1
STOCK PURCHASE AGREEMENT
BY AND AMONG
▇▇▇▇▇▇▇ ▇. PARDES (THE SOLE STOCKHOLDER OF
COLUMBIA EQUITIES, LTD.)
AND
COLUMBIA EQUITIES, LTD.
AND
OCEANFIRST BANK
AS BUYER
JUNE 27, 2000,
2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS......................................................2
-----------
SECTION 2. PURCHASE.........................................................9
--------
2.1 Purchase and Sale................................................9
-----------------
2.2 Purchase Price; Payment..........................................9
-----------------------
2.3 Closing..........................................................9
-------
2.4 Deliveries at the Closing........................................9
-------------------------
2.5 Preparation and Delivery of Fiscal Year End Financial Statements
----------------------------------------------------------------
and Closing Date Financial Statements...........................10
-------------------------------------
SECTION 3. REPRESENTATIONS AND WARRANTIES REGARDING
----------------------------------------
SELLER AND THE COMPANY..........................................11
----------------------
3.1 Organization and Good Standing of the Company...................11
---------------------------------------------
3.2 Subsidiaries....................................................11
------------
3.3 Capitalization: Title to Shares.................................11
-------------------------------
3.4 Authority, Approvals and Consents...............................12
---------------------------------
3.5 Financial Statements............................................12
--------------------
3.6 Absence of Certain Changes or Events............................13
------------------------------------
3.7 Contracts.......................................................14
---------
3.8 Brokers.........................................................15
-------
3.9 Transactions with Insiders......................................15
--------------------------
3.10 Properties and Insurance........................................15
------------------------
3.11 Absence of Undisclosed Liabilities..............................16
-----------------------------------
3.12 No Conflict or Violation........................................16
------------------------
3.13 Consents and Approvals..........................................17
-----------------------
3.14 Litigation......................................................17
----------
3.15 Labor Matters...................................................17
-------------
3.16 Compliance with Law; Permits and Licenses.......................18
-----------------------------------------
3.17 No Other Agreements to Sell the Assets or the Shares............18
-----------------------------------------------------
3.18 Proprietary Rights..............................................18
------------------
3.19 Employee Benefit Plans..........................................18
----------------------
3.20 Transactions with Certain Persons...............................21
----------------------------------
3.21 Environmental Liability.........................................21
-----------------------
3.22 Loans...........................................................21
-----
3.23 Taxes...........................................................21
-----
3.24 Real Estate Owned...............................................23
-----------------
3.25 Servicing Portfolio.............................................23
-------------------
3.26 No Repurchase Agreements........................................25
------------------------
3.27 Forbearance.....................................................25
-----------
3.28 Assets and Agreements...........................................25
---------------------
3.29 Mortgage Sale Agreements........................................25
------------------------
3.30 ARM Adjustments.................................................25
---------------
3
3.31 Insurance.......................................................25
---------
3.32 No Penalties....................................................26
------------
3.33 No Other Representations or Warranties..........................26
--------------------------------------
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING
----------------------------------------
BUYER...........................................................26
-----
4.1 Incorporation of Buyer..........................................26
----------------------
4.2 Power; Authorization; Consents..................................26
------------------------------
4.3 Financial Matters...............................................27
-----------------
4.4 Regulatory Approval.............................................27
-------------------
SECTION 5. ACTIONS BY THE COMPANY, SELLER AND BUYER PRIOR
----------------------------------------------
TO CLOSING......................................................27
----------
5.1 Maintenance of Business and Preservation of Permits and
-------------------------------------------------------
Services........................................................27
--------
5.2 Additional Financial Statements.................................27
-------------------------------
5.3 Certain Prohibited Transactions.................................28
-------------------------------
5.4 Investigation by Buyer..........................................29
----------------------
5.5 Consents and Best Efforts.......................................30
-------------------------
5.6 Notification of Certain Matters.................................30
-------------------------------
5.7 No Mergers, Consolidations, Sale of Shares, Etc.................30
------------------------------------------------
5.8 Governmental Agencies...........................................31
---------------------
5.9 [INTENTIONALLY OMITTED].........................................31
5.10 [INTENTIONALLY OMITTED].........................................31
5.11 Announcements...................................................31
-------------
5.12 Consents, Cooperation...........................................31
---------------------
5.13 Notification of Certain Matters.................................32
-------------------------------
5.14 Further Assurances..............................................32
------------------
5.15 Retention of Books and Records..................................32
------------------------------
5.16 Personnel.......................................................32
---------
5.17 Transaction Expenses............................................33
--------------------
5.18 Fulfillment of Conditions.......................................33
-------------------------
5.19 Standard of Care................................................33
----------------
5.20 Sale of Servicing...............................................34
-----------------
5.21 Name of Company.................................................34
---------------
SECTION 6. CONDITIONS TO THE OBLIGATIONS OF BUYER..........................34
--------------------------------------
6.1 Representations and Warranties; Covenants.......................34
-----------------------------------------
6.2 Consents........................................................34
--------
6.3 No Governmental Orders..........................................35
----------------------
6.4 Opinion of Sellers' Counsel.....................................35
---------------------------
6.5 Absence of Injunction...........................................35
---------------------
6.6 Officers and Directors..........................................35
----------------------
6.7 Certificates....................................................35
------------
6.8 Regulatory Consents and Approvals...............................35
---------------------------------
6.9 No Material Adverse Effect......................................35
--------------------------
4
SECTION 7. CONDITIONS TO THE OBLIGATIONS OF SELLERS........................36
----------------------------------------
7.1 Representations and Warranties; Covenants.......................36
-----------------------------------------
7.2 Absence of Litigation...........................................36
---------------------
7.3 Certificates....................................................36
------------
7.4 Regulatory Consents and Approvals...............................36
---------------------------------
SECTION 8. ACTIONS BY SELLER, THE COMPANY AND BUYER AFTER
----------------------------------------------
THE CLOSING.....................................................36
-----------
8.1 Books and Records...............................................36
-----------------
8.2 Further Assurances..............................................37
------------------
8.3 Noncompetition..................................................37
--------------
8.4 Certain Tax Matters:............................................37
-------------------
8.5 Preparation and Delivery of Tax Returns and the Fiscal Year End
---------------------------------------------------------------
Financial Statements............................................39
---------------------
SECTION 9. CONFIDENTIALITY.................................................39
---------------
9.1 Confidentiality.................................................39
---------------
SECTION 10. TERMINATION.....................................................40
-----------
10.1 Termination.....................................................40
-----------
10.2 Effect of Termination...........................................41
---------------------
SECTION 11. LIMITED SURVIVAL................................................41
----------------
11.1 Survival........................................................41
--------
SECTION 12. MISCELLANEOUS...................................................41
-------------
12.1 Headings........................................................41
--------
12.2 Notices.........................................................41
-------
12.3 Assignment......................................................43
----------
12.4 Entire Agreement................................................43
----------------
12.5 Amendment, Waiver...............................................43
-----------------
12.6 Counterparts....................................................44
------------
12.7 Governing Law...................................................44
-------------
12.8 Severability....................................................44
------------
12.9 No Third Person Beneficiaries...................................44
-----------------------------
12.10 No Agreement until signed by all parties. .....................44
----------------------------------------
12.11 Invalidity......................................................44
----------
12.12 Publicity.......................................................44
---------
12.13 Disclosure Schedule.............................................44
-------------------
12.14.Power of Attorney...............................................44
-----------------
Exhibits
A. Change in Control Agreements
B. Employment Agreement
C. Consulting Agreement
D. Schedule 8.4
5
STOCK PURCHASE AGREEMENT
THIS AGREEMENT dated this 27th day of June 2000, by and among OceanFirst
Financial Corp., a Delaware Corporation ("Parent"), OceanFirst Bank, a federal
savings bank and wholly owned subsidiary of Parent ("OceanFirst" or the "Buyer")
and ▇▇▇▇▇▇▇ ▇. Pardes, the sole stockholder of Columbia Equities, Ltd.
("Seller"), and Columbia Equities, Ltd. corporation (the "Company").
WHEREAS, Buyer desires to purchase and Seller desires to sell all issued
and outstanding shares of capital stock of the Company, on the terms and
conditions hereinafter set forth ("Transaction").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
-----------
1.1 In this Agreement (including the recitals and Schedules hereto),
except as expressly provided or as the context otherwise requires, the terms
below shall have the following meanings:
"Advances" shall mean amounts that as of the Closing Date, have been
--------
advanced by the Company in connection with servicing the Loans (including,
without limitation, principal, interest, taxes and insurance premiums) and which
have been paid by the Company as the servicer for the Loans pursuant to
applicable Investor requirements and the terms of applicable Servicing
Agreements.
"Affiliate" means, with respect to any Person, any other Person who
---------
directly or indirectly controls, is controlled by, or is under direct or
indirect common control with, such Person. "Control" (including the terms
"controlling," "controlled by" and under "common control with" a Person) means
the possession, direct or indirect of the power to (i) vote 50% or more of the
voting securities of such Person or (ii) possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agency or Agencies" shall mean FNMA, FHLMC, GNMA, HUD, FHA, and VA.
------------------
"Agency Portfolio" shall mean any loans serviced for Agencies.
----------------
"Agreement" means this agreement including all recitals, Exhibits,
---------
Schedules and the Disclosure Schedule relating hereto.
2
6
"Bank Regulatory Agencies" shall mean the Federal Deposit Insurance
--------------------------
Corporation, the Office of Thrift Supervision, any similar agency of any state
or any successor to any of the foregoing.
"Bankruptcy Action" shall mean, with respect to any of the Company's
------------------
Loans, that the borrower (i) has made an assignment for the benefit of creditors
or has petitioned or applied to any tribunal for the appointment of a custodian,
receiver or trustee for the borrower or for a substantial part of the borrower's
assets, (ii) has commenced any proceeding under any bankruptcy, reorganization,
readjustment of debt, receivership, dissolution or liquidation law or statute of
any jurisdiction, or (iii) has pending against the borrower any such petition,
application or proceedings.
"Business Day" means any day which is not a Sunday or any other day on
-------------
which the Buyer is open for business.
"Closing" means the closing of the purchase and sale of the Shares
-------
pursuant to this Agreement.
"Closing Date" means the day of the Closing, which shall be as soon as
-------------
practicable following the date on which all conditions to the obligations of
Buyer and Seller under Sections 6 and 7 of this Agreement have been satisfied.
"Closing Date Financial Statements" means the unaudited financial
-------------------------------------
statements required by Section 2.5(a).
"Closing Date Payment" means $4.0 million.
--------------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Collateral" means the property securing a Loan.
----------
"Company Agreement" or "Contract" or "Contracts" means any mortgage,
---------------------------------------------------
indenture, note, agreement, contract, lease, license, franchise, obligation,
instrument or other commitment, arrangement or understanding of any kind, to
which the Company is a party or by which the Company or any of its property may
be bound or affected, including without limitation any agreements with or
licenses or permits issued by any Agency and any agreements entered into by
Sellers that affect the Company in any way.
"Disclosure Schedule" means the disclosure schedule relating to this
--------------------
Agreement attached hereto and delivered by Seller to Buyer.
"Encumbrances" means any lien, charge or encumbrance.
------------
3
7
"Environmental Laws" shall mean all federal, state, district, and local
------------------
laws, and all rules or regulations promulgated thereunder, applicable to the
Company and where applicable to the Seller relating to pollution or protection
of the environment. Environmental Laws shall include without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Toxic Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, and all analogous laws promulgated or issued by any state or other
governmental authority, including without limitation, the laws of the States of
New York, New Jersey and Florida and any other states where loans are originated
by the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Facilities" means the offices and all other real property owned or leased
----------
by the Company, but excluding REO.
"Final Adjusted Net Worth" means the net worth of the Company determined
-------------------------
in accordance with GAAP, as set forth in the Fiscal Year End Financial
Statements, as reduced to eliminate receivables from affiliates and related
parties existing at the Closing Date and reduced by the amount of any liability
reflected in the Closing Date Financial Statements that was not reflected in the
Fiscal Year End Financial Statements that was not incurred in the ordinary
course of business, which is considered a Material Agreement or Material
Contract (except for such Material Agreements or Material Contracts that are
either (i) contemplated by this Agreement, or (ii) approved by Buyer, which
approval shall not be unreasonably withheld), and decreased to eliminate all
amounts for capitalized servicing and increased by the Servicing Amount less any
amounts of the purchase price for the Agency Portfolio not paid by the purchaser
of the Agency Portfolio as a result of the Agency Portfolio purchaser's review
of the Agency Portfolio loan documentation.
"Financial Statements" means the audited consolidated financial statements
--------------------
of the Company for the years ended May 31, 1999, 1998 and 1997, including the
notes thereto accompanied by the report thereon of Ernst & Young LLP and the
unaudited consolidated financial statements of the Company for the period ended
February 29, 2000.
"FHA" shall mean the Federal Housing Administration of the Department of
---
Housing and Urban Development of the United States of America or any successor
thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or any
-----
successor thereto.
"Fiscal Year End Financial Statements" means the audited consolidated
---------------------------------------
financial statements of the Company for the fiscal year ended May 31, 2000,
prepared in accordance with GAAP applied consistent with past practice including
notes thereto accompanied by the report thereon of Ernst & Young LLP. The Fiscal
Year End Financial Statements will reflect all adjustments and accruals
4
8
necessary for a fair presentation of the financial condition of the Company and
the results of its operations consistent with GAAP for the period presented.
"FNMA" shall mean the Federal National Mortgage Association or any
----
successor thereto.
"Forbearance" shall mean any written agreement with the borrower or
-----------
guarantor of any of the Loans to waive or forbear from exercising a right or
remedy under the applicable documents for Loans or to waive or forgive any
portion of the accrued interest of the Loans.
"Foreclosure" shall mean the legal process involved in the acquisition of
-----------
title to collateral securing any Loans in a foreclosure sale or pursuant to any
other comparable procedure allowed under applicable law.
"GAAP" means Generally Accepted Accounting Principles.
----
"GNMA" shall mean the Government National Mortgage Association or any
----
successor thereto.
"HUD" shall mean the Department of Housing and Urban Development or any
---
successor thereto.
"Insurer" shall mean (i) an entity or person who insures or guarantees all
-------
or any portion of the risk of loss upon borrowers' default on any of the Loans,
including, without limitation, the FHA, the VA and any private or other public
mortgage insurer, and (ii) providers of life, hazard, flood, disability, title
or other insurance with respect to any of the Loans or the collateral.
"Investor" shall mean the FHLMC, FNMA, GNMA, HUD or any
--------
state Investor or corporate or private Investor, as the case may be, who owns
any of the Loans or holds beneficial title to any of the Loans.
"Investor Commitment" shall mean the commitment of a Person to purchase a
--------------------
Loan owned by the Company or to be owned by the Company upon the closing of such
Loan.
"Insider" means, with respect to any Person, any officer, director or
-------
Affiliate of such Person.
"Knowledge of Seller", or words of similar import, means actual knowledge
-------------------
of the Seller or any other Person who is an officer of the Company.
"Legal Requirements" means all statutes, ordinances, codes, rules,
-------------------
regulations, standards, judgments, decrees, writs, rulings, injunctions, orders
and other requirements of governmental, administrative or judicial entities that
are material and applicable to the Company and any of its property.
5
9
"Letter of Intent" means the letter of intent entered into between the
----------------
Buyer, Seller and Company dated June 11, 2000.
"Lien" means any encumbrance, charge, right or other security interest.
----
"Litigation" shall mean a court action, an administrative or regulatory
----------
action, governmental investigation for which the Company or Seller has received
notice, or an arbitration proceeding, including, without limitation, Bankruptcy
Action or pending Foreclosure.
"Loan Documents" shall mean all files, records and documents existing
---------------
which were customarily required to originate and secure the Loans and reasonably
necessary to service the Loans in accordance with Investor requirements.
"Loans" shall mean (i) loans owned by the Company, or (ii) loans that are
-----
in the process of being closed by the Company (I.E., pipeline loans), or (iii)
loans that are serviced by the Company.
"Material Adverse Effect" shall mean an effect which: (1) is material and
------------------------
adverse to the business, operations, assets, properties, financial condition or
results of operations of the Company; (2) materially and adversely affects the
ability of the Company to perform its material obligations hereunder; (3)
materially and adversely affects the ability of the Company to continue to
originate Loans or maintain a Servicing Portfolio substantially at levels
historically maintained by the Company as reflected in the Financial Statements
delivered to Buyer under this Agreement; (4) materially and adversely affects
the timely consummation of the transactions contemplated hereby, except that any
effect that is directly a consequence of the Company's and Seller's compliance
with Section 5.3 or 5.20 of the Agreement shall not be deemed to cause a
Material Adverse Effect. In addition, without limiting the foregoing, a breach
of any of the following representations and warranties will constitute a
Material Adverse Effect: the first sentence of Section 3.1, any portion of
Section 3.3, the first two sentences of Section 3.4, and Section 3.6(a).
"Material Agreement" or "Material Contract" means each of the following
------------------- ------------------
Company Agreements or Seller Agreements that are material to the business,
operations, assets or financial condition of the Company, including, without
regard to materiality, each of the following Company Agreements:
(a) any mortgage, indenture, note, installment obligation or other
instrument, agreement or arrangement for or relating to borrowing of
money by the Company or guarantee by the Company of such obligation;
(b) any guaranty, direct or indirect, by the Company of any obligation
for borrowed money, excluding endorsements made for collection in
the ordinary course of business;
6
10
(c) any obligation to sell or to register the sale of any of the shares
or other securities of the Company;
(d) any obligation to make payments, contingent or otherwise, arising
out of the prior acquisition by the Company of the business of other
persons;
(e) any lease or similar arrangement requiring payments by the Company
in excess of $5,000 per annum;
(f) any Company Agreement to which any Insider is a party;
(g) any Company Agreement providing for aggregate payments in excess of
$25,000 per annum after the Closing that is not terminable by the
Company on less than 180 days' notice without penalty;
(h) any Company Agreement containing non-competition covenants binding
on the Company;
(i) any partnership, joint venture or similar agreement to which the
Company is a party;
(j) any employment contracts, arrangements, commitments or
understandings of any kind with any officer, director, employee or
consultant of the Company which may not be terminated by the Company
without penalty upon not more than 30 days' notice, pursuant to
which payments may be required to be made following the Closing; and
(k) any contract obligating the Company to pay an amount in excess of
$25,000 per annum;
(l) any capital expenditure, capital contribution or capital financing
by the Company in an amount in excess of $10,000.
"Permits" shall mean all licenses, permits, orders, consents, approvals,
-------
registrations, authorizations, qualifications and filings with and under all
federal, state, local or foreign laws and governmental or regulatory bodies or
Agencies.
"Person" means and includes an individual, corporation, partnership
------
(limited or general), joint venture, association, trust, any other
unincorporated organization or entity and a governmental entity or any
department or agency thereof or any other entity.
"Purchase Price" has the meaning given such term in Section 2.2 hereof.
--------------
7
11
"Related Escrow Accounts" means the mortgage escrow/impound accounts
-------------------------
maintained by the Company related to Servicing.
"Revised Basis Points" means 157.4 basis points plus the positive or
----------------------
negative difference between the weighted average basis points that the Agency
Portfolio is sold for in a sale pursuant to Section 5.20, as compared to 162.238
basis points.
"Servicing" or "Servicing Rights" means the right to receive servicing fee
-------------------------------
income and other income in connection with the rights and responsibilities of
the Company with respect to servicing and master servicing mortgage loans under
Servicing Agreements and the maintenance and servicing of Related Escrow
Accounts.
"Servicing Amount" means the lesser of (i) $12.112 million, or (ii) the
-----------------
product of the Revised Basis Points times the unpaid principal balance of the
Loans in the Servicing Portfolio as of May 31, 2000.
"Servicing Agreements" means the mortgage Loan Servicing agreements
---------------------
pursuant to which the Company is currently servicing and master servicing
certain mortgages and deeds of trusts relating to the Loans.
"Servicing Portfolio" as of a particular date means the portfolio of
--------------------
mortgage Loans serviced by the Company pursuant to mortgage Servicing
Agreements, together with all warehouse Loans, but not including any warehouse
Loans committed to be sold pursuant to an Investor Commitment on a servicing
released basis, as of such date.
"Shares" means all issued and outstanding Common Shares of the Company.
------
"Tax" or "Taxes" means all taxes, charges, fees, levies or other
----------------
assessments, and all estimated payments thereof, including but not limited to
income, excise, property, sales, use, value added, environmental, franchise,
payroll, transfer, gross receipts, withholding, social security, and
unemployment taxes, imposed by any federal, state, county or local government,
or any subdivision or agency thereof, and any interest, penalty and expense
relating to such taxes, charges, fees, levies or other assessments.
"VA" means the Veterans Administration or any successor thereto.
--
1.2 Other Defined Terms. Other terms defined throughout the Agreement
-------------------
shall have the meanings defined for such terms in the Section in which such
terms are defined.
8
12
SECTION 2. PURCHASE
--------
2.1 Purchase and Sale. Upon the terms and subject to the conditions set
-----------------
forth in this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to
purchase from Seller, all of Seller's right, title and interest in and to the
Shares as of the Closing Date.
As of the Closing Date, Buyer will obtain the release of Seller as
guarantor of the credit facility maintained by the Company with Fleet Bank, it
being understood that, promptly after the Closing Date, Buyer will be providing
the funds necessary for the Company to conduct its mortgage banking operations.
2.2 Purchase Price; Payment
-----------------------
(a) The purchase price for the Shares (the "Purchase Price") will be equal
to the greater of (i) $4.0 million, or (ii) the lesser of (A) the Final Adjusted
Net Worth, or (B) $6.1 million.
(b) The Purchase Price will be paid as follows:
(i) On the Closing Date, Buyer will pay to Seller the Closing Date
Payment by wire transfer of immediately available funds.
(ii) Promptly following the sale and receipt of payment from the
sale of all or part of the Company's Agency Portfolio pursuant to Section 5.20,
the parties shall calculate the Final Adjusted Net Worth in good faith. If the
Final Adjusted Net Worth exceeds the Closing Date Payment, the excess shall
promptly be paid to Seller by wire transfer of immediately available funds,
together with interest from the Closing Date to the date of payment at the rate
of 10% per annum.
2.3 Closing. Subject to the conditions set forth in Sections 6 and 7 of
-------
this Agreement, the Closing will take place at the offices of OceanFirst
Financial Corp. on the Closing Date. Buyer and Seller agree to cooperate to
exercise commercially reasonable efforts to close the transaction contemplated
herein as soon as reasonably practicable following the date of execution of this
Agreement.
2.4 Deliveries at the Closing. Subject to the provisions of Sections 6
-------------------------
and 7 hereof, at the Closing:
(a) Seller agrees to deliver to Buyer:
(i) certificates representing the Shares duly endorsed for transfer
to Buyer;
9
13
(ii) all opinions, certificates and other instruments and documents
contemplated under Section 6 to be delivered by Seller at or
prior to the Closing; and
(iii) all other documents, instruments and writings required to be
delivered by Seller or the Company at or prior to the Closing
Date pursuant to this Agreement or otherwise, or reasonably
requested by Buyer in connection herewith.
(b) Buyer agrees to deliver to Seller:
(i) $4.0 million in immediately available federal funds by wire
transfer to the bank account(s) designated by Seller prior to
Closing;
(ii) all certificates and other instruments and documents
contemplated under Section 7 to be delivered by Buyer or the
Company at or prior to the Closing;
(iii) a release of Seller from the guaranty of the credit facility
maintained by the Company with Fleet Bank; and
(iv) all other documents, instruments and writings required to be
delivered by Buyer at or prior to the Closing Date pursuant to
this Agreement or otherwise, or reasonably requested by Seller
in connection herewith.
(v) In addition, at Closing the Company shall deliver to Seller an
assignment of all receivables from related or affiliated
parties, to the extent such receivables are included as a
deduction to Final Adjusted Net Worth.
2.5 Preparation and Delivery of Fiscal Year End Financial Statements and
--------------------------------------------------------------------
Closing Date Financial Statements.
---------------------------------
(a) Prior to Closing, Seller shall take all action necessary, including
preparing all necessary documents and providing any necessary assistance to
enable the Company to deliver to Buyer, as soon as practical, the Fiscal Year
End Financial Statements. In addition, Buyer will cause Closing Date Financial
Statements to be prepared as soon as practicable after Closing on the same basis
as the Fiscal Year End Financial Statements and delivered to Buyer. The Closing
Date Financial Statements shall be prepared by Ernst & Young LLP and Seller
shall cooperate with Buyer and the Company and Ernst & Young LLP and provide
such assistance as may be necessary to enable Ernst & Young LLP to prepare such
Closing Date Financial Statements.
10
14
SECTION 3. REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND THE
-------------------------------------------------------
COMPANY
The Seller and the Company have diligently sought to disclose all material
aspects of the business, financial condition and assets and liabilities of the
Company to the Buyer and, except as specifically disclosed in this Agreement or
in the Disclosure Schedule of the Seller and Company delivered with this
Agreement, Seller and the Company hereby represent and warrant to Buyer as
follows:
3.0 Standards. No representation or warranty of the Seller or Company in
---------
Section 3 hereof shall be deemed untrue or incorrect on account of the existence
of any fact, circumstance or event unless, as a direct or indirect consequence
of such fact, circumstance or event, either individually or taken together with
all other facts, circumstances or events inconsistent with any paragraph of
Section 3, as modified by the Disclosure Schedule, there is reasonably likely to
exist a Material Adverse Effect.
3.1 Organization and Good Standing of the Company. The Company is duly
-----------------------------------------------
incorporated and is validly existing as a corporation in good standing under the
laws of the State of New York, and has the corporate power and authority to own,
lease and operate the property used in its business and to carry on its business
as now being conducted. The Company is registered to do business and is in good
standing in all jurisdictions listed on Section 3.1 of the Disclosure Schedule
and the Company is not required to be registered to do business, qualified or
authorized to do business under applicable law in any jurisdiction not listed on
Section 3.1 of the Disclosure Schedule. Sellers and/or the Company has made
available to Buyer true and complete copies of the Certificate of Incorporation
and all amendments thereto of the Company to the date hereof and the Bylaws of
the Company as in effect on the date hereof. The minute books and stock transfer
ledgers of the Company have been made available to Buyer prior to the execution
of this Agreement and accurately reflect all record transfers in the capital
stock of the Company prior to the execution of this Agreement and the originals
thereof will be delivered to the Company at Closing.
3.2 Subsidiaries. Other than as identified in Section 3.2 of the
------------
Disclosure Schedule, the Company does not own, directly or indirectly, any debt,
shares or other equity interest or securities in any corporation, partnership,
joint venture or other Person, and has no agreement or commitment to purchase
any such interest.
3.3 Capitalization: Title to Shares. The authorized capital stock of the
--------------------------------
Company consists of 12,000 shares of Common Stock of which 12,000 shares are
issued and outstanding and no shares of Preferred Stock. All of the Shares have
been validly authorized and issued, and are fully paid and nonassessable. There
is no security, option, warrant, right, call, subscription agreement, commitment
or understanding of any nature whatsoever to which any of the Seller or the
Company is a party, that directly or indirectly (i) calls for the issuance,
sale, pledge or other disposition of any shares of capital stock of the Company
or any securities convertible into, or other rights to acquire, any shares of
capital stock of the Company, (ii) obligate the Seller or the Company to grant,
offer or enter into
11
15
any of the foregoing or (iii) relates to the voting or control of such capital
stock, securities or rights. Seller has good and marketable title to 100% of the
Common Shares, free and clear of any Liens. There are no restrictions upon the
voting or transfer of any Shares pursuant to the charter or bylaws of the
Company or any agreement or other instrument to which the Company or any
Affiliate of the Company is a party or by which the Company or any Affiliate of
the Company or the Seller is bound. Upon consummation of the Transaction
contemplated by this Agreement, Buyer will be the owner of the Shares, free of
all Encumbrances other than any Encumbrances arising as a result of any action
by Buyer.
3.4 Authority, Approvals and Consents. The execution, delivery and
------------------------------------
performance of this Agreement by Seller and the Company has been duly authorized
by all necessary corporate action. This Agreement has been duly executed and
delivered by the Seller and constitutes a valid and binding obligation of the
Seller, enforceable against such Seller in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies. The
execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby do not and will not:
(a) contravene any provisions of the Certificate of Incorporation or
Bylaws of the Company;
(b) (after notice or lapse of time or both) conflict with, result in a
breach of any provision of, constitute a default under, result in
the modification or cancellation of, or give rise to any right of
termination in respect of, any material contract, agreement,
commitment, understanding or arrangement of any kind to which Seller
or the Company is a party or to which Seller or any of the Company's
property is subject;
(c) violate or conflict with any Legal Requirements applicable to the
Seller or to the Company; or
(d) require any authorization, consent, order, permit or approval of, or
notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority.
3.5 Financial Statements.
--------------------
(a) Financial Statements have been delivered to Buyer by Seller. Fiscal
Year End Financial Statements will be delivered to the Buyer as soon as
reasonably practical. Except as otherwise set forth therein (including the
footnotes, supplemental schedules and the statement of accounting policy), the
Financial Statements are based on the books and records of the Company, fairly
present in all material respects, the financial position and results of
operations and cash flows of the Company, as of the date of or for the period
indicated therein, in accordance with GAAP, and, except for the interim
financial statements, including the Financial Statements for the period ended
12
16
February 29, 2000, have been audited by Ernst & Young LLP, independent auditors.
The minute books of the Company contain accurate records of all corporate
actions of their respective shareholders and Boards of Directors (there being no
committees of the Boards of Directors).
(b) The interim financial statements through February 29, 2000 previously
provided by Seller to Buyer and all additional financial statements that have or
will be provided by Seller pursuant to Section 5.2 hereof have or will fairly
present, in all material respects, the financial position and results of
operations of the Company as of the date or for the period indicated therein in
accordance with GAAP subject to the accounting practices and presentation
(including the absence of complete footnotes) normally applied by the Company in
the preparation of interim financial statements and subject to normal year-end
adjustments.
(c) Nothing contained in the Disclosure Schedule shall be deemed to
qualify any representation or warranty contained in this Section 3.5.
3.6 Absence of Certain Changes or Events. Since February 29, 2000,
----------------------------------------
there has not been any:
(a) event and there has not existed any condition that has had or is
reasonably likely to have a Material Adverse Effect on the Company, excluding
any such effects resulting directly from new state or federal legislation or
regulations or interpretations thereof, general economic conditions (such as
fluctuations in interest rates or changes in the rate of mortgage prepayments)
and changes in GAAP;
(b) sale, assignment or transfer of any of the assets of the Company,
other than sales, assignments or transfers of assets in the ordinary course of
business consistent with past practice except as required by Section 5.20
hereof;
(c) material change in accounting methods or practices by the Company
(including, without limitation, any material change in depreciation or
amortization policies or rates adopted by it) except for changes that may be
required by GAAP;
(d) entry into, termination or modification by the Company of any Material
Contract except a modification to a Material Contract in the ordinary course of
business consistent with past practice;
(e) mortgage, pledge or other encumbrance of any assets of the Company
other than in the ordinary course of business consistent with past practice;
13
17
(f) declaration, setting aside or payment of any dividends or
distributions (whether in cash, stock or property) in respect of any capital
stock of the Company or any redemption, purchase or other acquisition of any of
the Company's capital stock, except for affiliate and related party receivables
that will be excluded from the definition of the Final Adjusted Net Worth;
(g) issuance by the Company of, or commitment of the Company to issue, any
shares of capital stock or obligations or securities convertible into or
exchangeable for shares of capital stock;
(h) cancellation or distribution of any indebtedness or waiver of any
rights of the Company, except in the ordinary course of business consistent with
past practice, except for affiliate and related party receivables that will be
excluded from the definition of Final Adjusted Net Worth;
(i) amendment, cancellation or termination of any Material Contract,
license, Permit or other instrument material to the Company other than in the
ordinary course of business consistent with past practice;
(j) failure to operate the business of the Company, in the ordinary course
so as to use reasonable efforts to: preserve the business intact; keep available
the services of the key employees of the Company, including all officers and the
five highest producing loan representatives (whether employees or independent
contractors); and preserve for Buyer the goodwill of any of the Company's
suppliers, customers and others having business relations with it;
(k) revaluation by the Company of any of its assets, including without
limitation, writing off notes or accounts receivable other than in the ordinary
course of business consistent with past practice;
(l) damage, destruction, nor loss materially and adversely affecting the
Facilities of the Company, except where covered by insurance;
(m) agreements to borrow money entered into by the Company or any loans
made or agreed to be made by the Company, other than in the ordinary course of
business consistent with past practice; or
(n) liability incurred involving $50,000 or more except in the ordinary
course of business, or any increase in the amount of or any change in the
assumptions underlying, or methods of calculating, any contingency or other
reserves except in the ordinary course of business consistent with past
practice.
3.7 Contracts. (a) The Company is not a party to, is not bound by nor
---------
receives benefits under (i) any Material Agreement not made in the ordinary
course of the Company's business, (ii) any material agreement, arrangement or
commitment, written or otherwise, with any Investor, mortgage broker, real
estate broker or agent, correspondent or any other person, individual or entity,
14
18
or (iii) any contract or agreement that by its terms limits the Company's
ability to conduct any type of business or to conduct business in any location,
in each case, whether written or oral.
(b) Seller has made available to Buyer for inspection true and complete
copies of all Material Agreements. Neither the Company nor, to the Knowledge of
Seller, any other party to any of the Material Agreements, is in breach of or
default under any Material Agreement, except for breaches or defaults which are
not likely to have a Material Adverse Effect. The consummation of the
transactions contemplated hereby will not (after notice or lapse of time or
both), in any material respect, conflict with, result in a breach of any
provision of, constitute a default under, result in the modification or
cancellation of, give rise to any right of termination in respect of, any
Material Agreement.
(c) Seller or the Company, as the case may be, has previously delivered to
Buyer a tape (magnetic media) on which certain information regarding the
Mortgage Servicing Portfolio as of March 31, 2000 is recorded. The information
contained in such tape is true and correct in all material respects. Section
3.7(c) to the Disclosure Schedule sets forth a complete and accurate list of (i)
each Investor with which the Company had, as of May 31, 2000, a Servicing
Agreement, together with the aggregate principal amount of Loans subject to each
such Servicing Agreement as of such date, and other Loans as of such date and
(ii) the aggregate balance of all escrow deposit accounts maintained by the
Company as of such date. Section 3.7(c) to the Disclosure Schedule sets forth,
with respect to each such Servicing Agreement (A) whether prior consent for
transfer pursuant to this Agreement is required; and (B) whether such Servicing
Agreement may be terminated without cause and without the payment of any
termination penalty or fee. The Company has previously made available to Buyer
copies of all Servicing Agreements which were in effect on February 29, 2000 and
which were in the Company's possession. Except as identified on Section 3.7(c)
to the Disclosure Schedule, all such Servicing Agreements are in full force and
effect at the date hereof.
3.8 Brokers. Except as disclosed in Section 3.8 of the Disclosure Letter.
-------
None of the Sellers nor the Company has incurred or will incur any broker's,
finder's or similar fee, commission or expense, in each case in connection with
the transactions contemplated by this Agreement.
3.9 Transactions with Insiders. Set forth on Section 3.9 to the Disclosure
--------------------------
Schedule is a true and complete list of the following agreements and
transactions: (i) all Company Agreements to which any Insider or, to the
Knowledge of Seller, any Affiliate of the Company is a party and (ii) a true and
complete description of all transactions between the Company or any employee
benefit plan in which any employee of the Company participates, on the one hand,
and any Insider or, to the Knowledge of Seller, any Affiliate of the Company, on
the other hand.
3.10 Properties and Insurance.
------------------------
(a) Section 3.10 of the Disclosure Schedule attached hereto sets forth a
list of all personal property owned by the Company. The Company owns no real
property other than REO. There are no liens on any real or personal property
owned by the Company except (i) as may be
15
19
reflected in the Financial Statements, (ii) for any lien for current taxes not
yet delinquent, (iii) for such other liens, security interests, claims, charges,
options or other encumbrances and imperfections of title as do not materially
affect the value of personal or real property reflected in the Financial
Statements or acquired since the date of such Financial Statements and which do
not materially interfere with or impair the present and continued use of such
property, and (iv) as it relates to any REO, the Company has good title, free
and clear of any liens, claims, charges, options or other encumbrances, to all
of the property reflected in the Financial Statements, and all property acquired
since the respective dates of the Financial Statements, except such property as
has been disposed of in the ordinary course of business for adequate
consideration. Each of such properties conforms in all material respects to
currently applicable ordinances, regulations and zoning requirements and, if
required, is occupied pursuant to a certificate of occupancy authorizing its
current use.
(b) Section 3.10 of the Disclosure Schedule sets forth a list as of the
date hereof of all leases of real property, identifying separately each ground
lease, to which the Company is a party (collectively, the "Leases"), other than
Leases related to REO. The Leases are in full force and effect in all material
respects and, as of the date of this Agreement, the Company has not received a
notice of default or termination with respect to such Leases. All leases
pursuant to which the Company, as lessee, leases real or personal property are
valid and enforceable in accordance with their respective terms. There has not
occurred any event which would constitute a breach by Seller of, or default by
Seller or the Company in, the performance of any covenant, agreement or
condition contained in any Lease.
(c) Section 3.10 of the Disclosure Schedule contains a true and complete
list of all material insurance policies currently in effect that insure the
business, operations or employees of the Company or any subsidiary or affect or
relate to the ownership, use or operation of any of the assets and properties of
the Company or any subsidiary and that have been issued to the Company or any
subsidiary for the benefit of the Company or any subsidiary. Each such policy is
valid and binding and in full force and effect, no premiums due thereunder have
not been paid and neither the Company nor any subsidiary has received any notice
of cancellation or termination in respect of any such policy or is in default
thereunder in any material respect. Seller has no reason to believe that
existing Policies cannot be renewed or replaced as and when the same shall
expire, upon terms and conditions as favorable as those presently in effect,
other than possible increases in premiums or unavailability in coverage that
have not resulted from any extraordinary loss experience of Seller or the
Company.
3.11 Absence of Undisclosed Liabilities. Neither the Seller nor the
-------------------------------------
Company has any liability (contingent or otherwise) that is material to the
financial condition or results of operations of the Company, or that, when
combined with all similar liabilities would be material to its business, except
as disclosed in the Financial Statements, the financial statements delivered
pursuant to Section 5.2 hereof or the Disclosure Schedule and except for
liabilities incurred in the ordinary course of business consistent with past
practice since the date of the most recent financial statements delivered
pursuant to Section 5.2 hereof.
16
20
3.12 No Conflict or Violation. Neither the execution and delivery of this
------------------------
Agreement nor the consummation of the Transaction contemplated hereby will (i)
conflict with or result in any breach which would constitute a material default
under any term or provision of any Material Contract to which the Company is a
party or is subject or by which any assets of the Company is bound, or interfere
with the ability of the Company to consummate the Transaction contemplated by
this Agreement, (ii) result in the creation or imposition of any Encumbrance on
any of the property or assets of the Company, (iii) result in any violation of
the provisions of the charter or bylaws of the Company, or (iv) result in any
violation by the Company of any statute, order, rule, regulation, ordinance,
code, judgment, writ, injunction, decree or award, or interfere in any material
way with the ability of Seller or the Company to consummate the Transaction
contemplated by this Agreement.
3.13 Consents and Approvals. Except for the consents, waivers or approvals
----------------------
of, or filings or registrations with the Bank Regulatory Agencies or any
Investor and except for the filing of pre- merger notification reports under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act if applicable, no consent, approval
or authorization of, or declaration, notice, filing or registration with, any
governmental or regulatory authority, or any other Person, is required to be
made or obtained by the Company on or prior to the Closing Date in connection
with the execution, delivery and performance of this Agreement and the
consummation of the Transaction contemplated by this Agreement. In addition,
Seller represents and warrants that, with respect to the transaction
contemplated by this Agreement, there are no consents required prior to Closing
or transfer of the Servicing portfolio and that only notice of change or
transfer of control to Investors for whom the Company services mortgages for,
HUD and the state banking departments material to the Company's mortgage
origination activities is required. Seller further represents and warrants that
it will take all steps necessary to provide any and all required notices of
change or transfer of control to Investors, and state banking departments.
3.14 Litigation. There is no Litigation (other than Litigation involving
----------
alleged claims that do not exceed $5,000 as to any individual matter or $50,000
in the aggregate) instituted, pending or, to the Knowledge of Seller,
threatened, or, in management's opinion, likely to be asserted based upon
statements made to management or any written correspondence received by
management against Seller or the Company or against any asset, interest or right
of Seller or the Company. There is no actual or, to the Knowledge of Seller or
the threatened Litigation which presents a claim to restrain or prohibit the
Transaction contemplated herein or to impose upon Buyer, the Company or Seller
any material costs or obligations in connection therewith.
3.15 Labor Matters. With respect to their employees, the Company is not a
-------------
party to any labor agreement with any labor organization, group or association
and the Company is in material compliance with all applicable laws respecting
employment practices, terms and conditions of employment and wages and hours and
has not engaged in any unfair labor practice. The Company has not experienced
any attempt by organized labor or its representatives to make the Company
conform to demands of organized labor relating to their employees or to enter
into a binding agreement with organized labor that would cover the Company's
employees. To the Knowledge of
17
21
the Seller there is no unfair labor practice charge or other complaint by any
employee or former employee of the Company against the Company pending before
any governmental agency arising out of any of the Company's activities; and
there is no labor strike or labor disturbance pending or, to the Knowledge of
the Seller, threatened against the Company.
3.16 Compliance with Law; Permits and Licenses.
-----------------------------------------
(a) The Company is operating in all material respects in compliance with
all applicable laws, statutes, ordinances and regulations, whether federal,
foreign, state, Agency or local, including but not limited to, truth-in-lending,
real estate settlement procedures, community reinvestment, equal credit
opportunity, mortgage lender, state usury and consumer protection acts, laws and
regulations. The Company has not received any notification from any agency or
department of federal, state or local government (i) asserting a material
violation of any such statute or regulation, (ii) threatening to revoke any
license, franchise, permit or government authorization, or (iii) restricting or
in any way limiting its operations. The Company is not subject to any regulatory
or supervisory cease and desist order, agreement, directive, memorandum of
understanding or commitment, and has not received any communication requesting
that it enter into any of the foregoing.
(b) The Company holds all Permits necessary for the ownership and conduct
of the business of the Company in each of the jurisdictions in which the Company
conducts or operates its business in the manner now conducted, and such Permits
are in full force and effect. The consummation of the Transaction contemplated
by this Agreement will not result in any revocation, cancellation or suspension
of any such Permit, and there is no pending or, to the Knowledge of Seller,
threatened Litigation with respect to revocation, cancellation, suspension or
nonrenewal thereof and there has occurred no event which (whether with notice or
lapse of time or both) will result in such a revocation, cancellation,
suspension or nonrenewal thereof, in any such case.
3.17 No Other Agreements to Sell the Assets or the Shares. Neither the
-------------------------------------------------------
Seller nor the Company has any agreement, absolute or contingent, with any other
Person to sell the capital stock, assets (other than sales of assets in the
ordinary course of business consistent with past practice) or its business or to
effect any merger, consolidation or other reorganization of its business or to
enter into any agreement with respect thereto.
3.18 Proprietary Rights. Except as disclosed in Section 3.18 of the
-------------------
Disclosure Schedule, the Company has no registrations of trademarks or other
marks, domain names, trade names or other trade rights, or pending applications
for any such registrations.
3.19 Employee Benefit Plans.
----------------------
(a) Disclosure; Delivery of Copies of Relevant Documents and Other
---------------------------------------------------------------------
Information. Section 3.19 of the Disclosure Schedule contains a complete list of
-----------
all Company employee plans. Such list shall include any employment contract,
consulting agreement, severance plan arrangement or policy, any plan or
arrangement providing for vacation, retirement benefits, life, health,
disability
18
22
or accident benefits or other fringe benefits (collectively referred to herein
as "Benefit Arrangements") and any pension plan or 401(k) Plan. True and
complete copies of each of the following documents have been delivered by Seller
to Buyer: (i) each Benefit Arrangement provided by the Company and the Company's
401(k) Plan ("Plan") and all amendments thereto, the most recently distributed
summary Plan description which has been distributed to the Company's employees
and any annuity contracts or other funding instruments, including insurance
policies, (ii) the most recent determination letter issued by the Internal
Revenue Service, with respect to the Plan, (iii) Annual Reports on Form 5500
Series required to be filed with any governmental agency for the Plan for the
most recent plan year with respect to which such reports have been filed,
including any accountants' statements, (iv) the latest actuarial report and
Pension Benefit Guaranty Corporation ("PBGC") filings for the Plan, (v) any
other correspondence with governmental regulators regarding any Benefit
Arrangements, and (vi) accounting statements demonstrating the funding status on
booked liability corresponding to any post-retirement benefit obligation other
than for an employee pension benefit plan.
(b) Representations. Seller and Company represent and warrant to Buyer
---------------
as follows:
(1) Company 401(k) Plan.
-------------------
(i) The funding method used in connection with the Company's
Plan are described in the annual report for the Plan.
The Plan is fully funded as of this date and will be
fully funded as of the Closing Date.
(ii) The Internal Revenue Service has issued determination
letters stating that the Plan and related trust
agreement is qualified and tax-exempt under the
provisions of Code Sections 401(a) and 501(a) as the
Plan is currently in effect as amended. The Company has
no pension plan subject to the provisions of Code
Section 403(a). Nothing has occurred or is anticipated
to occur with respect to the operation of the Plan that
could cause the loss of such qualification or exemption.
(iii) The Plan has been administered so as to comply with
applicable laws.
(2) Benefit Arrangements. Each Benefit Arrangement has been
----------------------
administered so as to materially comply with applicable law and where
intended to truly defer income by avoiding actual, constructive or other
receipt.
(3) Miscellaneous.
-------------
(i) Neither the Company nor any officer, director, employer,
agent or representative thereof, nor any Plan fiduciary,
has engaged in a transaction or failed to take any
action in connection with which the Company could be
subject to either a civil penalty assessed pursuant
19
23
to Section 409 or 502(i) of ERISA or a tax imposed
pursuant to Section 4975, 4976 or 4980B of the Code.
(ii) Full payment has been made of (a) all amounts that the
Company is required to pay under the terms of all
Benefit Arrangements, including the Plan or under
Section 412 of the Code, and (b) all such amounts have
been properly accrued through the Closing Date, and with
respect to the Plan, through the current plan year of
such Plan.
(iii) Neither the Company nor any organization to which it is
a successor or parent organization within the meaning of
Section 4069(b) of ERISA has engaged in any transaction
described in Section 4069 of ERISA.
(iv) No amounts payable under the Plan will fail to be
deductible for federal income tax purposes by virtue of
Section 280G of the Code or any regulation.
(v) With respect to the Plan, it is not funded wholly or
partially through an insurance policy.
(vi) Other than as provided in this Agreement, the transfer
of the Shares to Buyer as contemplated by Article 2
hereof will not (a) entitle any current or former
employee of the Company to severance pay, unemployment
compensation or any similar payment, (b) accelerate the
time of payment or vesting, or increase the amount of
any compensation due to any such employee or former
employee, other than any acceleration with respect to
the time of payment or vesting under the Plan or any
other Benefit Arrangement, or (c) renew or extend the
term of any agreement regarding compensation for a
current or former employee.
(vii) There is no pending or, to the Knowledge of the Seller,
threatened or anticipated material claim, against or
otherwise involving the Company Plan, any trust related
thereto, or any fiduciary thereof, other than routine
claims for benefits. There is no judgment, decree,
injunction, rule or order of any court, governmental
body, commission, agency or arbitrator outstanding
against or in favor of any Benefit Arrangement or the
Plan or any fiduciary thereof (other than rules of
general applicability).
(viii)To the Knowledge of Seller, the Company nor the Seller
or any officers of the Company has engaged in any
transaction or acted or
20
24
failed to act in any manner that would subject the
Company to any liability for breach of a duty under
ERISA.
(ix) Other than routine claims for benefits, no claim
against, or legal proceeding involving, the Company or
any Company Benefit Arrangement is pending or, to the
Knowledge of the Company or Seller, threatened.
3.20 Transactions with Certain Persons.
----------------------------------
(a) Section 3.20 of the Disclosure Schedule identifies all Contracts,
agreements or other arrangements in existence or effect as of the date hereof by
and between the Company, on the one hand, and any Affiliate of the Company, on
the other, which involves an annual aggregate payment or value in excess of
$25,000.
(b) Since January 1, 2000, the Company has not settled any intercompany
trade receivables and payables with Affiliates except in the ordinary course of
business at the recorded amounts thereof.
(c) Since January 1, 2000, the Company has not changed any of its policies
applicable to creation or settlement of intercompany charges.
3.21 Environmental Liability. There is no Litigation seeking to impose, or
-----------------------
that could reasonably result in the imposition on the Company or Seller of any
liability arising under any of the Environmental Laws, pending or, to the
Knowledge of Seller, threatened, or, in the opinion of management likely to be
asserted based upon statements made to management or any written correspondence
received by management against Seller or the Company; to the Knowledge of
Seller, there is no reasonable basis for any such Litigation that would impose
any such liability; and the Company is not subject to any agreement, order,
judgment, decree, or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.
3.22 Loans. Each of the Loans (i) is evidenced by notes, agreements or
-----
other evidences of indebtedness which are true, genuine and what they purport to
be, (ii) to the extent secured, each of the Loans has been secured by valid
liens and security interests which have been properly perfected, and (iii) is
the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and general equity principles. There are no
defenses, setoffs or counterclaims (other than payment defaults) under any
Loans. The documents related to Loans originated by the Company are in
compliance in all material respects with applicable law and Investor
requirements and are complete in all material respects with regard to servicing
activity.
3.23 Taxes.
-----
21
25
(a) All tax returns for all periods ending on or before the Closing Date
that are or were required to be filed by, or with respect to, the Company have
been or will be filed on a timely basis in accordance with the laws, regulations
and administrative requirements of each taxing authority. Seller will, at
Seller's expense, timely file or cause to be filed all tax returns that will be
required to be filed after the Closing Date by, or with respect to, the Company
for all periods ending on or before the Closing Date in accordance with
applicable laws, regulations and administrative requirements, and Buyer and the
Seller and Company will cooperate with respect thereto. All such tax returns
that have been filed on or before the Closing Date were, when filed, and
continue to be, true, correct and complete in all material respects. All such
tax returns that are filed after the Closing Date will be true, correct and
complete in all material respects when filed or caused to be filed by the
Company.
(b) Section 3.23 of the Disclosure Schedule lists (i) all United States
federal, state and local Income Tax Returns that have been filed with respect to
any taxable period ending, or with respect to any event or state of facts
occurring or existing, on or after May 31, 1997 by the Company and identifies
those that have been audited by any taxing authority or are closed by the
applicable statute of limitations and (ii) all other United States federal,
state and local Income Tax Returns that have been filed by the Company and are
not closed by the applicable statutes of limitations. The Disclosure Schedule
describes all adjustments to Income Tax Returns filed by, or on behalf of, the
Company for all taxable years since 1990 that have been proposed by any
representative of any taxing authority, and the resulting taxes imposed on or
payable by the Company, if any, proposed to be assessed. All deficiencies
proposed (plus interest, penalties and additions to tax that were or are
proposed to be assessed thereon, if any) as a result of such examinations have
been paid, reserved against, settled, or, as described in the Disclosure
Schedule are being contested in good faith by appropriate proceedings. Except as
set forth in the Disclosure Schedule, the Seller, has not given or been
requested to give waivers or extensions (or is or would be subject to a waiver
or extension given by any other entity) of any statute of limitations relating
to the payment of taxes for which the Company may be liable.
(c) The Company has paid, or made provision for the payment of, all taxes
that have or will become due for all periods ending on or before the Closing
Date, including but not limited to all taxes due for the 1999 tax year, all
taxes reflected on the Tax Returns referred to in this Section 3.23, or in any
assessment, proposed assessment, or notice, either formal or informal, received
by the Company, except such taxes, if any, as are set forth in the Disclosure
Schedules that are being contested in good faith and as to which adequate
reserves (determined in accordance with United States generally accepted
accounting principles consistently applied) have been provided. The charges,
accruals and reserves with respect to taxes on the books of the Company are
adequate (determined in accordance with United States generally accepted
accounting principles consistently applied) and are at least equal to the
Company's liabilities for taxes. All taxes that the Company is or was required
by law to withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the appropriate taxing authority. There are
no liens with respect to taxes upon any of the properties or assets, real or
personal, tangible or intangible, of the Company (except for taxes not yet due
or payable).
22
26
(d) Except as set forth on the Disclosure Schedule, for both Federal and
state income tax purposes, the Company has been a validly electing S corporation
within the meaning of Code ss.1361 and ss.1362 at all times during its existence
and the Company will be an S corporation up to and including the Closing Date.
(e) The Company will not be liable for any tax under Code ss.1374 in
connection with the deemed sale of the Company's assets caused by the Section
338(h)(10) Election. The Company has not, in the past ten years, (i) acquired
assets from another corporation in a transaction in which the Company's tax
basis for the acquired assets was determined, in whole or in part by reference
to the tax basis of the acquired assets (or any other property) in the hands of
the transferor, or (ii) acquired stock of any corporation which is a qualified
subchapter S subsidiary.
3.24 Real Estate Owned.
-----------------
(a) Except for liens, security interests, claims, charges, or such other
Encumbrances as have been appropriately reserved for in the Financial Statements
or are not material and are in the process of being cleared, title to the REO is
good and marketable, and there are no adverse claims or Encumbrances on the REO.
(b) All title, hazard and other insurance claims and mortgage guaranty
claims with respect to the REO have been timely filed and the Company has not
received any notice of denial of any such claim.
(c) The Company is in possession of all of the REO or, if any of the REO
remains occupied by the mortgagor, eviction or summary proceedings have been
commenced by the Company and/or the Company is diligently pursuing such eviction
or summary proceedings.
(d) No legal proceeding or quasi-legal proceeding is pending or, to the
Knowledge of Seller, threatened concerning any REO or any servicing activity or
omission to provide a servicing activity with respect to any of the REO.
3.25 Servicing Portfolio.
-------------------
(a) Physical Damage. With the exception of Collateral which is covered by
---------------
casualty insurance in accordance with Investor requirements, to the Knowledge of
Seller, there exists no physical damage to the Collateral from fire, flood,
windstorm, earthquake, tornado, hurricane or any other similar casualty, which
physical damage would cause any Loan to become delinquent or adversely affect
the value or marketability of any Loan, Servicing Rights or Collateral.
(b) Compliance. The Company has complied in all material respects with all
----------
of its contractual obligations and all Investor guidelines or policies which
relate to any of the Loans, Servicing Rights, Advances or Other Assets. No prior
servicer or originator has claimed in any writing delivered to the Sellers or
the Company, any bona fide defense, offset or counterclaim, with
23
27
respect to their contractual obligations relating to any of the Loans, Servicing
Rights, Advances or Other Assets.
(c) Escrow Accounts. The Company or Seller (i) has established custodial
---------------
accounts for escrow deposits related to the Servicing Rights, and such custodial
accounts have been and are being maintained in accordance with applicable law,
the terms of the Servicing Agreements, and, where applicable, in accordance with
the requirements of Investors, Insurers and Governmental Agencies having
jurisdiction; and (ii) subject to and in accordance with the applicable
requirements pertaining generally to the type, size or capitalization of
depository institutions qualified to hold such balances, of Investors, Insurers
and Governmental Agencies having jurisdiction, has the right and power to
determine the financial institution in which the escrow accounts are held.
Except for payments which are past due under the terms of the Loan Documents,
all escrow deposits paid to the Company for the account of the borrowers and the
Company are deposited in the applicable custodial escrow accounts.
(d) Advances, Defaulted or Delinquent Loans. The Advances are valid and
-----------------------------------------
existing amounts owing to the Company, are carried on the books of the Company
at values determined in accordance with GAAP, and are not subject to setoffs or
claims arising from acts or omissions of the Company. Except as set forth in
Section 3.25(d) of the Disclosure Schedule, no Investor has or has claimed any
defense, offset or counterclaim to repayment of any Advance, nor to the
Knowledge of Seller, is any Investor insolvent or otherwise unable to repay any
Advance as required by the pertinent Servicing Agreement. Section 3.25(d) of the
Disclosure Schedule accurately summarizes the Advances outstanding as of March
31, 2000.
(e) No Repurchase or Recourse. Except as set forth in Section 3.25(e) of
-------------------------
the Disclosure Schedule, neither Seller nor the Company is a party to:
(i) agreements or arrangements with (or obligations to) Persons,
including Investors or Insurers, to repurchase from such
Persons Loans, mortgage property services for others or Loans
sold by the Company with servicing released ("Servicing
Released Loans"), which agreements, arrangements or
obligations pertain to Loans with an unpaid principal balance;
or
(ii) any agreement, arrangement or understanding to reimburse,
indemnify or hold harmless any Person or otherwise assume any
liability with respect to a Loan, which agreement, arrangement
or understanding covers Loans with an unpaid principal
balance.
Section 3.25(e) of the Disclosure Schedule shall state the maximum repurchase,
reimbursement, indemnification and hold harmless amount for each loan set forth
on the Schedule and shall state the period in which the Company may be liable
for any repurchase, reimbursement, indemnification and hold harmless. The
representations and warranties contained in this subsection shall exclude
24
28
repurchase and recourse obligations based upon a breach by the Company of a
customary representation, warranty or undertaking.
3.26 No Repurchase Agreements. The Company has not purchased securities
------------------------
subject to an agreement to resell.
3.27 Forbearance. No Loans are subject to any agreement with the borrower
-----------
or guarantor of any Loan to waive or forgive any portion of the accrued interest
of the Loan except as approved or directed by the Investor and as is documented
in writing in loan files provided to Buyer and no such forbearance has occurred
totaling more than $5,000 in the aggregate.
3.28 Assets and Agreements. Notwithstanding any of the foregoing
-----------------------
provisions of Section 3 hereof, Seller and the Company specifically warrant and
represent that all of the Company's assets (whether real, personal, tangible,
intangible, present, future, legal, equitable, direct or indirect) and
agreements and contracts to which Seller or the Company is a party (including
Servicing Agreements, Leases and Investor agreements) will be assumed and/or
retained by the Buyer thereof following the Transaction and the consummation of
the Transaction will not cause an acceleration of and does not constitute a
default in, either immediately or after giving notice or by lapse of time, any
such contract or agreement or subject any such contract or agreement to
cancellation or termination.
3.29 Mortgage Sale Agreements. To the Knowledge of Seller (i) there is no
------------------------
threatened reduction or cancellation of any mortgage sale agreement to which it
is a party, (ii) the obligations of the Company under each mortgage sale
agreement to which it is a party are being performed in accordance with its
terms and (iii) the Company has no reason to believe that guarantee fees payable
to Investors will be increased as a result of the Company's credit performance.
3.30 ARM Adjustments. To the Knowledge of Seller and the Company, all
----------------
prior mortgage servicers have properly and accurately entered into its system
all data required to service ARM loans subject to the Company Servicing
Agreements (the "ARM Loans"). The interest rates and monthly payment amounts for
all ARM Loans have been properly and accurately adjusted on each interest
adjustment date or payment adjustment date. The amortization of principal and
interest for all ARM Loans has been properly and accurately calculated on each
payment adjustment date in compliance with all laws and the ARM Loan mortgage
documents. All necessary and required notices in connection with ARM Loans have
been executed and delivered.
3.31 Insurance.
---------
(a) Mortgage Insurance. The Company has complied in all material respects
------------------
with the provisions of the applicable insurance or guarantee contract for each
mortgage Loan and the insurance or guarantee contract is in full force and
effect for each mortgage Loan. To the Knowledge of Seller, there is no
reasonable basis to believe that there are any events or conditions
25
29
(except for the passage of time or giving of notice) that can result in a
revocation of insurance or provide adequate grounds to deny coverage.
(b) Title Insurance. To the extent required by each applicable
----------------
Investor, the Company has title insurance for all Loans from a title Insurer
acceptable to the applicable Investor and qualified to do business in the
jurisdiction where the Collateral is located. The Company has not performed any
act or omission that would impair title insurance coverage for the Loans.
(c) Other Insurance. All Loans are covered by hazard insurance and, where
---------------
applicable, flood insurance, to the extent required by law or agreement, and
each policy is in a form usual and customary to the industry, in full force and
effect, and fully paid prior to the date insurance payments were due.
3.32 No Penalties. Neither the acquisition of the Company, nor the
-------------
repayment of the Fleet Bank line of credit by the Buyer will result in the
assessment of any prepayment or other penalties by Fleet Bank under the terms of
the credit documents between the Company and Fleet Bank.
3.33 No Other Representations or Warranties. Except for the
----------------------------------------------
representations and warranties contained in this Section 3, Seller and the
Company make no representation or warranty, express or implied, written or oral,
and Seller and the Company hereby disclaim any such representation or warranty,
whether by Seller or the Company or any of their officers, directors, employees,
agents or representatives or any other Person, with respect to the Company or
the execution and delivery of this Agreement or the transactions contemplated
hereby, notwithstanding the delivery or disclosure to Buyer, any Affiliate of
Buyer or any of their officers, directors, employees, agents or representatives
or any other Person of any documentation or other information by Seller or the
Company or of their Affiliates, officers, directors, employees, agents or
representatives or any other Person with respect to any one or more of the
foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING BUYER
----------------------------------------------
Buyer hereby represents and warrants to each of the Seller as follows:
4.1 Incorporation of Buyer. Buyer is duly organized and validly existing
----------------------
as a federal savings bank under the laws of the United States, and has the
corporate power and authority to own, lease and operate the property used in its
business and to carry on its business as now being conducted.
4.2 Power; Authorization; Consents. Buyer has the corporate power and
--------------------------------
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized and approved by the board of directors of the Buyer, and no
other proceedings on the part of Buyer are necessary to authorize and approve
this Agreement or any of the transactions contemplated hereby. This Agreement
has been duly
26
30
executed and delivered by Buyer and constitutes a valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally or by the principles governing the availability of equitable remedies.
The execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated hereby do not and will not:
(a) contravene any provisions of the Charter or Bylaws of Buyer; or
(b) violate or conflict with any material Legal Requirement applicable
to Buyer or any of its business or property.
4.3 Financial Matters. The Buyer has sufficient funds available to it to
------------------
meet its obligations to pay the Purchase Price, and any other fees, costs, and
expenses payable at or prior to Closing and any other fees, costs and expenses
due in connection with the transactions contemplated by this Agreement,
including satisfaction of the outstanding balance of the credit facility
maintained by the Company with Fleet Bank.
4.4 Regulatory Approval. Buyer will file the Notice required by the Office
-------------------
of Thrift Supervision ("OTS") to enable the Bank to establish an operating
subsidiary within one week following execution of this Agreement in accordance
with 12 C.F.R. Section 559.11, and Buyer will diligently respond to any comments
or requests for information from the OTS throughout the Notice process and
report to Seller as to the status of such Notice to the extent known by Buyer.
SECTION 5. ACTIONS BY THE COMPANY, SELLER AND BUYER PRIOR TO CLOSING
---------------------------------------------------------
The Company, Seller and Buyer covenant as follows for the period from the
date hereof to the Closing Date:
5.1 Maintenance of Business and Preservation of Permits and Services.
--------------------------------------------------------------------
Seller and the Company shall diligently carry on the Company's business, in the
ordinary course consistent with past practice except as contemplated or required
by this Agreement, or as otherwise agreed by the parties hereto. Seller and the
Company shall use reasonable commercial efforts to: (i) preserve the Company's
Material Contracts and material Permits in full force and effect, and (ii)
preserve its goodwill.
5.2 Additional Financial Statements. As soon as reasonably practicable
---------------------------------
after they become available, Seller shall furnish to Buyer the Company's
unaudited monthly financial statements on a consolidated basis for each month
subsequent to February 29, 2000, which shall have been prepared using the same
accounting principles used to prepare the audited financial statements provided
in accordance with Section 3.5 subject to interim accounting practices,
estimation procedures and presentation normally applied by the Company in the
preparation of interim financial statements and subject to normal year-end
adjustments.
27
31
5.3 Certain Prohibited Transactions. Except to the extent required by
--------------------------------
Section 5.20, the Company shall not and the Seller shall not cause, direct or
permit the Company, without the prior approval of Buyer to:
(a)(i)increase the compensation payable by the Company to any individual
who is currently an employee of the Company, whether paid on a salary or
commission basis, (ii) except for amounts awarded in the ordinary course of
business, or required under existing plans described on the Disclosure Schedule,
pay or award any bonus, incentive compensation, service award or other like
benefit for or to the credit of any of the Personnel, (iii) pay or agree to pay
any employee welfare, pension, retirement, profit sharing or similar payment or
arrangement for any Personnel except pursuant to the existing plans and
arrangements described on the Disclosure Schedule, (iv) enter into any new
employment, management or consulting agreement with any individual, or (v)
implement any new bonus or incentive compensation plan or formula which would
obligate the Company to pay or award any bonus or incentive compensation for or
to the credit of any of the Personnel for performance for 2000 or subsequent
years;
(b) except as contemplated by this Agreement, add to or modify any of the
employee benefit plans, arrangements or practices described on the Disclosure
Schedule which addition or modification would affect any of the Personnel other
than to (i) make contributions in accordance with the normal practices of the
Company, (ii) extend coverage to any other Personnel who become eligible in
accordance with the terms thereof, (iii) make amendments or modifications
reasonably necessary in order to comply with applicable law, or (iv) make
amendments or modifications that will not, individually or in the aggregate,
materially increase the liability of the Company;
(c) except in the ordinary course of business consistent with past
practice, sell, assign or transfer any of the assets of the Company;
(d) except in the ordinary course of business consistent with past
practice, enter into, terminate or modify any Material Contracts;
(e) cancel any indebtedness or waive or compromise any rights having a
value to the Company of $5,000 or more, whether or not in the ordinary course of
business, except as contemplated by Section 3.6(f) and (h) of this Agreement;
(f) except in the ordinary course of business consistent with past
practice, mortgage, pledge or otherwise encumber any assets of the Company;
(g) except in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee, endorse
or otherwise become responsible for obligations of any other individual,
partnership, firm or corporation, or make any loans or advances to any
individual, partnership, firm or corporation;
28
32
(h) declare, set aside or pay any dividends or distributions (whether in
cash, stock or property) in respect of any capital stock of the Company;
(i) issue or commit to issue any shares of capital stock or obligations or
securities convertible into or exchangeable for capital stock;
(j) terminate, cancel or amend any insurance coverage maintained by Seller
or the Company with respect to any assets of the Company;
(k) settle pending or threatened Litigation involving the Company not in
the ordinary course of business without the prior written approval of Buyer;
(l) amend its charter or bylaws;
(m) merge with any other corporation or permit any other corporation to
merge into it or consolidate with any other corporation;
(n) fail to comply with any applicable law, regulation, ordinance, order,
injunction or decree, or fail to comply with any lawful requirement of any
governmental body, Agency, court, Investor or Insurer or contractual obligation
in connection with the origination or servicing of any Loans;
(o) establish any new Facilities or renew any leases;
(p) agree to do any of the foregoing.
5.4 Investigation by Buyer. Buyer shall be permitted to have one of its
-----------------------
employees present at the Company from and after the execution of this Agreement
to familiarize Buyer with the operations of the Company. In addition, Seller and
the Company shall allow Buyer during regular business hours through Buyer's
employees, agents and representatives, to make such investigation of the
business, properties, books and records of the Company, and to conduct such
examination of the condition of the Company, as Buyer reasonably deems necessary
or advisable to familiarize itself with such business, properties, books,
records, condition and other matters, and to verify the representations and
warranties of the Company hereunder; provided, however, that any information
obtained from the Company shall be subject to the provisions relating to
confidentiality set forth in the Letter of Intent and as set forth herein. No
investigation pursuant to this Section 5.4 shall affect or be deemed to modify
any representation or warranty made by, any party hereto.
5.5 Consents and Best Efforts. Promptly after execution and delivery of
-------------------------
this Agreement, Buyer and the Company and Seller shall make all filings required
under applicable laws and regulations. In addition, Buyer and the Company and
Seller will each promptly furnish all information as may be required by any
federal or state regulatory agency properly asserting jurisdiction in order that
the requisite approvals for the purchase and sale of the Shares pursuant
29
33
hereto, and the transactions contemplated hereby, may be obtained or to cause
any applicable waiting periods to expire. The Company and Seller and Buyer will,
as soon as practicable, commence to take all other action required to obtain as
promptly as practicable all necessary Permits, consents, approvals,
authorizations and agreements of, and to give all notices and reports and make
all other filing with, any third parties, including without limitation, those
required from governmental authorities necessary to authorize, approve or permit
the consummation of the Transaction contemplated hereby, and Buyer and Seller
and the Company shall cooperate with each other with respect thereto. Buyer and
Seller and the Company shall provide to each other copies of all applications,
documents, correspondence or oral (to the extent material) or written comments
that each of them or any of their Affiliates files with, sends to or receives
from any regulatory or governmental agency, or the staff or supervisory agents
of any of them, relating to this Agreement and the Transaction contemplated
herein, including any applications filed for the purpose of obtaining any
necessary regulatory consents, approvals or waivers. Buyer and Seller and the
Company each represents and warrants to the other that all information
concerning it, its Affiliates or their respective directors, officers,
shareholders and subsidiaries included (or submitted for inclusion) in any such
application or filing shall be true, correct and complete in all material
respects. In addition, subject to the terms and conditions herein provided, each
of the parties hereto covenants and agrees to use its commercially reasonable
efforts to take, or cause or be taken, all action or do, or cause to be done,
all things necessary, proper or appropriate to consummate and make effective the
transactions contemplated hereby and to cause the fulfillment of the parties'
obligations hereunder.
5.6 Notification of Certain Matters. Seller and the Company shall give
---------------------------------
prompt notice to Buyer, and Buyer shall give prompt notice to Seller and the
Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Closing Date, and (ii) any material
failure of Seller or Company or Buyer, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, and each party shall use all reasonable efforts to remedy such
failure.
5.7 No Mergers, Consolidations, Sale of Shares, Etc. Seller and the
---------------------------------------------------
Company and each of its Affiliates will not, directly or indirectly, solicit any
offer or enter into negotiations relating to the sale or exchange of any Shares,
the merger of the Company with, or the direct or indirect disposition of a
significant amount of the Company's assets or business to any Person other than
Buyer or its Affiliates or provide any assistance or any information to or
otherwise cooperate with any Person in connection with any such inquiry,
proposal or transaction. In the event that Seller or the Company or any of its
Affiliates receives an unsolicited offer for such a transaction or obtains
information that such an offer is likely to be made, Seller or the Company will
provide Buyer with notice thereof as soon as practical after receipt thereof,
including the identity of the prospective Buyer or soliciting party.
30
34
5.8 Governmental Agencies. Notwithstanding anything set forth in Section
---------------------
5.5 hereof, immediately after the execution of this Agreement, Seller shall
proceed at Seller's expense, to provide such consents, from (or file notices
with or obtain waivers from), and to obtain any required Permits from any
federal or state governmental agency, including without limitation, GNMA, FNMA,
FHLMC, HUD, FHA and VA and any New York, New Jersey, Connecticut or Florida
state agency (collectively the "Governmental Agencies") to effect the transfer
and/or sale of the Servicing Portfolio pursuant to this Agreement. Seller shall
do all things necessary or appropriate to secure any such Permit of Governmental
Agencies as a result of the transactions contemplated herein, and Buyer shall
cooperate and do all things necessary or appropriate to secure any such permit.
5.9 [INTENTIONALLY OMITTED]
5.10 [INTENTIONALLY OMITTED]
5.11 Announcements. Prior to the Closing, no party hereto will issue any
-------------
press release or otherwise directly or indirectly make any public statement or
furnish any statement or make any announcement to its customers with respect to
the transactions contemplated hereby without the prior consent of the other,
except as may be required by law, and except that Buyer and Sellers, upon prior
notice to the other, may make such announcements and disclosures as may be
required by the rules of any stock exchange on which their securities are
listed.
5.12 Consents, Cooperation. Subject to the terms and conditions hereof,
---------------------
each of the Company, Sellers and Buyer will use commercially reasonable efforts:
(a) to obtain prior to the earlier of the date required (if so required)
or the Closing Date, all authorizations, consents, orders, permits
or approvals of, or notices to, or filings, registrations or
qualifications with, any governmental, administrative or judicial
authority or any other Person that are required on their respective
parts, for the consummation of the transactions contemplated by this
Agreement;
(b) to defend, consistent with applicable principles and requirements of
law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third
persons (including governmental authorities) challenging this
Agreement or the transactions contemplated hereby;
(c) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing; and
(d) to take, or cause to be taken, all action and to do, or cause to be
done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
31
35
5.13 Notification of Certain Matters. Between the date hereof and the
---------------------------------
Closing, Seller, the Company and Buyer will give prompt notice in writing to the
other of: (i) any information known to Seller or the Company or Buyer that
indicates that any representation or warranty of the Seller, the Company or
Buyer, as the case may be, contained herein will not be true and correct in any
material respect as of the Closing and (ii) the occurrence of any event known to
Seller, the Company or Buyer, which will result, or has a reasonable prospect of
resulting, in the failure to satisfy a condition specified in Section 6 or 7
hereof.
5.14 Further Assurances. Any time after the Closing, Seller and Buyer
-------------------
will, and Buyer will cause the Company to, promptly execute, acknowledge and
deliver any other assurances or documents reasonably requested by Buyer or any
of the Seller, as the case may be, to satisfy or in connection with its
obligations hereunder.
5.15 Retention of Books and Records. For a period of six years after the
------------------------------
Closing Date, Buyer will cause the Company to retain all books, records and
other documents pertaining to the Company in existence on the Closing Date and
to make the same available after the Closing Date for examination and copying by
any of the Sellers or their representatives, at such Seller's expense, upon
reasonable notice. No such books, records or documents will be destroyed by
Buyer or the Company without first advising Seller in writing and providing
Seller a reasonable opportunity to obtain possession or make copies thereof at
such Seller's expense.
5.16 Personnel.
---------
(a) ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will be hired as an Executive Vice President of
the Buyer and will receive base salary and additional incentive cash
compensation, a portion of which will be paid to Mr. Pardes under his Employment
Agreement with the Company, and will share in deferred compensation plans, and
other benefit plans all of which shall be consistent with those available to
other Executive Vice Presidents of the Buyer. ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will continue
to be reimbursed for auto, telephone and other reasonable expense incurred in
connection with the performance of his responsibilities, including reimbursed
expenses generally available to other Executive Vice Presidents of Buyer. In
addition, each of the Buyer and Parent will enter into Change in Control
Agreements with ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the forms attached hereto as Exhibit A.
(b) On the Closing Date, upon consummation of the acquisition of the
Company by the Buyer, Buyer will cause the Company to enter into a three-year
employment agreement with ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the form of agreement attached
hereto as Exhibit B.
(c) The Buyer shall not have any duty or obligation to continue to employ
any of the Company's employees beyond the Closing Date; provided that consistent
with the Buyer's business needs Buyer agrees to act in good faith, consistent
with prudent business practice, at no additional cost, to retain employees of
the Company in positions at the Buyer or a subsidiary thereof for which they are
qualified. The terms and conditions of each offer of employment will be
determined by Buyer at the time an offer of employment is made.
32
36
(d) Upon consummation of the acquisition of the Company by the Buyer,
Buyer will cause the Company to enter into a one-year consulting agreement with
▇▇. ▇▇▇▇▇▇▇ ▇. Pardes in the form of agreement attached hereto as Exhibit C.
5.17 Transaction Expenses. Each of Buyer and the Seller shall be
---------------------
responsible for payment of their own transaction-related expenses incurred in
connection with the transactions contemplated by this Agreement including, but
not limited to, fees and expenses of counsel, accountants, (including the cost
of producing the Fiscal Year End Financial Statements, and tax returns required
to be filed by the Company (including pursuant to Section 3.23 and Section 8.5
hereof, the cost of which will be the sole responsibility of the Seller)
investment bankers, and other professionals. No transaction- related expenses
shall be paid by the Company. Buyer agrees to pay the transaction costs,
including reasonable commissions and related expenses associated with the sale
of the servicing portfolio required by Section 5.20 herein.
5.18 Fulfillment of Conditions. Each of the Seller and Buyer (i) will
---------------------------
execute and deliver at the Closing all agreements that each is required hereby
to execute and deliver as a condition to the Closing; (ii) will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the obligations of each contained in
this Agreement; and (iii) will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
5.19 Standard of Care. In addition to any other requirements imposed by
----------------
this Agreement, and except as Buyer may otherwise consent, the Company shall
from the date hereof to the Closing Date, service the Loans, make advances with
respect thereto consistent with past practice, collect any and all advances
(including the Advances and the Other Assets), conduct Foreclosures, manage
Collateral and pay, perform and discharge all obligations as the servicer of the
Loans in accordance with applicable law and regulations and in accordance with
applicable Investor and Insurer requirements. The Company shall exercise with
respect to the servicing of the Loans (including the conduct of Foreclosures and
the management of Collateral) and the collection of advances (including the
Advances and the Other Assets) the same degree of care that the Company
exercises with respect to the servicing of any other loans (including the
conduct of foreclosures and the management of property) and the collection of
advances for its own account. In the event no particular Investor or Insurer
requirements are applicable with respect to a particular Loan or action of the
Company, including, without limitation, any action under or in connection with
this Agreement, then the Company shall comply with the FNMA requirements. In the
event there is a conflict between any provision of this Agreement and any
applicable Investor or Insurer requirements, the latter shall govern the
Company's conduct.
5.20 Sale of Servicing. Prior to the Closing Date, the Seller shall take
-----------------
all steps necessary to arrange for the sale by the Company of its Agency
Portfolio on market terms and conditions typically associated with the sale of
servicing portfolios as contemplated herein. The Company shall maintain a
minimum of FNMA and FHLMC servicing rights as necessary to maintain its
standing, privileges, credentials and any related underwriting and/or product
enhancements with FNMA and
33
37
FHLMC, which minimum amount of servicing rights is anticipated to be $10
million. Following Closing, if a contract for the sale of the Agency Portfolio
has not yet been entered into, Buyer shall cause the Company, through its
President, to continue to market or otherwise solicit bids for the sale of the
Agency Portfolio.
5.21 Name of Company. Buyer recognizes that the Company has been a
----------------
Westchester County New York business for twenty years and has conducted its
lending activities in the metropolitan New York market for that period of time.
Accordingly, Buyer agrees that for a minimum of three years following the
Closing Date, the Company shall maintain the names that it is currently licensed
in the relevant jurisdictions (e.g., Columbia Equities, Ltd.) followed by "a
subsidiary of OceanFirst Bank."
SECTION 6. CONDITIONS TO THE OBLIGATIONS OF BUYER
--------------------------------------
The obligations of Buyer required to be performed by it at or prior to the
Closing are subject to the satisfaction, at or prior to the Closing, of each of
the following conditions, each of which may be waived by Buyer:
6.1 Representations and Warranties; Covenants. The representations and
-------------------------------------------
warranties of the Seller and Company contained in Section 3 of this Agreement
will be true and correct as of the Closing (except for those that are made as of
a certain time, which shall be true and correct as of such time), except for
changes contemplated by this agreement and failures to be true and correct that
do not result in a Material Adverse Effect. Each obligation of Seller and
Company required by this Agreement to be performed by them at or prior to the
Closing will have been duly performed and complied with in all material respects
at the Closing. At the Closing, Buyer will have received certificates, dated the
Closing Date and duly executed by the Seller and Chief Executive Officer of the
Company ,with no personal liability, except with respect to any causes of action
Buyer may have as a result of any fraudulent acts, that after careful review of
the business, results of operations, assets and liabilities of the Company, to
the effect that the conditions set forth in the preceding sentences have been
satisfied
6.2 Consents. All Permits, consents, approvals and waivers from
--------
Governmental Authorities and other parties necessary to permit the Company to
consummate the transactions contemplated hereby or necessary to avoid a breach
of, default under or termination of any Contract or Permit of the Company, the
absence of which would prevent the Company from continuing to conduct its
business substantially in accordance with past practice without significant cost
or loss of revenue shall have been obtained, and no such Permit, consent,
approval or waiver shall contain any condition or requirement which shall
materially and adversely affect the economic and business benefits to Buyer of
the Transaction contemplated hereby; all conditions required to be satisfied
prior to the Closing imposed by the terms of such Permits, consents, approvals
or waivers shall have been satisfied; all waiting periods relating to such
approvals shall have expired; and all notifications to any regulatory
authorities that are required shall have been made.
34
38
6.3 No Governmental Orders. None of the parties hereto shall be subject to
----------------------
any order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Transaction contemplated
hereby.
6.4 Opinion of Sellers' Counsel. Buyer will have been furnished with the
----------------------------
opinion of counsel acceptable to Buyer, dated the Closing Date, addressed to
Buyer, in form and substance reasonably satisfactory to Buyer and typically
provided by a seller in connection with a transaction of the nature contemplated
by this Agreement. In rendering such opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by Seller and
officers of the Company and by government officials and upon such other
documents and data, including opinions of local counsel, as such counsel deem
appropriate as a basis of such opinion.
6.5 Absence of Injunction. No order, stay, judgment or decree will have
---------------------
been issued by any court and be in effect restraining or prohibiting the
consummation of the transactions contemplated hereby.
6.6 Officers and Directors. Buyer will have received the written
------------------------
resignation of any director and officer of the Company or any subsidiary of the
Company (or such officers or directors will have otherwise been removed) whose
resignation it has requested.
6.7 Certificates. In addition to the certificates required by Section 6,1,
------------
the Seller will execute such certificates as reasonably requested by the Buyer
and the Company will furnish to Buyer such additional certificates of its
executive officers as Buyer may reasonably request to evidence satisfaction of
the conditions set forth in this Section 6.
6.8 Regulatory Consents and Approvals. All consents, approvals and actions
---------------------------------
of, filing with and notices to any governmental or regulatory authority
necessary to permit Buyer and Seller to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any governmental or
regulatory authority necessary for the consummation of the transactions
contemplated by this Agreement shall have occurred.
6.9 No Material Adverse Effect. No event shall have occurred that has or
---------------------------
is reasonably likely to result in a Material Adverse Effect on the Company.
SECTION 7. CONDITIONS TO THE OBLIGATIONS OF SELLERS
----------------------------------------
The obligations of the Seller to be performed by it at or prior to the
Closing are subject to the satisfaction, at or prior to the Closing, of each of
the following conditions, each of which may be waived by the Seller:
35
39
7.1 Representations and Warranties; Covenants. The representations and
-------------------------------------------
warranties of Buyer contained in this Agreement will be true and correct as of
the Closing (except for those made as of a certain date, which shall be true and
correct as of such date), except for changes contemplated by this Agreement and
failures to be true and correct that do not result in a Material Adverse Effect.
Each obligation of Buyer required by this Agreement to be performed by it at or
prior to the Closing will have been duly performed in all material respects at
or prior to the Closing except that the obligations of Buyer pursuant to Section
2.4(b) and 5.16(b) shall be performed in all respects. At the Closing, the
Seller will have received a certificate, dated the Closing Date and duly
executed by an executive officer of Buyer (without personal liability to such
officer) to the effect that the conditions set forth in the preceding sentences
have been satisfied.
7.2 Absence of Litigation. No order, stay, judgment or decree will have
---------------------
been issued by any court and be in effect restraining or prohibiting the
consummation of the transactions contemplated hereby.
7.3 Certificates. Buyer will have furnished the Seller with such
------------
certificates of its officers and others as Seller may reasonably request to
evidence satisfaction of the conditions set forth in this Section 7.
7.4 Regulatory Consents and Approvals. All consents, approvals and actions
---------------------------------
of filings with and notices to any governmental or regulatory authority
necessary to permit Seller and Buyer to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any governmental or
regulatory authority necessary for the consummation of the transactions
contemplated by this Agreement shall have occurred. Nothing in this paragraph is
intended to limit Buyer's representation and warranty as set forth in Section
4.2 and Section 5.5 herein.
SECTION 8. ACTIONS BY SELLER, THE COMPANY AND BUYER AFTER THE CLOSING
----------------------------------------------------------
8.1 Books and Records. Seller, the Company and Buyer agree that so long as
-----------------
any books, records and files relating to the business, properties, assets or
operations of the Company, to the extent that they pertain to the operations of
the Company prior to the Closing Date, remain in existence and available, each
party (at its expense) shall have the right to inspect and to make copies of the
same at any time during normal business hours for any proper purpose.
8.2 Further Assurances. On and after the Closing Date, the Company and
-------------------
Buyer will take all appropriate action and execute all documents, instruments or
conveyances of any kind which may be reasonably necessary or advisable to carry
out any of the provisions hereof.
36
40
8.3 Noncompetition.
--------------
(a) During the period beginning on the Closing Date and ending on the date
five years following the Closing Date, the Seller shall not, without the prior
written consent of Buyer, directly or indirectly, establish any offices within
25 miles of existing offices of the Company and main corporate office of Buyer,
the primary purpose of which is to originate or service residential first
mortgage loans, acquire more than 50% of the voting power of any Person engaged
in such businesses, or endeavor to entice away from Buyer any employees of the
Buyer (including ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who will continue to serve the Company
following Closing pursuant to his employment agreement with the Company) who,
prior to the Closing Date, were employees of the Company.
(b) Seller acknowledges that the restrictions and agreements contained in
this Section 8.3 are reasonable and necessary to protect the legitimate
interests of Buyer, and that any violation of this Section 8.3 will cause
substantial and irreparable injury to Buyer that would not be quantifiable and
for which no adequate remedy would exist at law and agrees that injunctive
relief, in addition to all other remedies, shall be available therefor.
(c) It is the intent and understanding of each party hereto that if, in
any action before any court or agency legally empowered to enforce this Section
8.3, any term, restriction, covenant, or promise is found to be unreasonable and
for that reason unenforceable, then such term, restriction, covenant, or promise
shall not thereby be terminated but that it shall be deemed modified to the
extent necessary to make it enforceable by such court or agency and, if it
cannot be so modified, that it shall be deemed amended to delete therefrom such
provision or portion adjudicated to be invalid or unenforceable, such
modification or amendment in any event to apply only with respect to the
operation of this Section 8.3 in the particular jurisdiction in which such
adjudication is made.
8.4 Certain Tax Matters.
-------------------
(a) Section 338(h)(10) Election. At Buyer's option, Seller will join (and
---------------------------
will cause the Company to join) with Buyer in making an election under Code
ss.338(h)(10) (and any corresponding election under state and local law) with
respect to the purchase and sale of the Shares hereunder (a "Section 338(h)(10)
Election"). Seller will include any income, gain, loss, deduction, or other tax
item resulting from the Section 338(h)(10) Election on Seller's federal and
state tax returns to the extent permitted by applicable law. Buyer will pay the
New York State tax liability imposed on the Company attributable to the making
of the Section 338(h)(10) Election up to a maximum amount equal to the lesser of
60% of the tax liability due and payable by the Company to the State of New York
attributable to the making of the Section 338(h)(10) Election or an amount equal
to .675% of the Final Adjusted Net Worth. Seller shall pay Buyer for any balance
owed to New York State by the Company in excess of the amount paid by Buyer
through the application of this formula. Seller shall also pay any tax imposed
on the Company attributable to the making of the Section 338(h)(10) Election, to
the extent imposed, under Code ss.1374 and any state tax imposed under a
corresponding state statute. Seller shall indemnify Buyer and the Company
against any loss arising out of any
37
41
failure of Seller to pay the taxes attributable to Seller resulting from the
Section 338(h)(10) Election and all corporate level tax the Seller has agreed to
pay pursuant to this Section 8.4.
(b) Allocation of Purchase Price. Buyer and Seller agree that the Purchase
----------------------------
Price and the liabilities of the Company (plus other relevant items) will be
allocated to the assets of the Company for all purposes (including tax and
financial accounting) in the manner shown on the allocation schedule attached to
this Agreement as Exhibit 8.4 and such allocation shall be updated using the
Closing Date Financial Statements. Buyer and Seller will file or cause to be
filed all tax returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
(c) S Corporation Status. Except as a result of this transaction, Seller
--------------------
will not revoke or cause to be revoked the Company's election to be taxed as an
S corporation within the meaning of Code ▇▇.▇▇. 1361 and 1362. Seller will not
take or allow any other action that would result in the termination of the
Company's status as a validly electing S corporation within the meaning of Code
▇▇.▇▇. 1361 and 1362.
(d) Cooperation on Tax Matters.
--------------------------
(i) Buyer and Seller shall cooperate (and cause the Company to
cooperate) fully, and to the extent reasonably requested by
the other party, in connection with the filing of tax returns
pursuant to this Agreement and any audit, litigation or other
proceeding with respect to this Agreement and any audit,
litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other
party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. Buyer and
Seller agree (A) to retain all books and records with respect
to tax matters pertinent to the Company relating to any
taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority,
and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books
and records and, if the other party so requests, the Company
or Buyer, as the case may be, shall allow the other party to
take possession of such books and records.
(ii) Buyer and Seller further agree, upon request, to use their
commercially reasonable efforts to obtain any certificate or
other document from any governmental authority or any other
person as may be necessary to mitigate,
38
42
reduce or eliminate any tax that could be imposed (including,
but not limited to, with respect to the transactions
contemplated hereby).
8.5 Preparation and Delivery of Tax Returns and the Fiscal Year End
--------------------------------------------------------------------
Financial Statements.
---------------------
Seller shall take all action necessary to deliver the Fiscal Year
End Financial Statements as soon as practicable at Seller's own cost following
the Closing Date if not delivered to Buyer prior to that time. In addition,
Seller shall take all action necessary to file the tax returns for the Company
as of its last tax year and as of the Closing Date, which return will reflect
the taxes due by the Company attributable to the making of the Section
338(h)(10) Election, and the cost of preparing and filing those tax returns
shall be the sole responsibility of the Seller.
SECTION 9. CONFIDENTIALITY
---------------
9.1 Confidentiality.
---------------
(a) All confidential information disclosed by either Seller, the Company
or Buyer whether prior to or subsequent to the Closing Date shall be solely for
the purpose of consummating the Transaction described herein and shall not be
used by Buyer for any other purpose. Buyer shall maintain the confidentiality of
such information. If the Transaction described herein is not consummated, all
documents and copies hereof containing such confidential information in the
possession of Buyer or its agents or representatives shall be returned to
Seller. For purposes of this paragraph, confidential information shall mean
information relating to the assets, business and financial conditions of Seller
which is not publicly available through sources other than Seller.
(b) All confidential information disclosed by Buyer to Seller or the
Company shall be used solely for the purpose of this Agreement and the
Transactions described herein and shall not be used by Seller or the Company for
any other purpose. Seller and the Company shall maintain the confidentiality of
such information. If the Transaction described herein is not consummated, all
documents and copies thereof containing such confidential information relating
to Buyer in the possession of Seller or the Company or their agents or
representatives shall be returned to Buyer. For purposes of this paragraph,
confidential information relating to Buyer shall mean information relating to
the assets, business and financial conditions of Buyer which is not readily
available through sources other than Buyer.
(c) All terms and conditions of this Transaction, whether or not the
Transaction described herein is consummated, shall be kept in confidence by
Buyer and Seller and shall not be disclosed to any other party; provided, this
shall not prohibit Buyer or Seller from disclosing such information to their
respective accountants, lawyers and other financial advisers so long as such
parties have agreed to be bound by the confidentiality provisions of this
paragraph or as otherwise required by law.
39
43
SECTION 10. TERMINATION
-----------
10.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
(a) by mutual consent of the parties hereto;
(b) at any time on or prior to the Closing Date, by Buyer in writing, if
Seller or the Company has, or by Seller and the Company in writing, if Buyer
has, in any material respect, breached (i) any covenant or agreement contained
herein, or (ii) any representation or warranty contained herein, and in either
case if such a breach has not been cured by the earlier of 30 days after the
date on which written notice of such breach is given to the party committing
such breach on the Closing Date;
(c) By Buyer or Seller, if any court of competent jurisdiction or other
governmental body has issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
has become final and non-appealable, provided that same cannot be stayed,
lifted, set aside or satisfied by reasonable action of the parties;
(d) On the Closing Date, by either party hereto in writing, if any of the
conditions precedent set forth in Articles 6 or 7 hereof with respect to such
party have not been satisfied or fulfilled;
(e) By either Buyer or Seller if events have occurred which have made it
impossible to satisfy a condition precedent to the terminating party's
obligations to consummate the Transaction contemplated hereby, unless such
terminating party's willful breach of this Agreement has caused the condition to
be unsatisfied, provided that the terminating party has given the other party
written notice with respect thereto at least 10 days prior to such termination
and has given the other party a reasonable opportunity to discuss the matter
with a view to achieving a mutually acceptable resolution; or
(f) by either party hereto in writing if the Closing Date has not occurred
by the close of business on December 31, 2000 due to circumstances beyond the
control of the parties hereto.
If Buyer or Seller terminate this Agreement pursuant to the provisions
hereof, such termination will be effected by written notice to the other party
specifying the provision hereof pursuant to which such termination is made.
10.2 Effect of Termination.
---------------------
(a) Upon termination of this Agreement pursuant to Section 10.1 hereof,
this Agreement will forthwith become null and void and remedies for any knowing
breach will include damages, attorneys' fees, and other remedies that are
otherwise available at law or in equity.
40
44
SECTION 11. LIMITED SURVIVAL
----------------
11.1 Survival. The respective representations and warranties, covenants
--------
and agreements of the parties to this Agreement shall not survive the Closing
Date, except for the representations and warranties, covenants and agreements
contained in Sections 3.23, 5.15, 5.17, 5.20, 5.21, 8 and 9, which shall survive
the Closing.
SECTION 12. MISCELLANEOUS.
-------------
12.1 Headings. The section headings herein are for convenience of
--------
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof. References to
Sections, unless otherwise indicated, are references to Sections of this
Agreement.
12.2 Notices. All notices to be given pursuant to this Agreement to any
-------
party must be in writing and will be deemed to have been validly given:
(a) if delivered by hand or by overnight delivery to such party (if an
individual) or to an officer or agent of such party at its address
given below; or
(b) if delivered by facsimile transmission, to such party at its address
given below.
41
45
The address of each party for the purposes of this Agreement is as
follows:
If to Sellers:
▇▇. ▇▇▇▇▇▇▇ ▇. Pardes
Columbia Equities, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Columbia Equity, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Mail to:
-------
If to Buyer:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
OceanFirst Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
42
46
With a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may by notice to the other change its address for notice and
will so change its address for notice whenever its existing address for notice
ceases to be adequate for delivery both by hand and by facsimile.
Notices so given will be deemed to be given and received:
(c) on the date of delivery, if delivered by hand or by overnight
delivery service; and
(d) if sent by facsimile, on the date transmission is confirmed by the
recipient.
12.3 Assignment. This Agreement and all provisions hereof will be binding
----------
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any rights, interest, or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party, and PROVIDED that
no party hereto or successor or assignee has the ability to subrogate any other
person to any right or obligation under this Agreement.
12.4 Entire Agreement. This Agreement (including the Exhibits, Schedules
----------------
and Disclosure Schedule hereto) embody the entire agreement and understanding of
the parties with respect to the transactions contemplated hereby and thereby and
supersede all prior written or oral commitments, arrangements or understandings
with respect thereto (other than the Confidentiality Agreement, which will
terminate at the Closing). There is no restriction, agreement, promise,
warranty, covenant or undertaking with respect to the transactions contemplated
hereby and thereby other than those expressly set forth herein or therein.
12.5 Amendment, Waiver.
-----------------
(a) This Agreement may only be amended or modified in writing signed by
the party or parties against whom enforcement of any such amendment
or modification is sought.
(b) Any party hereto may, by an instrument in writing, waive compliance
with any term or provision of this Agreement on the part of such
other party or parties hereto. The waiver by any party hereto of a
breach of any term or provision of this Agreement will not be
construed as a waiver of any subsequent breach.
43
47
12.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which will be considered one and the same agreement and
each of which will be deemed an original.
12.7 Governing Law. This agreement will be governed by the laws of the
--------------
State of New Jersey (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including but not limited to
matters of validity, construction, effect and performance.
12.8 Severability. If any one or more of the provisions of this Agreement
------------
is held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement will not be
affected thereby, and Sellers and Buyer will use their reasonable efforts to
substitute one or more valid, legal and enforceable provisions which insofar as
practicable implement the purposes and intent hereof. To the extent permitted by
applicable law, each party waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.
12.9 No Third Person Beneficiaries. This Agreement is not intended to
-------------------------------
confer upon any other Person other than the parties hereto, any rights or
remedies hereunder.
12.10 No Agreement until signed by all parties. Nothing in this document
----------------------------------------
will constitute an offer capable of acceptance or an agreement of any kind until
this document is executed and delivered by each of the parties. Facsimile
signatures received by each of the parties hereto will be binding under this
Agreement.
12.11 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
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 or any other such instrument.
12.12 Publicity. The parties shall mutually agree as to the form and
---------
substance of any press release relating to this Agreement or the Transaction
contemplated hereby and shall consult with each other as to the form and
substance of other public disclosure related thereto; provided, however, that
nothing contained herein shall prohibit any party, following notification to the
other party, from making any disclosure which its counsel deems necessary.
12.13 Disclosure Schedule. Any information set forth on the Disclosure
--------------------
Schedule with respect to a particular Section of this Agreement shall be deemed
disclosed for purposes of any other Section of this Agreement and for this
Agreement generally.
12.14. Power of Attorney. In the event of the death, incompetence, or
-------------------
other disability of Seller prior to the Closing Date, by signing this Agreement,
Seller irrevocably grants to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ power of attorney to carry out the
terms of this Agreement on behalf of Seller, the Company and/or Seller's estate,
and, Buyer shall recognize the Power of Attorney granted by this Section,
provided same is sufficient as a matter of law to effectuate the transaction
contemplated herein.
44
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLER
/s/ ▇▇▇▇▇▇▇ ▇. Pardes
-----------------------------------------
▇▇▇▇▇▇▇ ▇. Pardes
COLUMBIA EQUITIES, Ltd.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
OCEANFIRST BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board, President,
Chief Executive Officer
45
