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AGREEMENT OF PURCHASE AND SALE OF STOCK
This agreement is made as of April 30, 1998 at Walnut Creek,
California, among Finet Holdings Corporation, a Delaware corporation
("Buyer"), having its principal office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Shareholders"), each a resident of the state of New
Jersey, and Coastal Federal Mortgage Company, a New Jersey corporation
("Corporation").
RECITALS
Shareholders have represented that they own all of the issued and
outstanding stock of Corporation. Buyer desires to purchase from
Shareholders and Shareholders desire to sell to Buyer all of the
outstanding stock of Corporation (the "Shares"). Corporation desires that
this transaction be consummated. In consideration of the mutual
covenants, agreements, representations, and warranties contained in this
Agreement, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1. Shareholders and Buyer adopt this Agreement as a plan of
reorganization under the Internal Revenue Code Paragraph
368(a)(1)(B).
1.2. Subject to the terms of and conditions set forth in this
Agreement, on the Closing Date, Shareholders will transfer, convey and
deliver the Shares to Buyer, and Buyer will acquire the Shares from
Shareholders.
1.3. Except as may occur in the ordinary course of its business, as of
the Closing Date, none of the assets of the Corporation, as defined below,
and as reflected on the Financial Statements, as defined in Paragraph 3.5
herein below, shall be excluded from the transaction provided for in this
Agreement.
2. CONSIDERATION
2.1. Subject to the terms and conditions set forth in this Agreement,
the consideration to be delivered to Shareholders in exchange for the Stock
shall be 1,250,000 shares of Buyer's common stock, par value $.01 per share
which shares shall, for purposes of this Agreement, be valued at $ 4.00 per
share ("Stock"). The parties acknowledge and agree that for the purposes of
this Agreement, the 1,250,000 shares of Stock shall be equal in value to
five million ($5,000,000) dollars (the "Purchase Price"), and shall be
adjusted as set forth below.
2.2. Subject to the terms and conditions set forth in this Agreement,
at the Closing Buyer will issue and deliver to Shareholders a portion of
the Purchase Price totaling 1,125,000 shares of Stock, equal in value to
four million five hundred thousand ($4,500,000) dollars.
2.3. The Purchase Price, in shares of Stock, shall be issued and
delivered to the individual Shareholders in the numbers determined as
follows:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 43 %
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 42 %
▇▇▇▇▇▇ ▇. ▇▇▇▇ 15 %
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On the Closing Date, the Buyer shall reserve from the Purchase Price
delivery of 125,000 shares of Stock, which shall constitute the balance of
the Purchase Price, which for the purposes of this Agreement, has a value
of five hundred thousand ($500,000) dollars (the "Reserved Shares"). The
Reserved Shares will be delivered to Shareholders, in accordance with the
provisions of the escrow agreement, a true and correct copy of which is
attached hereto as Exhibit A ("Escrow Agreement"), subject to the
following:
(a) Contingency Reserve for General Management
Representations: The Reserved Shares, (125,000 shares) shall be
decreased, as provided herein, to reflect any overstatement of the
Corporation's assets or understatement of the Corporation's liabilities,
from those provided in the Financial Statements (as defined in Paragraph
3.5). The actual amount of the decrease, if any, to the Reserved Shares
shall be equal to the total amount of any asset overstatements plus
liability understatements, should that total amount exceed fifty thousand
($50,000) dollars ("Reserved Share Verification"). The balance of the
Reserved Shares after any decrease as defined herein, shall be distributed
to Shareholders upon the completion of the first audit report by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ & Co., or another nationally recognized firm of independent public
accountants chosen by Buyers, which is anticipated to be on or before July
15, 1998.
2.4 Piggy Back Rights: Shareholders shall be entitled to "Piggy Back"
registration rights on registrations of Finet common stock, subject to the
right however, of Finet and its underwriters to reduce the number of
shares proposed to be registered by Shareholders in view of market
conditions. Buyer agrees to use its best efforts to include Shareholder's
Stock, including the Reserved Shares, in its current S-3 Registration.
3. WARRANTIES OF SHAREHOLDERS
Shareholders, jointly and severally, warrant and represent to Buyer as
follows:
3.1. Corporation is duly organized, valid and existing, and in good
standing under the laws of the state of New Jersey and has all necessary
corporate powers to own its properties and operate its businesses now owned
and operated by it. Corporation is also duly organized, validly existing
and in good standing under the laws of each of the states in which it is
currently doing business, and which are set forth in Schedule 3.1 to this
Agreement, except where the failure to be or do so or to hold the licenses,
authorizations, and permits referred to herein, would not have a material
adverse effect on the business of the Corporation. In addition,
Corporation holds all required licenses, authorizations and permits to
conduct its business in each of the states, to the extent disclosed, set
forth in Schedule 3.1.
3.2. The authorized Stock of the Corporation consists of 2,500 shares
of common stock, no par value, of which 2,000 shares (the Shares) are
issued and outstanding. All the Shares are validly issued, fully paid and
not assessable, and such shares have been so issued in full compliance with
all federal and state securities laws. There are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating Corporation to issue or to transfer
from treasury any additional shares of its capital stock of any class.
3.3. Shareholders are the owners, beneficially and of record, of all
of the Shares free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges, and restrictions,
Shareholders have the full power to transfer the Shares to Buyer without
obtaining the consent or approval of any other person or governmental
authority, other than the consent of applicable licensing authorities,
which shall be obtained by the parties prior to the Closing Date and
attached hereto as Schedule 3.3 to this Agreement.
3.4. Corporation does not own, directly or indirectly, any interest
or investment, whether equity or debt, in any corporation, partnership,
business, trust, or other entity.
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3.5. Schedule 3.5 (a) to this Agreement sets forth the balance sheets
of the Corporation as of December 31, 1996, audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CPA.
and December 31, 1997, audited by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company, LLP and the
related statements of income and retained earnings for the fiscal years
ending on those dates, Corporation's independent public accountants, whose
opinions with respect to those financial statements appear in that
Schedule. Schedule 3.5 (b) to this Agreement sets forth the unaudited first
quarter 1998 compilation, prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CPA. and together
with related unaudited statements of income and retained earnings for the
three month period ending on March 31, 1998, certified by the individual
Shareholders as accurately reflecting the financial condition of the
Corporation for those periods and accurately reflecting all information
normally reported to Corporations' independent public accountants for the
preparation of corporation's financial statements. The financial statements
of Schedules 3.5 (a) and (b) are referred to herein as the "Financial
Statements". The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently followed by
Corporation throughout the periods indicated, and fairly present the
financial position of Corporation on the respective dates of the balance
sheets included in the Financial Statements, and the results of its
operations for the respective periods indicated.
3.6. Since December 31, 1997, there has not been any change in the
financial condition or operations of Corporation, except changes in the
ordinary course of business, or as is set forth in Schedule 3.6 attached
hereto.
3.7. Corporation has no debt, liability, or obligation of any nature,
including threatened or filed litigation, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, that is not
reflected or reserved against in the Corporation's balance sheet as of
December 31, 1997, included in the Financial Statements or set forth in
Schedule 3.5 (a) (b) to this Agreement, except for (1) those that may have
been incurred after the date of that balance sheet in the ordinary course
of business and (2) those that are not required by generally accepted
accounting principles to be included in a balance sheet. All debts,
liabilities, and obligations incurred after that date were incurred in the
ordinary course of business and are usual and normal in amount both
individually and in the aggregate. All, to the best of their knowledge
threatened or filed litigation shall be specifically identified in Schedule
3.7, including the names of the parties, the nature of the action and the
amount of damages or the relief sought.
3.8. Except as is disclosed in Schedule 3.8, within the times and in
the manner prescribed by law, Corporation has filed all federal, state and
local tax returns required by law and have paid all taxes, assessments, and
penalties due and payable. The Federal and State income tax returns of
Corporation have been prepared and filed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CPA, for the
1996 and 1997 fiscal years, and the results are accurately reflected in the
Financial Statements. The provisions for taxes reflected in Corporation's
balance sheet as of December 31, 1997 are adequate for federal, state,
county, and local taxes for the period ending on the date of that balance
sheet and for all prior periods, whether disputed or undisputed. There are
no present disputes about taxes of any nature payable by Corporation.
Corporation has never filed, and will not file on or before the Closing
Date, any consent under Internal Revenue Code Paragraph 341(f).
Shareholders have paid or deposited, within the period prescribed by law,
all payroll taxes that relate to periods before the Closing Date.
3.9. No assets of the Corporation are excluded from the transfer of
ownership of the Shares provided for in this Agreement and there has been
no sale, encumbrance or other transfer of or lien created on any of the
assets of the Corporation between the date of this Agreement and the
Closing Date, other than in the ordinary course of the Corporation's
business, or as is set forth in Schedule 3.9 attached hereto.
3.10. Corporation owns no real property or any interest in real
property other than as lessee of certain business premises (the "Premises")
under terms of those leases disclosed to Buyer, copies of which have been,
or will prior to the Closing Date be, disclosed to Buyer, or as is set
forth in Schedule 3.10 attached hereto.
3.11. Except as reflected in the Financial Statements described in
Paragraph 3.5, above, the Corporation is not subject to any indebtedness,
obligation or liability, contingent or otherwise, except those arising in
the ordinary course of business subsequent to December 31, 1997.
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3.12. Since December 31, 1997, there has not been any of the
following, except as is set forth in Schedule 3.12 attached hereto:
(a) Transaction by Corporation, except in the ordinary course of
business as conducted on that date;
(b) Capital expenditure by Corporation exceeding ten thousand
($10,000) dollars;
(c) Material adverse change in the financial condition, liabilities,
assets, business, or prospects of the Corporation;
(d) Destruction, damage to, or loss of any asset of the Corporation
(whether or not covered by insurance) that materially and adversely affects
the financial condition, business, or prospects of the Corporation;
(e) Labor trouble or other event or condition of any character
materially and adversely affecting the financial condition, business,
assets or prospects of the Corporation;
(f) Change in accounting methods and practices, including, without
limitation, any change in depreciation or amortization policies or rates by
Corporation;
(g) Revaluation by the Corporation of any of its assets;
(h) Declaration, setting aside, or payment of a dividend or any other
distribution in respect of the capital stock of the Corporation, or any
direct or indirect redemption, purchase or other acquisition by Corporation
of any of its shares of capital stock;
(i) Increase in the salary or other compensation payable or to become
payable by the Corporation to any of its officers, directors, or employees,
or the declaration, payment, or commitment, or obligation of any kind for
the payment, by Corporation, of a bonus or other additional salary or
compensation to any such person;
(j) Sale or transfer of any asset of the Corporation except in the
ordinary course of business;
(k) Amendment or termination of any contract, agreement or license to
which Corporation is a party, except in the ordinary course of business;
(l) Loan by Corporation to any person or entity, or guaranty by
Corporation of any loan, except in the ordinary course of business;
(m) Mortgage, pledge, or other encumbrance of any asset of the
Corporation;
(n) Waiver or release of any right or claim of Corporation, except in
the ordinary course of business;
(o) Other event or condition of any character that has, or might
reasonably have a material and adverse effect on the financial condition,
business, assets or prospects of the Corporation;
(p) Issuance or sale by Corporation of any shares of its capital stock
of any class, or of any of its other securities;
(q) Threatened or filed litigation against the Corporation, to the
best of Shareholders knowledge; or
(r) Agreement by Corporation to do any of the things described in the
preceding clauses of this Subsection 3.12.
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3.13. No agreement to which the Corporation is a party or due to which
it has any obligation shall be violated or placed into default or breached
by the transaction contemplated by this Agreement, except as is set forth
in Schedule 3.13 attached hereto.
3.14. Schedule 3.14 to this Agreement is a complete and accurate
schedule describing and specifying the location of all equipment,
furniture, supplies, and other tangible personal property, each having an
original retail value of one thousand ($1,000.00) dollars or more, which is
owned by, whether in possession or not of, the Corporation, or used by the
Corporation in connection with its business. The property listed in
Schedule 3.14 constitutes all such tangible personal property necessary for
the conduct by Corporation of its business now conducted, which is subject
to the terms and conditions of this Agreement.. No such property is held
under any lease, security agreement, conditional sales contact, or other
title, retention or security arrangement, or is located other than in the
possession of Corporation, except as disclosed in Schedule 3.14.
3.15. Corporation has disclosed to Buyer and made available for
Buyer's inspection, or will do so prior to Closing Date, all books,
records, files and other documents and information, whether stored by
document, electronically or otherwise, concerning all transactions,
constituting the business of Corporation, including, without limitation,
records of all debts,obligations and liabilities and of all accounts
receivable held by Corporation.
3.16. Schedule 3.16 to this Agreement is a schedule of all trade
names, trademarks, service marks, and copy rights and their registrations,
owned by Corporation or in which it has any rights or licenses, together
with a brief description of each. Shareholders have no knowledge of any
infringement or alleged infringement by others of any tradename, trademark,
service ▇▇▇▇, or copyright. To the best of Shareholders knowledge,
Corporation has not infringed, and is not now infringing on any tradename,
trademark, service ▇▇▇▇, or copy right belonging to any other person, firm,
or corporation. Except as set forth in Schedule 3.16, Corporation is not a
party to any license, agreement, or arrangement, whether as licensor,
licensee, or franchisor, franchisee, or otherwise, with respect to any
trademarks, service marks, trade names, or applications for them, or any
copyrights. Corporation owns, or holds adequate licenses or other rights to
use, all trademarks, tradenames, service marks, and copy rights necessary
for their respective businesses as now conducted by them (including without
limitation those listed in Schedule 3.16), and to the best of Shareholders
knowledge, that use does not, and will not, conflict with, infringe on, or
otherwise violate any rights of others. Corporation has the right to sell
or assign to Buyer all owned trademarks, tradenames, service marks, and all
such licenses and other rights.
3.17. Schedule 3.17 to this Agreement is a complete list, without
extensive or revealing descriptions, of Corporation's trade secrets,
including all customer lists, processes, know how, computer programs and
routines, and other technical data. The specific location of each trade
secrets' documentation, including its complete description, specifications,
charts, procedures, and other material relating to it, is also set forth in
that Schedule. Each trade secret's documentation is current, accurate, and
sufficient in detail and content to identify and explain it and to allow
its full and proper use by Buyer without reliance on the special knowledge
or memory of others. Corporation is a sole owner of each of these trade
secrets, free and clear of any liens, encumbrances, restrictions, or legal
or equitable claims of others, except as specifically stated in Schedule
3.17. Corporation has taken all reasonable security measures to protect the
secrecy, confidentiality, and value of these trade secrets; to the best of
their knowledge , any of their employees who, either alone or in concert
with others, have knowledge of or access to these secrets, or who have
knowledge of or access to information relating to them, have been put on
notice and, if appropriate, have entered into agreements that these secrets
are proprietary to the Corporation and are not to be divulged or misused.
All these trade secrets are presently valid and protectable and are, to the
best of their knowledge, not part of the public knowledge or literature;
they have not, to Shareholder's knowledge, been used, divulged, or
appropriated for the benefit of any past or present employees or other
persons, or to the detriment of Corporation.
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3.18. Corporation has good and marketable title to all their
respective assets and interest in assets, tangible or intangible, with
constitute all the assets and interest in assets that are used in the
businesses of the Corporation. All these assets are free and clear of
restrictions on or conditions to transfer or assignment and free and clear
of mortgages, liens, pledges, charges, encumbrances, equities or
restrictions, except for (1) those disclosed in corporation's balance sheet
as of December 31, 1997, or in Schedules 3.1 through 3.13 to this
Agreement; (2) the lien of current taxes not yet due and payable; and (3)
possible minor matters that, in the aggregate, are not substantial in
amount and do not materially detract from or interfere with the present or
intended use of any of these assets or materially impair business
operations. Corporation is not in default or in arrears in any material
respect under any lease. All premises occupied by Corporation and all of
the tangible personal property of Corporation that is necessary to the
operation of their businesses is in operating condition and repair,
ordinary wear and tear excepted. Corporation is in possession of all
premises leased to them from any third party. Neither Shareholders, nor any
officer, director, or employee of Corporation, nor any spouse, child, or
other relative of any of these persons, owns, or has any interest, directly
or indirectly, in any of the property owned by or leased to Corporation or
any copyrights, patents, trademarks, tradenames, or trade secrets licensed
by Corporation. Corporation does not occupy any real property in violation
of any law, regulation or decree.
3.19. Schedule 3.19 to this Agreement is a description of all
insurance policies held by Corporation concerning its businesses and
properties. All these policies are in their respective principal amounts as
set forth in Schedule 3.19. Corporation has maintained and now maintains
(1) insurance on all of their assets and businesses of a type customarily
insured, covering property damage and loss of income by fire or other
casualty, and (2) adequate insurance protection against all liabilities,
claims and risks against which it is customary to insure. Corporation is
not in default with respect to payment of premiums on any such policy.
Except as set forth in Schedule 3.19, no claim is pending under any such
policy.
3.20. Corporation is not a party to, nor is the Corporation either
bound by, any agreement not entered into in the ordinary course of
business, or any agreement that is unusual in nature, duration, or amount
(except the agreements listed in Schedule 3.6 copies of which have been
furnished to or made available to Buyer.) There is no default or event
that, with notice, a lapse of time, or both, would constitute a default by
any party to any of these agreements. Corporation has not received notice
that any party to any of these agreements intends to cancel or terminate
any of these agreements or to exercise or not exercise any options under
any of these agreements. Corporation is not a party to, nor is the property
of Corporation bound by, any agreement that is materially adverse to the
businesses, properties or financial condition of Corporation.
3.21. Corporation has not received notice of any violation of any
applicable federal, state or local statute, law, or regulation (including
any applicable mortgage lending or servicing law, ordinance or regulation)
affecting its properties or the operation of its business; and to the best
of the knowledge of Shareholders and Corporation there are no such
violations.
3.22. Except as set forth in Schedules 3.6 and 3.12, there is no
pending, or, to the best knowledge of Shareholders and Corporation,
threatened, suit, action, arbitration, or legal, administrative, or other
proceeding or governmental investigation against or materially adversely
affecting Corporation, or any of its businesses, assets or financial
conditions. The matters set forth in Schedules 3.6 and 3.12, if decided
adversely to Corporation, will not result in a material adverse change in
the business, assets, or financial condition of Corporation, except as is
specifically set forth in Schedules 3.6 and 3.12. Shareholders have
furnished or made available to Buyer copies of all relevant court papers
and other documents relating to the matters set forth in Schedules 3.6 and
3.12. Corporation is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local or foreign court,
department, agency, or instrumentality. Except as set forth in Schedules
3.6 and 3.12, neither Corporation nor Shareholders are presently engaged in
any legal action to recover money due to any of them or damages sustained
by any of them.
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3.23. Except as is set forth in Schedules 3.1 through 3.22, the
consummation of the transactions contemplated by this Agreement will not
result in or constitute any of the following:
(a) a breach of any term or provision of this Agreement;
(b) a default or an event that, with notice, lapse of time, or both,
would be a default, breach, or violation of the articles of incorporation
or bylaws of Corporation or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of
trust, or other agreement, instrument, or arrangement to which any
Shareholder or Corporation is a party or by which any of them or the
property of any of them is bound;
(c) an event that would permit any party to terminate any agreement or
to accelerate the maturity of any indebtedness or other obligation of
Corporation; or
(d) the creation or imposition of lien, charge, or encumbrance on any
of the properties of Corporation.
3.24. Shareholders have the rights, power, legal capacity and
authority to enter into and perform their respective obligations under
this Agreement. The execution and delivery of this Agreement by
Corporation shall have been duly authorized by all necessary corporate
action.
3.25. Shareholders have furnished to Buyer for its examination (1)
copies of the articles of incorporation and bylaws of Corporation; (2) the
minute books of Corporation containing all records required to be set forth
of all proceedings, consents, actions, and meetings of the Shareholders and
boards of directors of Corporation; (3) all permits, orders, and consents
issued by any governmental authority of the State of New Jersey regarding
the Corporation, or any security of either of them, and all applications
for such permits, orders, and consents; and (4) the stock transfer books of
Corporation setting forth all transfers of any capital stock.
3.26. Schedule 3.26 is a list of the names and addresses of all
officers, directors, employees, agents, and representatives of Corporation
stating the rates of compensation payable to each and the date commenced.
3.27. Schedule 3.27 is a list of all Corporation's material employment
contracts; collective bargaining agreements; and pension, bonus, profit
sharing, stock option or other agreements providing for employee
remuneration or benefits. To the best of Shareholders' knowledge,
Corporation is not in default under any of these agreements. There have
been no claims of defaults, and to the best knowledge of Shareholders,
there are no facts or conditions that if continued, or on notice, will
result in a default under these contracts or arrangements. there is no
pending or, to Shareholders' knowledge, threatened labor dispute, strike,
or work stoppage affecting Corporation's business. To the best of their
knowledge, Corporation has complied with all applicable laws for each of
their respective employee benefit plans, including the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) if and to the
extent applicable. To the best of Shareholders knowledge, there are no
threatened or pending claims by or on behalf of any such benefit plan, by
or on behalf of any employee covered under any such plan, or otherwise
involving any such benefit plan, that allege a breach of fiduciary duties
or a violation of other applicable state or federal laws; nor is there, to
Shareholders' knowledge, any basis for such a claim. Except as is set forth
in Schedule 3.7, Corporation has not entered into any severance or similar
arrangement with any present or former employee that will result in any
obligation, absolute or contingent, of Buyer or Corporation, to make any
payment to any present or former employee following termination of
employment. Schedule 3.7 contains a complete list of all employee welfare
benefit plans, pension plans, deferred or incentive compensation plans,
bonus plans, stock option plans, employee stock purchase plans, retirement
plans, health plans, insurance plans, travel allowance plans, profit
sharing plans, and any other employee benefit or fringe benefit plan,
agreement, arrangement, or commitment, other than normal payroll practices
and policies concerning holidays, vacations, and salary continuation during
short absences for illness or other reasons, maintained by Corporation.
True and complete copies of all documents relating to each plan or
arrangement described in Schedule 3.7
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have been made available by Corporation to Buyer for Buyer's review, or
will be so made available prior to the Closing Date.
3.28. Schedule 3.28 lists (1) the names and addresses of all persons
holding a power of attorney on behalf of Corporation and (2) the names and
addresses of all banks or other financial institutions in which Corporation
has an account, deposit, or safe deposit box, account numbers, with the
names of all person authorized to draw on these accounts or deposits or to
have access to these boxes.
3.29. To the best of Shareholders knowledge, as of the date of this
Agreement and the Closing Date, Corporation is not, and will not be, in
violation of any federal, state or local law, ordinance or regulation
relating to industrial hygiene, soil, water, or environmental conditions
on, under or about any premises occupied or used by Corporation during the
period that Corporation has occupied any such property, there has been no
use, presence, disposal, storage, generation, release, or threatened
release (as those terms are used in the Environmental Laws, and hereinafter
collectively referred to as "Use") of Hazardous Materials on, from or under
such Premises by the Corporation, except as previously disclosed by
Corporation or Shareholders to Buyer in writing. Shareholders have no
knowledge of any use of Hazardous Materials on, from or under such premises
which may have occurred prior to the Corporation taking possession of such
premises, except as previously disclosed to Buyer in writing. To the best
of Shareholders knowledge, during the period that Corporation has occupied
such premises, there has been no enforcement action or litigation brought
or threatened against the Corporation, nor any settlements reached by or
with any party or parties alleging the Use of Hazardous Materials on, from
or under such premises, except as previously disclosed to Buyer in writing.
For purposes hereof, "Environmental Laws," shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
1901 et seq.; the Hazardous Materials Transportation Act, 39 U.S.C. 1801 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.;
the Federal Clean Water Act, 33 U.S.C. 1251 et seq.; and any other federal,
state or local law, statute, code, regulation, ordinance or other mode of
governance concerning Hazardous Materials. "Hazardous Materials" shall mean
any and all flammable, explosive, asbestos, radioactive material, hazardous
waste, toxic substance or related material, including but not limited to
those materials and substances defined as "hazardous substances",
"hazardous materials", "hazardous waste" or "toxic substance" in the
Environmental Laws.
3.30. Corporation is not in default under any agreement, lease,
indenture, mortgage, deed of trust or instrument to which it is a party or
by which it may be bound or subject, concerning any premises occupied or in
the possession of Corporation, or to which Corporation holds any rights to
any interest or use. 3.31. None of the warranties or representations made
by Shareholders herein, or made in any certificate or memorandum furnished
or to be furnished by any of them or on their behalf in relation to this
transaction, contains or will contain any untrue statement of a material
fact, or omits to state any material fact necessary to make the statements
made.
4. BUYER'S REPRESENTATIONS AND WARRANTIES
4.1. Buyer represents and warrants to Shareholders that:
(a) Buyer is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware. The execution and
delivery of this Agreement and the consummation of this transaction by
Buyer have been duly authorized, and no further corporate authorization is
necessary on the part of Buyer.
(b) Buyer need make or obtain no consent, approval, or
authorization of, or declaration, filing, or registration with, any federal
or state governmental or regulatory authority in connection with the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated by this Agreement.
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(c) The execution, delivery and performance of this Agreement by
the Buyer and the consummation by the Buyer of the transactions
contemplated hereby will not (i) result in a violation of the Buyer's
Certificate of Incorporation or By-laws or (ii) conflict with or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Buyer or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Buyer's Common Stock is traded or listed) applicable
to the Buyer or any of its subsidiaries or by which any property or asset
of the Buyer or any of its subsidiaries is bound or affected. Neither the
Buyer nor its subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation or Bylaws or their organizational
charter or by-laws, respectively, or any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order
or any statute, rule or regulation applicable to the Buyer or its
subsidiaries. The business of the Buyer and its subsidiaries is not being
conducted, and shall not be conducted in violation of any law, ordinance,
regulation of any governmental entity. Except as specifically contemplated
by this Agreement and as required under the 1933 Act and any applicable
state securities laws, to the best of the Buyer's knowledge, the Buyer is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for
it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement. All consents, authorizations, orders,
filings and registrations which the Buyer is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the
date hereof. The Buyer and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
(d) Since January 1, 1996, the Buyer had filed all reports,
schedules, forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing
filed prior to the date hereof and all exhibits included therein and being
hereinafter referred to as the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
As of their respective dates, the financial statements of the Buyer
included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Buyer as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf
of the Buyer to the Shareholders which is not included in the SEC
Documents, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein,
in the light of the circumstance under which they are or were made, not
misleading.
(e) Except as disclosed in the SEC documents, since December 15,
1997, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of the Buyer or its subsidiaries. The
Buyer has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Buyer
or its subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
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(f) There is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Buyer or any of
its subsidiaries, threatened against or affecting the Buyer, the Common
Stock or any of the Buyer's subsidiaries, wherein an unfavorable decision,
ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Buyer to perform its
obligations under, this Agreement or any of the documents contemplated
herein or (iii), except as expressly set forth in the SEC Documents, have a
material adverse effect on the business, operations, properties, financial
condition or results of operation of the Buyer and its subsidiaries taken
as a whole.
(g) At the Closing, Buyer knows of no event, liability or material
change in Buyer's business or its prospects that would have a materially
adverse affect on the trading price of Buyer's stock.
(h) Buyer is acquiring the Shares hereunder for its own account
for investment purposes only and not with a view to, or resale in
connection with any public distribution thereof or with any present
intention of selling, distributing or otherwise disposing the Shares.
5. SHAREHOLDER'S OBLIGATIONS BEFORE CLOSING
5.1. Shareholders covenant that, from the date of this Agreement until
the Closing:
(a) Buyer and its counsel, accountants and other representatives
will have full access during normal business hours to all properties,
books, accounts, records, contracts and documents of or relating to
Corporation. Shareholders and Corporation will furnish or cause to be
furnished to Buyer and its representatives all data and information
concerning the business, finances, and properties of Corporation that may
reasonably be requested.
(b) Corporation will carry on its businesses and activities
diligently and in substantially the same manner as they previously have
been carried out and will not institute any unusual or novel method of
operation, business practice, management, accounting or operation that
vary materially from those methods used by Corporation as of the date of
this Agreement.
(c) Except as is set forth in Schedule 3.12, Corporation will use
its best efforts, without making any commitments on behalf of Buyer, to
preserve its respective business organizations intact; to keep available to
Corporation its present officers and employees; and to preserve its present
relationships with lenders, investors, brokers, customers, and others
having business relationships with it.
(d) Except as is set forth in Schedule 3.12, Corporation will not:
(1) amend its articles of incorporation or bylaws;
(2) issue any shares of its capital stock;
(3) issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments under which any
additional shares of its capital stock of any class might be directly or
indirectly authorized, issued, or transferred from treasury; or
(4) agree to do any of the acts listed above.
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(e) Corporation will continue to carry its existing insurance,
subject to variations and amounts required by the ordinary operations of
its businesses. At the request of Buyer and at Buyer's sole expense, the
amount of insurance against fire and other casualties that, at the date of
this Agreement, Corporation carries on any of its properties or in respect
of its operations will be increased by the amount or amounts Buyer will
specify.
(f) Except in the ordinary course of business, Corporation will not
agree to:
(1) make any change in compensation payable or to become
payable by it to any officer, employee, sales agent, or representative;
(2) make any change in benefits payable to any officer,
employee, sales agent, or representative under any bonus or pension plan or
other contract or commitment; or
(3) modify any collective bargaining agreement to which it is a
party or by which it may be bound.
(g) Corporation will not agree to do, without Buyer's consent, any
of the following:
(1) enter into any contract, commitment or transaction not in
the usual and ordinary course of its business;
(2) make any capital expenditures in excess of $5,000 for any
single item or enter into any lease of capital equipment or real or
personal property under which the annual lease charge is in excess of
$5,000; or
(3) sell or dispose of any capital asset with a net book value
exceeding $5,000.
(h) Except in the ordinary course of business or as is set forth in
Schedule 3.12, Corporation will not:
(1) declare, set aside, or pay any dividend or make any distribution in
respect of its capital stock;
(2) directly or indirectly purchase, redeem or otherwise acquire any shares
of its capital stock;
(3) enter into any agreement obligating it to do any of the foregoing
prohibited acts.
(i) Except in the ordinary course of business, or as is set fort in
Schedule 3.12, Corporation will not, or will not agree to:
(1) pay any obligation or liability, fixed or contingent, other than a
current liability;
(2) waive or compromise any right or claim; or
(3) cancel, without full payment, any note, loan, or other
obligation owed to Corporation.
(j) Corporation will not, or will not agree to, modify, amend,
cancel or terminate any of its existing contracts or agreements, except in
the ordinary course of business.
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6. CONSENTS OF OTHERS
The parties acknowledge and agree that the Shareholders shall have no
responsibility with respect to the transfer, consents or approval of the
Corporation's mortgage lending licenses, as may be required upon transfer
of ownership by applicable regulatory authorities and as disclosed in
Schedule 3.1. However, Shareholders shall exercise their best efforts, and
promptly execute and deliver any documents and instruments that may be
reasonably required, to assist Buyer in obtaining such consents or
approval; provided, however, that Shareholders will not be obligated under
this Paragraph to execute any guarantee, assumption of liability, or other
document or instrument requiring it to assume obligations not contemplated
by this Agreement.
7. WARRANTIES TRUE AT CLOSING
All warranties of Shareholders and Buyer set forth in this Agreement
and in any written statements delivered to Buyer by Shareholders and by
Buyer to Shareholders under this Agreement will also be true and correct on
the Closing Date as if made on that date.
8. BUYER CONFIDENTIALITY
Buyer agrees that, unless and until the Closing has been consummated,
Buyer and its officers, directors and other representatives will hold in
strict confidence, and will not use to the detriment of Shareholders or
Corporation, all data and information about the business of Corporation and
Shareholders (whether or not Closing takes place) obtained in connection
with the transaction or agreement, except as far as the data and
information may be required by law to be disclosed to its shareholders or
other parties. If the transactions contemplated by this Agreement are not
consummated, Buyer will return to Shareholders all that data and the
information that Shareholders may reasonably request, including documents
prepared by or made available to Buyer in connection with this transaction.
9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Shares under this Agreement
are subject to the satisfaction, at or before Closing, of all the
conditions set forth below in this Paragraph 9. Buyer may specifically
waive in writing any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition will
constitute a waiver by Buyer of any of its other rights or remedies, at law
or in equity, if Shareholders or Corporation are in default of any of their
representations, warranties, or covenants under this Agreement.
(a) Except as otherwise permitted by this Agreement, all warranties
by each of the Shareholders in this Agreement, or in any written statement
that will be delivered to Buyer by any of them under this Agreement, must
be true in all material respects on the Closing Date as though made at that
time.
(b) Shareholders must have performed, satisfied and complied in all
material respects with all covenants, agreements, and conditions required
by this Agreement to be performed or complied
with by them, or any of them, by the Closing Date.
(c) During the period from December 31, 1997 to the Closing Date,
there shall not have been any material adverse change in the financial
condition or the results of operations of Corporation, and Corporation will
not have sustained any insured or uninsured loss or damage to its assets
that materially adversely affects its ability to conduct a material part of
its business, except as is set forth in Schedules 3.5 through Schedules
3.13 attached hereto.
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(d) Buyer will have received a certificate, dated the Closing Date,
signed and verified by Shareholders and by Corporation's president and its
chief financial officer, certifying, in such detail as Buyer and its
counsel may reasonably request, that to the best of their knowledge the
conditions specified in Paragraphs 3, 5 and 9 of this Agreement have been
fulfilled.
(e) Buyer will have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, PC, counsel
for Shareholders, an opinion dated the Closing Date in form and substance
satisfactory to Buyer and its counsel, that:
(i) Corporation is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of New Jersey,
and has all necessary corporate power to own its properties as now owned
and operate its business as now operated.
(ii) The authorized capital stock of Corporation consists of
2,500 shares of capital stock of no par value, of which 2,000 shares are
issued and outstanding. All outstanding shares are validly issued, fully
paid, and non-assessable. That there are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements
or commitments obligating Corporation to issue or transfer from treasury
any additional shares of its stock of any class.
(iii) This Agreement has been duly and validly authorized
and, when executed and delivered by Shareholders, will be valid, binding,
and enforceable against each of them in accordance with its terms, except
as limited by bankruptcy and insolvency laws and other laws and equitable
principles affecting the rights of creditors generally.
(iv) That Shareholders are the record owners of 2,000 shares of
stock of the Corporation. On the transfer and delivery of the Shares to
Buyer in accordance with this Agreement, Buyer will acquire the rights and
the Shares free of any adverse claim, so long as Buyer is a purchaser for
value in good faith and without notice of any adverse claim.
(v) Neither execution or delivery of this Agreement nor the
consummation of the transaction contemplated in this Agreement will
constitute (a) a default or an event that would, with notice, lapse of
time, or both-constitute a default under, or violation or breach of,
Corporation's articles of incorporation or bylaws, or to the best of
counsel's knowledge, any indenture, license, lease, franchise, mortgage,
instrument, or other agreement to which any of the Shareholders or
Corporation is a party or by which they or the properties of Corporation
may be bound; or (b) an event that would permit any party to any agreement
or instrument to terminate it or accelerate the maturity of any
indebtedness or other obligation of Corporation; or (c) an event that would
result in the creation or imposition of any lien, charge, or encumbrance on
any asset of Corporation.
(vi) Except as set forth in Schedules 3.6 and 3.12 to this
Agreement, to the best of counsel's knowledge, there is no suit, action,
arbitration, or legal, administrative or other proceeding or governmental
investigation pending or threatened against or affecting Corporation, or
any of its businesses or properties or financial or other condition.
(f) No action, suit, or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, will have been instituted or
threatened on or before the Closing Date.
(g) Buyer will have received from Corporation's chief financial
officer a letter, which shall be joined in and signed by Shareholders,
dated at the Closing Date, stating that on the basis of a review of the
latest available accounting records of Corporation, consultations with
other responsible officers of Corporation and with Shareholders, and any
other pertinent inquiries that he may deem necessary, he has no knowledge
or reason to suspect that during the
222
period from December 31, 1997 to a specified date not more than five (5)
business days before the Closing Date, there was any change in the
financial conditions or results of operations of Corporation, except
changes incurred in the ordinary and usual course of its businesses during
that period that in the aggregate are not materially adverse, and any
other changes or transactions contemplated by this Agreement. For purposes
of that letter, "materially adverse" will be deemed to be an increase in
liabilities equal to or greater than fifty thousand dollars ($50,000)
without a corresponding increase in assets, or a reduction in monthly
operating revenue during that period of fifty thousand dollars ($50,000) or
more.
(h) The execution and delivery of this Agreement by Corporation,
and the performance of its covenants and obligations under it, will have
been duly authorized by all necessary corporate action, and Buyer will have
received copies of all resolutions pertaining to that authorization,
certified by the secretary of the Corporation.
(i) All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, will have been obtained
by Shareholders or Corporation and delivered to Buyer.
(j) The employment agreements with each of the Shareholders, in the
forms set forth in Exhibit B, dated the Closing Date, will have been
executed and delivered by Shareholders to Buyer.
(k) The form and substance of all certificates, instruments,
opinions, and other documents delivered to Buyer by Shareholders under this
Agreement will be satisfactory in all reasonable respects to Buyer and its
counsel.
(l) Shareholders will have delivered to Buyer, except as is
otherwise provided in the Shareholders Employment Agreements attached
hereto as Exhibit B, the written resignations of all of the officers and
directors of Corporation, as requested by Buyer and will cause any other
action to be taken with respect to these resignations that Buyer may
reasonably request.
(m) Buyer will have received from Shareholders an investment
letter agreement substantially in the form set forth in Exhibit C.
10. CONDITIONS PRECEDENT TO SHAREHOLDERS' PERFORMANCE
The obligations of Shareholders to sell and transfer the Shares under
this Agreement are subject to the satisfaction, at or before the Closing,
of all the following conditions.
Shareholders may waive any or all of these conditions in whole or in part
without prior notice, provided, however, that no such waiver of a condition
will constitute a waiver by Shareholders of any their other rights or
remedies, at law or in equity, if Buyer should be in default of any of its
representations, warranties or covenants under this Agreement.
(a) All warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement must be true in
all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of that date.
(b) Buyer must have performed and complied with all covenants and
agreements and satisfied all conditions that it is required by this
Agreement to perform, comply with, or satisfy before or at the Closing.
(c) The board of directors of Buyer will have duly authorized and
approved the execution and delivery of this Agreement and all corporate
action necessary or proper to fulfill Buyer's obligations to be performed
under this Agreement on or before the Closing Date.
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(d) The employment agreements with each of the Shareholders, in the
forms set forth in Exhibit B, dated the Closing Date, will have been
executed and delivered by Buyer to Shareholders.
(e) An escrow shall be established with ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, PC, the
terms and conditions of which are set forth in Exhibit A, attached hereto
("Escrow"). Shareholders shall pay for all costs and expenses associated
with the Escrow.
(f) Shareholders will have received a certificate, dated the
Closing Date, signed and verified by Buyer's president and its chief
financial officer, certifying, in such detail as Shareholder and its
counsel may reasonably request, that to the best of their knowledge the
conditions specified in Paragraphs 4,10 and 12 of this Agreement have been
fulfilled.
(g) All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, will have been obtained
by Buyer and delivered to Shareholders.
(h) No action, suit, or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, will have been instituted or
threatened on or before the Closing Date.
11. THE CLOSING
(a) The transfer of the Shares by Shareholders to the Escrow for
Buyer's benefit (the Closing) will take place at the offices of the
Corporation located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m. local time, on April 30,1998, or at such other time and place as
the parties may agree to in writing (the Closing Date).
(b) At the Closing, Shareholders must deliver to Buyer the
following instruments, in form and substance satisfactory to Buyer and its
counsel, against delivery of the items specified in Paragraph 12:
(1) a certificate or certificates, into Escrow, representing
the Shares, registered in the name of Shareholders, duly endorsed by
Shareholders for transfer or accompanied by an assignment of the Shares
duly executed by Shareholders, with notorized signatures. On submission of
that certificate or certificates to Corporation for transfer, Corporation
will prepare a certificate representing the Shares, to be registered in the
Buyer's name, in accordance with the terms of the Escrow;
(2) the stock books, stock ledgers, minute books and corporate
seal of the Corporation;
(3) the opinion of counsel as provided in paragraph 9(e);
(4) a report of corporation's independent public accountants or
chief financial officer, as provided for in Paragraph 9(g), dated April 30,
1998;
(5) except as otherwise specified by Buyer, the written
resignations of all of the officers and directors of Corporation;
(6) employment agreements between Shareholders and Corporation
dated the Closing Date, the form set forth in Exhibit , executed by
Shareholders and Corporation;
224
(7) a certificate executed by Shareholders, dated the Closing
Date, certifying that their respective representations and warranties
in this Agreement are true and correct on the Closing Date, as though each
representation and warranty had been made on that date;
(8) a general release in the form set forth in Exhibit D, in
favor of Corporation, executed by Shareholders, and dated the Closing Date.
12. BUYER'S OBLIGATIONS AT CLOSING
At or prior to the Closing, Buyer must deliver to the Shareholders the
following:
(a) A certificate representing the total number of shares of
Buyer's common stock to be issued and delivered to Shareholders at the
Closing under Paragraph 2.1 against delivery of the items Shareholders are
to deliver as specified in Paragraph 11.
(b) Certified resolutions of Buyer's board of directors,
authorizing the execution and performance of this Agreement and all action
to be taken by Buyer under this Agreement.
(c) Employment Agreements with each of the Shareholders, in the
forms set forth in Exhibit 12, dated the Closing Date, executed by Buyer
and delivered to Shareholders.
(d) A certificate executed by its President certifying that all
Buyer's representations and warranties under this Agreement are true as of
the Closing Date, as though each of those representations and warranties
had been made on that date and the conditions in Paragraphs 10 and 12 have
been fulfilled.
(e) An agreement whereby Buyer shall ensure that the employees of
the Corporation continue to receive those benefits which they currently
enjoy as employees of Corporation, for the remainder of the 1998 calendar
year, at no increase in cost to the employees.
13. SHAREHOLDER'S INDEMNITY
From and after the Closing Date, the Shareholders shall jointly and
severally indemnify, defend, save and hold harmless Buyer, and any of its
affiliates, including, without limitation, its officers, directors,
shareholders, employees, attorneys, agents and representatives ("Buyer's
Affiliates"),and against any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, judgments or
deficiencies, including interest, penalties, and reasonable attorneys'
fees, that Buyer may incur, sustain or suffer, on or before April 30, 2000,
as a result of any intentional misrepresentation or fraudulent act by
Shareholders, which arises from or relates to, Shareholders
representations, warranties, covenants or agreements in this Agreement or
in any schedule, certificates, exhibit, or other instrument furnished or to
be furnished by Shareholders or Corporation under this Agreement.
14. BUYER'S INDEMNITY
Buyer will indemnify, defend and hold harmless Shareholders against,
and in respect of, claims, losses, expenses, costs, obligations, and
liabilities they may incur by reason of Buyer's breach of or failure to
perform any of its warranties, guaranties, commitments, or covenants in
this Agreement.
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15. TERMINATION
This Agreement may be terminated prior to the Closing Date as follows:
15.1. By Shareholders (acting unanimously) or Buyer, if the Closing
has not taken place on or before April 30, 1998, or other mutually agreed
upon date; provided, however, that such termination will not relieve any
party from any liability if such party, as of the termination date, is in
breach of any of the provisions of this Agreement; and provided, further,
that if the delay is caused by the act or omission of a particular party,
such party will not have the right to terminate hereunder; or
15.2. By Buyer, if on the Closing Date any of the conditions set
forth in Paragraph 9 have not been satisfied or
waived by Buyer; or
15.3. By Shareholders (acting unanimously), if on the Closing Date
any of the conditions set forth in Paragraph 10 have not been satisfied or
waived by Shareholders; or
15.4. By mutual agreement of Buyer and Shareholders evidenced by a
writing executed by all parties.
16. PUBLICITY
All notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement will be jointly planned and
coordinated by and between Buyer and Shareholders. No party will act
unilaterally in this regard without the prior written approval of the
other; however, this approval will not be unreasonably withheld.
17. COSTS
17.1. Each party represents and warrants that it has dealt with no
broker or finder in connection with any transaction contemplated by this
Agreement, and, as far as it knows, no broker or other person is entitled
to any commission or finder's fee in connection with any of these
transactions. Shareholders and Buyer will indemnify and hold one another
harmless against any loss, liability, damage, costs, claim, or expense
incurred by reason of any brokerage, commission or finder's fee alleged to
be payable because of any act, omission or statement of the indemnifying
party.
17.2. Each party will pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in Closing
and carrying out the transactions contemplated by this Agreement.
18. ASSIGNMENT
This Agreement will be binding on, and will inure to the benefit of,
the parties to it and their respective heirs, legal representatives,
successors, and assigns; provided, however, the Buyer may not assign any of
its rights under this Agreement, except to a wholly owned subsidiary
corporation of Buyer, except that Buyer shall remain responsible to perform
its obligations hereunder and that Shareholders shall not be entitled to
assign any of their rights or obligations under this Agreement, jointly or
severally, without prior written consent of Buyer, which consent may be
withheld in Buyer's sole discretion.
19. ARBITRATION
Any controversy or claim arising out of, or relating to, this
Agreement, or the making, or performance, or interpretation of it, will be
settled by arbitration in San Francisco, California, under the commercial
arbitration rules of the American Arbitration Association then existing,
and judgment on the arbitration award may be entered in any court
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having jurisdiction over the subject matter of the controversy.
Arbitrator(s) will be persons experienced in negotiating, making and
consummating acquisition agreements. Absent fraud, collusion or willful
misconduct by the arbitrator, the award shall be final. In making the
decision and award, the arbitrator shall apply applicable substantive law.
If a court, applying applicable substantive law, would be authorized to
award punitive or exemplary damages, then the arbitrator shall have the
same power, but the arbitrator shall not otherwise award punitive or
exemplary damages. Questions regarding whether a claim must be arbitrated
or whether a claim involves a legally protected right shall be determined
by the arbitrator.
20. LITIGATION COSTS
If any legal action or any arbitration or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party
or parties will be entitled to recover reasonable attorneys' fees and other
costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
21. PARTIES IN INTEREST
Nothing in this Agreement, whether expressed or implied, is intended
to confer any rights or remedies under or by reason of this Agreement on
any persons other than the parties to it and their respective successors
and assigns. Nothing in this Agreement is intended to relieve or
discharge the obligations or liability of any third person to any party to
this Agreement. No provision gives any third person any right of
subrogation or action against any party to this Agreement.
22. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior
and contemporaneous agreements, representations, and understandings of
the parties. No supplement, modification, or amendment of this Agreement
will be binding unless executed in writing by all of the parties. No waiver
of any of the provisions of this Agreement will constitute a waiver of any
other provision, whether or not similar, nor will any waiver constitute a
continuing waiver. No waiver will be binding unless executed in writing by
the party making the waiver.
23. SURVIVAL OF WARRANTIES AND REPRESENTATIONS
The representations, warranties and covenants set forth or
incorporated by reference in this Agreement shall survive the Closing Date.
All representations and warranties contained in this Agreement (including
the attached exhibits and schedules, or in any certificates delivered with
respect hereto will be deemed to be representations and warranties) shall
remain in full force and effect until April 30, 2000; provided, however,
that all such representations and warranties described above shall survive
after the applicable survival period with respect to any claim made prior
to the expiration thereof until, and shall expire when, such claim is
finally resolved.
24. FORM OF AGREEMENT
The subject headings of the sections and paragraphs of this Agreement
are included for convenience only and will not affect the construction or
interpretation of any its provisions.
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25. WORD USAGE
Unless the context clearly requires otherwise:
(a) Plural and singular numbers will each be considered to include
the other;
(b) The masculine, feminine and neuter genders will each be
considered to include the other;
(c) "shall," "will," "must," "agree," and "covenants" are each
mandatory;
(d) "may" is permissive;
(e) "or" is not exclusive; and
(f) "includes" and "including" are not limiting.
26. COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.
27. GOVERNING LAW
This Agreement will be construed in accordance with, and governed by,
the laws of the state of California as applied to contracts that are
executed and performed in California.
28. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of final jurisdiction, it is the intent of the parties that all
other provisions of this Agreement be construed to remain fully valid,
enforceable, and binding on the parties.
29. NOTICES
All notices, request, demands and other communications under this
Agreement must be in writing and will be considered to have been duly given
on the date of service if served personally on the party to whom notice is
to be given, or on the date of delivery if delivered by Federal Express or
other similar courier service which provides a written document evidencing
date of delivery, or on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and, in each case, properly addressed as
follows:
To Buyer:
President
Finet Holdings Corporation
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228
To Shareholders:
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IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it on the date and year first above written.
BUYER:
Finet Holdings Corporation
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇,
Chief Operating Officer
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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CORPORATION:
Coastal Federal Mortgage Company
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Secretary