purchasers of the Interests; (ix) the execution of this Agreement
and the performance of the obligations hereunder will not violate or result in
a breach or constitute a default under any of the terms or provisions of the
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organizational documents or operating agreement of the Company or of any lease,
instrument, license, permit or any other agreement to which the Company is a
party or by which the Company or any Seller is bound; and (x) the offer and
sale of Interests pursuant to this Agreement are exempt from registration
pursuant to the Securities Act of 1933, as amended.
7.3 Governmental Contracts; No Litigation. All necessary consents of,
notices to, and filings with any governmental authority or agency, including
without limitation the Securities and Exchange Commission, relating to the
consummation of the transactions contemplated in this Agreement shall have been
obtained or accomplished and no action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the acquisition by Purchasers of the shares and no
governmental agency or body shall have taken any other action or made any
request of Purchasers in connection with this transaction as a result of which
the management of Purchasers reasonably deems it inadvisable to proceed with
the transactions hereunder.
7.4 No Adverse Change. No adverse change in the results of operations,
financial condition or business of the Company shall have occurred, and the
Company shall not have suffered any loss or damage to any of its properties or
assets, whether or not covered by insurance, since the Balance Sheet Date,
which change, loss or damage materially adversely affects or impairs the
ability of the Company to conduct its business and Purchasers shall have
received a certificate signed by Sellers dated the Closing Date to such effect.
7.5 Updates. Sellers shall have delivered to Purchasers accurate
updates to each of the schedules to this Agreement, as of the Closing Date,
showing all additions or changes to the items described in each of such
schedules arising since the date of such schedules.
7.6 Releases. Sellers shall have delivered to Purchasers an instrument
dated the Closing Date releasing the Company and Purchasers from any and all
claims of Sellers against the Company.
7.7 Approval by Counsel. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall have met the reasonable satisfaction of
counsel to Purchasers and such counsel shall have been furnished with all such
documents and instruments as they shall have reasonably requested in connection
with the transactions contemplated herein.
7.8 Net Assets of Company. The Company's audited financial statements
shall evidence net assets (excluding goodwill) of the Company worth not less
than $1,100,000 at the Closing Date.
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.
The obligations of Sellers hereunder are, at their option, subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions.
8.1 Accuracy of Representations; Performance of Covenants. The
representations and warranties of Purchasers contained in Section 4 shall be
accurate as of the Closing Date as though such representations and warranties
had been made at and as of that time; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Purchasers on
or before the Closing Date shall have been duly complied with and performed;
and a certificate to the foregoing effect dated the Closing Date and signed by
a duly authorized officer of Purchasers shall have been delivered to Sellers.
8.2 Board Seats. Purchasers shall have caused the appointment of one
nominee of BAY and one nominee of BURGER to the Board of Directors of the
Company.
9. TERMINATION.
9.1 By Purchasers. Purchasers may terminate this Agreement by giving
written notice to Sellers:
(a) on or before the 3Oth day following the date of this Agreement if
Purchasers is not satisfied with the results of its continuing business, legal
and accounting due diligence regarding the Company; or
(b) at any time prior to the Closing Date (i) in the event any of the
Sellers has breached any material representation, warranty or covenant
contained in this Agreement in any material respect, the Purchasers has
notified the Sellers of the breach, and the breach has continued without cure
for a period of thirty (30) days after notice of breach; or (ii) if the Closing
shall not have occurred on or before December 31, 1995 by reason of the failure
of any condition precedent set forth in Section 7 above (unless the failure
results primarily from Purchasers itself breaching any representation, warranty
or covenant contained in this Agreement).
10. SURVIVAL OF REPRESENTATIONS.
The representations, warranties, covenants and agreements of the parties
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties.
11. GENERAL.
11.1 Additional Conveyances. Upon the execution of this Agreement,
Purchasers and Sellers mutually agree to promptly undertake, and to pursue,
cooperatively and diligently, the obtaining of all approvals, consents and
authorizations required to be given by third parties, governmental or private,
that are necessary or
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16
appropriate to effect the transactions contemplated in this Agreement in an
expeditious and prudent manner. In addition, Sellers shall deliver or cause to
be delivered on the Closing Date, and at such other times and places as shall
be reasonably agreed on, such additional instruments as Purchasers may
reasonably request for the purpose of carrying out this Agreement. Sellers
will cooperate and use their best efforts to have the present principals,
managers and employees of the Company cooperate with Purchasers on and after
the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or
disputes of any nature with respect to matters pertaining to all periods prior
to the Closing Date.
11.2 Assignment. This Agreement and the rights of Sellers hereunder
may not be assigned (except by operation of law) and shall be binding upon and
shall inure to the benefit of the parties hereto, the successors and legal
representatives of Purchasers and the heirs, assigns and legal representatives
of Sellers. Purchasers may assign its rights and obligations hereunder.
11.3 Entire Agreement. This Agreement (including the schedules,
annexes and exhibits hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding between Sellers and
Purchasers and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement may be modified or amended
only by a written instrument executed by Sellers and Purchasers each acting
through its duly authorized agent.
11.4 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
11.5 Brokers. Each party represents and warrants that it employed no
broker or agent in connection with this transaction and agrees to indemnify the
other against all other loss, cost, damage or expense arising out of claims for
fees or commissions of brokers or agents employed or alleged to have been
employed by such party.
11.6 Fees and Expenses. Whether or not the transactions herein
contemplated shall be consummated, Purchasers will pay the fees, expenses and
disbursements of Purchasers and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments thereto. Sellers will pay the fees, expenses and disbursements
of Sellers and their agents, representatives, accountants and counsel incurred
in connection with the subject matter of this Agreement and any amendments
hereto and all other costs and expenses incurred in the performance and
compliance with all conditions to be performed by Sellers under this Agreement.
11.7 Fair Dealing. Purchasers agree that until January 1, 2001 any
transactions or contractual relationship between Midwest Loan Services and any
affiliate (including BANK, NEWBERRY, BURGER, and any other entity controlled by
Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, or BURGER, will be on a fair and arms length
basis.
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11.8 Arbitration. Any controversy or claim arising out of or related
to this Agreement shall be resolved by binding arbitration in Xxx Arbor or
Detroit, Michigan, at BANK's option, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon any
award may be entered in any court having jurisdiction thereof. The prevailing
party shall be entitled to recover reasonable attorney's fees and other costs
incurred in any arbitration proceeding.
11.9 Notices. Any notice or communication required or permitted
hereunder shall be sufficiently given when sent by first class mail, postage
prepaid and simultaneously sent by facsimile:
(a) If to Purchasers, addressed to it at:
Xxxxxxx Xxxxx Xxxxxxx, President
Xxxxxxxx Bancorp, Inc.
University Bank
000 Xxxx Xxxxxxx Xxx.
Xxxxx Xxx. Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
(b) If to Sellers, to them at:
Xxxxxx Xxxxx and Xxxxx Xxxxxx
Bay Loan Brokers, Inc.
0000 Xxxxxxx Xxxx. Xxxxxxxx X
Xxx Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
Xxxxxx Xxxxxx, President
Midwest Loan Services
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Xxxxxx Xxxxxxx, Chairman
Northern Michigan BIDCO, Inc.
000 Xxxx Xxxxxxx Xxx.
Xxxxx Xxx. Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
11.10 Applicable Law: This Agreement shall be construed in accordance
with and governed by the laws of the state of Michigan.
11.11 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the day and year first above written.
PURCHASERS:
Witness: Xxxxxxxx Bancorp, Inc.
___________________ By:/s/Xxxxxxx Xxxxx Ranzini
------------------------
Xxxxxxx Xxxxx Xxxxxxx, President
Witness: University Bank
___________________ By:/s/Xxxxxxx Xxxxx Ranzini
------------------------
Xxxxxxx Xxxxx Xxxxxxx, President
SELLERS:
Witness: Bay Loan Brokers, Inc.
___________________ By:/s/Xxxxxx Xxxxx
---------------
Witness: Xxxxxx Xxxxx
___________________
Witness: Bay Loan Brokers, Inc.
___________________ By:/s/Xxxxx Xxxxxx
---------------
Xxxxx Xxxxxx
Witness: Midwest Loan Services, Inc.
___________________ By:/s/Xxxxxx Xxxxxx
----------------
Xxxxxx Xxxxxx, President
Witness: Northern Michigan BIDCO, Inc.
___________________ By:/s/Xxxxxx Xxxxxxx
-----------------
Xxxxxx Xxxxxxx, Chairman
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