PURCHASE AND ASSUMPTION AGREEMENT
by and among
INTERCOUNTY MORTGAGE, INC.,
Seller
and
CFS BANK,
Purchaser
and
RESOURCE BANCSHARES MORTGAGE GROUP, INC.,
Seller Parent
Dated as of March 11, 1998
TABLE OF CONTENTS
-----------------
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions...........................................................1
ARTICLE II
PURCHASE OF PURCHASED ASSETS
AND ASSUMPTION OF ASSUMED LIABILITIES
-------------------------------------
2.1 Closing Date.........................................................10
2.2 Purchase of Purchased Assets and Assumption
of Assumed Liabilities...............................................10
ARTICLE III
CONSIDERATION AND PAYMENTS
--------------------------
3.1 The Purchase Price...................................................10
3.2 Payment of the Estimated Purchase Price..............................11
3.3 Post-Closing Date Calculation and Settlement of
Final Purchase Price.................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
4.1 Corporate Organization...............................................12
4.2 Authorization........................................................12
4.3 Subsidiaries.........................................................12
4.4 Seller Financial Statements..........................................12
4.5 Litigation...........................................................13
4.6 Finders or Brokers...................................................13
4.7 Mortgage Banking Licenses and Compliance with Mortgage
Banking Regulations; Audits and Investigations.......................13
4.8 Real Property........................................................14
4.9 Personal Property....................................................15
4.10 Contracts............................................................16
4.11 Taxes................................................................16
4.12 Non-Contravention....................................................16
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SECTION
4.13 Originator Agreements................................................16
4.14 Absence of Certain Changes...........................................17
4.15 Agreements and Arrangements..........................................18
4.16 Insurance............................................................18
4.17 Pipeline Loans.......................................................19
4.18 [Intentionally Omitted]..............................................19
4.19 Hazardous Materials..................................................19
4.20 Intellectual Property................................................19
4.21 Regulatory Approvals.................................................20
4.22 Labor and Employment Matters.........................................20
4.23 [Intentionally Omitted]..............................................21
4.24 Assets, Investors and Insurers.......................................21
4.25 Good Title...........................................................21
4.26 Marketing, Solicitation and Origination Materials....................21
4.27 Condition of Seller..................................................22
4.28 Adequate Resources...................................................22
ARTICLE IV A
REPRESENTATIONS AND WARRANTIES OF SELLER PARENT
-----------------------------------------------
4.1A Corporate Organization...............................................22
4.2A Authorization........................................................22
4.3A Seller Parent Financial Statements...................................23
4.4A Litigation...........................................................23
4.5A Finders or Brokers...................................................24
4.6A Non-Contravention....................................................24
4.7A Regulatory Approvals.................................................24
4.8A Condition of Seller Parent...........................................24
4.9A Adequate Resources...................................................24
4.10A Audits and Investigations............................................25
4.11A Absence of Certain Changes...........................................25
4.12A Seller's Representations and Warranties..............................25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
5.1 Corporate Organization...............................................25
5.2 Authorization........................................................26
5.3 Non-Contravention....................................................26
5.4 Litigation...........................................................26
5.5 Finders or Brokers...................................................27
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SECTION
5.6 Adequate Resources...................................................27
5.7 Condition of Purchaser...............................................27
5.8 Regulatory Approvals.................................................27
ARTICLE VI
COVENANTS OF THE PARTIES
------------------------
6.1 Employee Incentive Payments..........................................27
6.2 Closed Loans and Pipeline Loans......................................28
6.3 Conduct of Business..................................................30
6.4 Lessor Consents and Contract Consents................................31
6.5 Regulatory Approval..................................................32
6.6 Further Assurances; Transitional Matters.............................32
6.7 No Solicitation......................................................33
6.8 Allocation of Purchase Price.........................................33
6.9 Preparation of Closing Date Schedule of Purchased Assets.............33
6.10 Proration of Operating Revenues, Costs and Expenses..................33
6.11 Employees............................................................34
6.12 No Other Liabilities.................................................35
6.13 Non-Solicitation of Customers........................................35
6.14 Use of Existing Marketing, Solicitation and Origination
Materials of Seller..................................................35
6.15 Maintenance of Resources.............................................35
6.16 Agreement Not to Compete.............................................36
6.17 Pipeline Loan Information............................................36
6.18 Assignment of Trademark and Servicemark..............................36
6.19 Processing, Underwriting and Closing Systems.........................36
6.20 Leased Software......................................................37
6.21 Waiver of Compliance with Bulk Sales Act Procedures..................37
6.22 Transfer Tax.........................................................37
6.23 Audit Opinion........................................................37
6.24 Regulatory Approval..................................................37
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
------------------------------------------
7.1 Representations, Warranties and Covenants of Seller
and Seller Parent....................................................38
7.2 Corporate Resolution.................................................38
7.3 Officer's Certifications.............................................38
7.4 [Intentionally Omitted]..............................................39
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SECTION
7.5 Opinion of Counsel to Seller and Seller Parent.......................39
7.6 Regulatory Approval..................................................39
7.7 Litigation...........................................................39
7.8 Filings..............................................................40
7.9 Environmental Matters................................................40
7.10 [Intentionally Omitted]..............................................40
7.11 [Intentionally Omitted]..............................................40
7.12 [Intentionally Omitted]..............................................40
7.13 Loan Levels..........................................................40
7.14 Employees............................................................40
7.15 Bill of Sale.........................................................41
7.16 Assignment of Trademark and Servicemark..............................41
7.17 Correspondent Agreement..............................................41
7.18 Escrow and Paying Agent Agreement....................................41
7.19 [Intentionally Omitted]..............................................41
7.20 [Intentionally Omitted]..............................................41
7.21 Certificates of Good Standing........................................41
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER AND SELLER PARENT
-----------------------------------------------------
8.1 Representations, Warranties and Covenants of Purchaser...............42
8.2 Opinion of Counsel to the Purchaser..................................42
8.3 Corporate Resolution.................................................42
8.4 Officer's Certification..............................................42
8.5 Regulatory Approval..................................................43
8.6 Litigation...........................................................43
8.7 Filings..............................................................43
8.8 Escrow and Paying Agent Agreement....................................43
8.9 [Intentionally Omitted]..............................................43
8.10 Assumption Agreement.................................................43
8.11 Correspondent Agreement..............................................43
ARTICLE IX
INDEMNIFICATION
---------------
9.1 Indemnification by Seller and Seller Parent..........................44
9.2 Indemnification by Purchaser.........................................45
9.3 Limitations on Indemnification.......................................46
9.4 Notice and Settlement of Claims; Payment of Amounts Due..............47
9.5 Record Retention.....................................................49
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SECTION
ARTICLE X
TERMINATION
-----------
10.1 Termination of Agreement.............................................49
10.2 Immaterial Breach....................................................50
10.3 Waiver of Right to Terminate.........................................50
10.4 Effect of Termination................................................50
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Notification of Mortgagors, Insurance Companies, etc.................51
11.2 Supplementary Information............................................51
11.3 Access to Information................................................51
11.4 No Broker's Fees.....................................................52
11.5 Further Assurances...................................................52
11.6 Survival.............................................................53
11.7 Governmental Authorities; Laws and Severability......................53
11.8 Form of Payment to be Made...........................................53
11.9 Payment of Costs.....................................................53
11.10 Notices..............................................................53
11.11 Successors and Assigns...............................................55
11.12 Third-Party Beneficiaries............................................55
11.13 Counterparts.........................................................55
11.14 Governing Law........................................................55
11.15 Entire Agreement; Amendments.........................................55
11.16 Consents of Third Parties............................................56
11.17 Confidentiality......................................................56
11.18 Press Releases.......................................................57
11.19 Exhibits and Schedules and Headings..................................57
11.20 Qualifications to Representations....................................57
11.21 Material Adverse Change..............................................58
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Exhibit A Seller Financial Statements
Exhibit B Underwriting Guidelines of Seller
Exhibit C Form of Opinion of Counsel of Seller
Exhibit D Form of Opinion of Counsel of Seller Parent
Exhibit E Form of Opinion of Counsel of Purchaser
Exhibit F Form of Bill of Sale
Exhibit G Form of Correspondent Agreement
Exhibit H Form of Assignment of Trademark and Servicemark
Exhibit I Form of Assumption Agreement
Exhibit J Form of Seller's Officer's Certificate
Exhibit K Form of Seller Parent's Officer's Certificate
Exhibit L Form of Purchaser's Officer's Certificate
Exhibit M Form of Employment Agreement
Schedule 1 [Intentionally Omitted]
Schedule 2 Contracts, Insurer Contracts and Investor Contracts
Schedule 3 Seller Disclosure Schedule
Schedule 4 Seller Parent Disclosure Schedule
Schedule 5 [Intentionally Omitted]
Schedule 6 Leased Personal Property and Personal Property Leases
Schedule 7 Leased Real Property
Schedule 8 Owned Personal Property
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Schedule 4.13(a)(i) Originators
Schedule 4.13(a)(ii) List of Originator Agreements
Schedule 4.20 Intellectual Property
Schedule 5.5 Brokers or Finders (Purchaser)
Schedule 6.3 Conduct of Business
Schedule 6.10 Security Deposits and Pre-Paid Rent
Schedule 6.11 List of President and Seven Branch Managers
Schedule 6.16 Originators Not to be Solicited
Schedule 11.20(b) Knowledge Persons of Seller
Schedule 11.20(c) Knowledge Persons of Seller Parent
Schedule 11.20(d) Knowledge Persons of Purchaser
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PURCHASE AND ASSUMPTION AGREEMENT
---------------------------------
PURCHASE AND ASSUMPTION AGREEMENT ("Agreement"), dated as of the 11th
day of March, 1998 among CFS Bank, a federally chartered stock savings bank,
having its principal office at 93-22 Jamaica Avenue, Woodhaven, New York 11421
(the "Purchaser"), Intercounty Mortgage, Inc., a Delaware corporation, having
its principal office at 100 Wood Avenue South, Iselin, New Jersey 08830 (the
"Seller"), and Resource Bancshares Mortgage Group, Inc., a Delaware corporation,
having its principal office at 7909 Parklane Road, Columbia, South Carolina
29223 ("Seller Parent").
WHEREAS, Seller desires to sell, transfer and assign to Purchaser all
of Seller's right, title and interest to the Origination Business (as defined
below), and Purchaser desires to purchase and assume all right, title and
interest in and to such Origination Business; and
WHEREAS, in order to induce Purchaser to purchase the Origination
Business, Seller Parent desires to assume joint and several liability with
Seller for the performance of Seller's obligations hereunder.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and upon the terms and subject to
the conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
1.1 DEFINITIONS.
Whenever used in this Agreement, the following terms, unless the
context requires otherwise, shall have the meanings specified below in this
Article.
"AFFILIATE" means, as to any Person, a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person. For purposes of this definition, the term control means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"AGENCY-TYPE PRODUCT" means FHA, VA, conventional conforming or
conventional non-conforming (jumbo) mortgage loans that are eligible for sale to
FNMA or FHLMC or for inclusion in a security guaranteed by GNMA (or, but for
their size, would be so eligible) under FNMA/FHLMC/GNMA guidelines as in effect
on the Closing Date and that are secured by one-to-four family residential
properties located in the states of New York, New Jersey, Pennsylvania,
Connecticut, and Massachusetts.
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"AGREEMENT" means this Purchase and Assumption Agreement and all
Exhibits and Schedules hereto as the same may from time to time be amended or
supplemented (as permitted by the terms of this Agreement) by one or more
instruments executed by all Parties hereto.
"APPLICABLE REQUIREMENT" means and includes, as of the time of
reference, all of the following: (i) all material contractual obligations of
Seller, any Originator or any Prior Originator with respect to the Origination
Business, including without limitation those contractual obligations contained
herein, in the Originator Agreements, in any other agreement with any
Originator, Insurer or Investor, or in any Mortgage Loan Documents for which
Seller or any Originator is responsible or at any time was responsible; (ii) all
applicable federal, state and local legal and regulatory requirements (including
statutes, rules, regulations and ordinances) binding upon Seller, any Originator
or any Prior Originator including, but not limited to, the Mortgage Laws; (iii)
all other applicable requirements of each federal, state or local governmental
agency, board, commission, instrumentality or other governmental or
quasi-governmental body or office, including without limitation those of any
Investor and any Insurer; and (iv) all other applicable judicial and
administrative judgments, orders, stipulations, awards, writs and injunctions.
"ASSUMED LIABILITIES" means all liabilities and obligations of Seller
under the Real Property Leases, the Personal Property Leases, the Originator
Agreements and the Contracts, but only with respect to, or to the extent
attributable to, the period on and after the Closing Date.
"BUSINESS DAY" means any day except for a Saturday, Sunday, or other
day on which banking institutions in the State of New York are required or
permitted by law or by executive order to be closed.
"CLAIM" means any pending or threatened claim, demand, dispute,
litigation or proceeding.
"CLOSED LOAN" means a Mortgage Loan closed prior to the Closing Date.
"CLOSING" means the effective time of the sale of the Origination
Business, which for all purposes is 9:00 A.M. local time in New York, New York,
on the day on which Seller transfers, or causes the transfer of the Purchased
Assets to Purchaser pursuant to this Agreement.
"CLOSING DATE" means the date on which the Closing occurs.
"CLOSING DATE SCHEDULE OF PURCHASED ASSETS" means the schedule of
assets acquired, reflecting the Purchased Assets as of the Closing Date, but
excluding the Pipeline Loans, prepared in the manner provided in Section 6.9
hereof.
"COMMENCEMENT OF SELLER'S OPERATIONS" means May 8, 1995, the date on
which Seller commenced operation of the Origination Business.
"CONTRACT CONSENTS" means the consent or approval of the vendor,
contractor, Investor or Insurer, as is the case, under the Contracts necessary
for Purchaser to receive an assignment of
2
benefits under the Contracts from Seller and/or for Purchaser to assume the
responsibilities of Seller under the Contracts.
"CONTRACTS" means (i) the contracts and agreements related to or
providing for furnishing of services or use of Personal Property, Software and
equipment in connection with the operation of the Origination Business,
including but not limited to contracts for Data Processing Equipment, licensing
agreements, maintenance contracts and purchase contracts; (ii) the Investor
Contracts; and (iii) the Insurer Contracts, all as listed in Schedule 2;
provided, however, any Contracts listed in Schedule 2 may be removed by
Purchaser from Schedule 2 as of the Closing Date pursuant to Section 6.4(e).
"CORRESPONDENT AGREEMENT" means the Correspondent Agreement to be
executed by Purchaser and Seller Parent in substantially the form annexed hereto
as Exhibit G.
"CORRESPONDENT MANUAL" means the correspondent purchase program manual
of Seller Parent in effect from time to time as amended or supplemented by the
delivery to Purchaser of program announcements, memoranda or other similar
communications.
"CUT-OFF DATE" means the close of business on the last day of the month
which ends immediately prior to the Closing Date.
"DAMAGES" means, in respect of any obligation to indemnify any Person
pursuant to the terms of this Agreement, any and all Losses, damages,
liabilities, obligations, demands, suits, judgments, settlements, governmental
investigations, reasonable out-of-pocket costs, expenses and attorneys' fees
(including such costs, expenses and attorneys' fees incurred in enforcing such
right of indemnification against any Indemnitor) and penalties, if any, but
shall, except in the case of the Pipeline Loans, not include any diminution in
value of any asset or business.
"DATA PROCESSING EQUIPMENT" means all data processing equipment listed
on Schedule 8, and all related hardware, and shall include all equipment related
thereto, including, without limitation, remote terminals, networked personal
computers, cabling, wiring and related installation equipment and materials.
"DOCUMENTATION" means all material related to or in support of Software
and Leased Software, including, but not limited to, operation instructions,
input information, format specification, instructional and other documentation,
including all guides and manuals.
"ESCROW AND PAYING AGENT AGREEMENT" shall have the meaning set forth in
Section 6.1.
"ESTIMATED PURCHASE PRICE" shall have the meaning set forth in Section
3.2.
"EXECUTION DATE" means the date of this Agreement.
"FAIR MARKET VALUE" means the amount at which property of a similar
kind and condition would change hands in an orderly sale on an arm's length
basis between a willing buyer and a
3
willing seller, neither being under any compulsion to buy or sell and both
having reasonable knowledge of the relevant facts.
"FHA" means the Federal Housing Administration of the Department of
Housing and Urban Development of the United States of America, or any successor
thereto.
"FHA LOAN" means a mortgage loan insured by the FHA.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"FINAL PURCHASE PRICE" shall have the meaning as set forth in Section
3.3 of this Agreement.
"FIXED ASSETS" means the assets listed in Schedule 8 and as reflected
in the aggregate on Exhibit A.
"FNMA" means Fannie Mae, f/k/a the Federal National Mortgage
Association, or any successor thereto.
"GAAP" means Generally Accepted Accounting Principles.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof.
"GNMA" means the Government National Mortgage Association or any
successor thereto.
"HAZARDOUS MATERIALS" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, asbestos, hazardous
wastes, hazardous or toxic substances, or other related materials defined in the
(1) Comprehensive Environmental Response, Compensation and Liability Act of
1980, 41 U.S.C. ss.9601 ET SEQ. (known as CERCLA or Superfund); (2) the
Superfund Amendments and Reauthorization Act of 1986. Pub L. No. 99-499, 100
Stat. 1613 (known as SARA); (3) Resource Conservation and Recovery Act, 41
U.S.C. ss.6901 ET SEQ. (known as RCRA); (4) National Environmental Policy Act,
42 U.S.C. ss.4231 ET SEQ. (NEPA); (5) Toxic Substances Control Act, 15 U.S.C.
ss.2601 ET SEQ. (known as TSCA); (6) The Safe Drinking Water Act, 42 U.S.C.
ss.300 (f) ET SEQ.; (7) Clean Water Act, 33 U.S.C. ss.1251 ET SEQ.; (8) Clean
Air Act, 42 U.S.C. ss.7901 ET SEQ.; (9) The Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. ss.11001 ET SEQ.; (10) The Occupational
Safety and Health Act, 29 U.S.C. ss.651 ET SEQ.; and (11) The New York
Environmental Conservation Law, ss.1-0101 et seq. (known as ECL) and any other
judicial or administrative interpretation thereof or any other federal, state or
local law, rule or regulation, including any judicial or administrative orders
or judgments.
"HUD" means the Department of Housing and Urban Development of the
United States of America and any successor thereto.
4
"INDEMNIFICATION EVENT" shall refer to any action, proceeding, Loss or
Damages for which a Person is entitled to, or claims entitlement to,
indemnification under this Agreement.
"INDEMNITOR" shall refer to the indemnifying Person(s) in the case of
any obligation to indemnify any other Person(s) pursuant to the terms of this
Agreement.
"INSURER" or "INSURERS" means or mean FHA, VA or any private mortgage
insurer, pool insurance insurer and any insurer or guarantor under any standard
hazard insurance policy, any federal or private flood insurance policy, any
title insurance policy, any earthquake insurance policy, and any successor
thereto.
"INSURER CONTRACTS" means the contracts of Seller for obtaining
insurance with respect to Mortgage Loans from Insurers as set forth in Schedule
2.
"INTELLECTUAL PROPERTY" shall refer to the intellectual property listed
on Schedule 4.20.
"INVESTOR" or "INVESTORS" means FNMA, FHLMC or other institutional
investors that have entered into Investor Contracts.
"INVESTOR CONTRACTS" means the contracts of Seller to sell Mortgage
Loans to Investors as set forth in Schedule 2.
"LEASED PERSONAL PROPERTY" means the personal property set forth in
Schedule 6 which is leased by Seller and used in the Origination Business,
whether pursuant to an operating lease or a capital lease, provided, however,
any Leased Personal Property in Schedule 6 may be removed by Purchaser from
Schedule 6 as of the Closing Date pursuant to Section 6.4(d) or Section 7.4(c).
"LEASED REAL PROPERTY" means the locations leased by Seller at the
addresses set forth on Schedule 7 as of the Execution Date, provided, however,
any such location may be removed by Purchaser from Schedule 7 as of the Closing
Date if it does not satisfy Section 4.19 or 7.9 hereof on such date and shall be
removed if so provided in Section 6.4(b). The Leased Real Property includes the
leasehold improvements and fixtures (if not owned by Seller) at each location.
"LEASED SOFTWARE" means Software that is Leased Personal Property.
"LESSOR CONSENTS" means the consent or approval required from a
landlord or lessor, as is the case, which is required for the assignment to
Purchaser of the rights of Seller under a Real Property Lease or a Personal
Property Lease and/or for Purchaser to assume the liabilities of Seller under a
Real Property Lease or Personal Property Lease.
"LICENSES" shall have the meaning set forth in Section 4.7.
"LOSS" or "LOSSES" means any and all actual losses, damages,
deficiencies, claims, costs or expenses, including reasonable attorneys',
accountants', consultants' or experts' fees and
5
disbursements, but shall, except in the case of the Pipeline Loans, not include
any diminution in value of any asset or business.
"MORTGAGE" means any deed of trust, security deed, mortgage, security
agreement or any other instrument which constitutes a first lien on real estate
securing payment by a Mortgagor of a Mortgage Note.
"MORTGAGE LAWS" shall mean any applicable local, state or federal law
or ordinance, and any regulations or orders issued thereunder, governing or
pertaining to residential mortgage lending, fair housing or unlawful
discrimination in residential lending (including without limitation
anti-redlining, equal credit opportunity, and fair credit reporting),
truth-in-lending, real estate settlement procedures, adjustable rate mortgages,
adjustable rate mortgage disclosures or consumer credit (including without
limitation the federal Consumer Credit Protection Act, the federal
Truth-in-Lending Act and Regulation Z thereunder, the federal Real Estate
Settlement Procedure Act of 1974 and Regulation X thereunder, and the federal
Equal Credit Opportunity Act and Regulation B thereunder) or with respect to the
Flood Disaster Protection Act and all applicable usury and interest limitations
laws.
"MORTGAGE LOAN" means a one-to-four family residential mortgage loan
secured by a first lien on Mortgaged Property.
"MORTGAGE LOAN DOCUMENTS" means, with respect to any Mortgage Loan, the
Mortgages, the Mortgage Notes and any and all other documents evidencing the
Mortgage Loan.
"MORTGAGE NOTE" means the mortgage note, mortgage bond, deed of trust
note, security deed note or other form of promissory note executed by a
Mortgagor and secured by a Mortgage, evidencing the indebtedness of the
Mortgagor under a Mortgage Loan.
"MORTGAGED PROPERTY" means a one-to-four family residence that is
encumbered by a Mortgage, including all buildings and fixtures thereon and all
accessions thereto including installation of mechanical, electrical, plumbing,
heating and air conditioning systems located in or affixed to such building, and
all alterations, additions and replacements.
"MORTGAGOR" means any obligor under a Mortgage Note and Mortgage.
"1998 FIRST QUARTER LOAN PRODUCTION" means the aggregate retail and
wholesale production of Closed Loans of Seller during the months of January,
February, and March 1998.
"ORIGINATION BUSINESS" means the mortgage loan origination business,
including the solicitation, processing, originating, underwriting, documenting,
and funding of mortgage loans, presently being conducted by Seller. The
Origination Business as of the Closing Date shall include the Purchased Assets,
the Assumed Liabilities and the Origination Practices of Seller.
"ORIGINATION PRACTICES" means Seller's manner and methods of conducting
the Origination Business and Seller's loan origination and escrow practices,
including but not limited to all
6
procedures, forms, documents and agreements used by Seller, Originators or Prior
Originators in connection with soliciting, marketing, complying with Applicable
Requirements, accepting applications, processing, underwriting, pricing,
committing, documenting, funding, closing, purchasing or modifying mortgage
loans and compensating Originators or any other Person in connection therewith.
"ORIGINATOR" means any mortgage broker, correspondent or other Person
that currently is a party to an Originator Agreement with Seller. The
Originators are listed on Schedule 4.13(a)(i).
"ORIGINATOR AGREEMENTS" means all agreements between Seller and
correspondents, mortgage brokers and other Persons pursuant to which Seller
purchases, funds or otherwise acquires Mortgage Loans in the conduct of the
Origination Business.
"OTS" means the Office of Thrift Supervision and any successor thereto.
"OWNED PERSONAL PROPERTY" means any personal property including,
without limitation, fixtures, furniture, equipment, office materials and
supplies, leasehold improvements and other tangible personal property that is
located at any Leased Real Property and that is owned by Seller and used in the
Origination Business, including the Data Processing Equipment. The Owned
Personal Property is described in Schedule 8.
"OWNED REAL PROPERTY" means any real property that is owned by Seller
and used in the Origination Business together with all improvements and fixtures
related thereto and that has been selected for purchase by Purchaser.
"PARTY" or "PARTIES" mean Seller, Purchaser and/or Seller Parent, as
the case may be.
"PERSON" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity or a federal, state,
local or foreign government, or a political subdivision thereof, or any agency
of such government or subdivision.
"PERSONAL PROPERTY" means the Owned Personal Property and the Leased
Personal Property.
"PERSONAL PROPERTY LEASES" means the leases listed in Schedule 6 that
relate to the Leased Personal Property.
"PIPELINE LOAN" means a Mortgage Loan secured or to be secured by a
Mortgage on a Mortgaged Property with respect to which, as of the Pipeline Loan
Cut-Off Date, an application has been filed by the prospective Mortgagor with
Seller or an Originator (and such Originator has registered such loan with
Seller) and which, as of the Closing, has not yet closed and funded or been
purchased by Seller from the Originator.
"PIPELINE LOAN CUT-OFF DATE" means the close of business on the Friday
immediately prior to the Closing Date.
7
"PLAN" shall have the meaning as set forth in Section 4.15 of this
Agreement.
"PRIOR ORIGINATOR" means any party that was an originator of any
Mortgage Loan before Seller or any Originator who became the originator of the
Mortgage Loan or Pipeline Loan.
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1 of
this Agreement.
"PURCHASED ASSETS" means all of Seller's right, title and interest in
and to all of the following properties, assets, rights, contracts and claims
which are owned or held by Seller and used in the Origination Business, with
such changes, deletions or additions thereto as may occur from the Execution
Date to the Closing Date, in the ordinary course of business, consistent with
Seller's past practice and consistent with the terms and conditions of this
Agreement:
1. all guides, handbooks, program descriptions, legal
materials and opinions relating to the conduct of the Origination Business and
all operating guidelines and procedures, solicitation and marketing materials,
application and commitment documents, disclosure documents and other materials
prepared by or for and used in, the Origination Business and all loan closing
and funding documents and all other materials and documents used or prepared for
Seller or Originators in connection with or in relation to the Origination
Business;
(ii) all Owned Personal Property;
(iii) all Leased Real Property and all Leased Personal
Property (other than Leased Software);
(iv) [Intentionally Omitted]
(v) all Intellectual Property, all Software (other than
Leased Software) and all Documentation;
(vi) all Originator Agreements; and
(vii) all Contracts.
"PURCHASER" means CFS Bank.
"PURCHASER PARENT" means Haven Bancorp, Inc.
"REAL PROPERTY LEASES" means the real estate leases and sublease
agreements, if any, relating to the Leased Real Property.
"REGULATORY APPROVAL" means the non-objection of the OTS to Purchaser's
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.
8
"REGULATORY AUTHORITIES" means any federal, state or local government
or government agency or administrative agency, or board having or claiming
jurisdiction over Seller, Seller Parent, or Purchaser, as the case may be, the
Origination Business, or any Originator or any Prior Originator.
"REPRESENTATIVES" shall have the meaning set forth in Section 11.3(a).
"SELLER" means Intercounty Mortgage, Inc., a wholly owned subsidiary of
Seller Parent.
"SELLER DISCLOSURE SCHEDULE" means the schedule attached as Schedule 3
hereto, setting forth exceptions to the representations and warranties of Seller
contained in Article IV.
"SELLER FINANCIAL STATEMENTS" means the Statement of Financial
Condition and the Statement of Income of the Seller for the fiscal year 1997
attached as Exhibit A hereto.
"SELLER PARENT" means Resource Bancshares Mortgage Group, Inc.
"SELLER PARENT DISCLOSURE SCHEDULE" means the schedule attached as
Schedule 4 hereto, setting forth exceptions to the representations and
warranties of Seller Parent contained in Article IVA.
"SELLER PARENT FINANCIAL STATEMENTS" means the Statement of Financial
Condition and the Statement of Income of the Seller Parent for the fiscal year
1997 attached as Exhibit A hereto, and such later audited financial statements
as become available prior to the Closing Date.
"SELLER'S REPRESENTATIVES" shall have the meaning set forth in Section
11.3(b).
"SOFTWARE" means the software listed in Schedule 2 that is owned by or
licensed to Seller and either developed by or used by Seller in the Origination
Business, in machine-readable or interpreted form, usable on or with the Data
Processing Equipment, including all Documentation, enhancements, improvements,
modifications and additions thereto.
"TRANSACTION DOCUMENTS" means this Agreement and all other documents,
certificates, instruments and agreements executed by any of Purchaser, Seller or
Seller Parent in connection with the transactions contemplated by this
Agreement.
"TRANSFERRED EMPLOYEE" shall refer to any individual who is employed by
Seller in the conduct of the Origination Business immediately prior to the
Closing, including an employee on disability or an approved leave of absence,
and who is employed by Purchaser or an Affiliate immediately following the
Closing.
"UNDERWRITING GUIDELINES" means the underwriting guidelines of Seller
as set forth in Exhibit B.
"VA" means the United State Department of Veterans Affairs or any
successor thereto.
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"VA LOAN" means a mortgage loan guaranteed in part by the VA.
ARTICLE II
----------
PURCHASE OF PURCHASED ASSETS
AND ASSUMPTION OF ASSUMED LIABILITIES
-------------------------------------
2.1 CLOSING DATE.
Subject to the terms and conditions set forth herein, the Closing Date
shall take place on the date which is the earlier to occur of:
1. 75 days after the Execution Date; and
2. 10 days following the receipt of the Regulatory
Approval; or such other date as is mutually agreed to by the Parties.
Subject to the terms and conditions of this Agreement, each of the
Parties agrees to use all reasonable efforts to cause the Closing to be
completed on the earliest feasible date.
2.2 PURCHASE OF PURCHASED ASSETS AND ASSUMPTION OF ASSUMED
LIABILITIES.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, (i) Seller shall sell, assign, transfer and convey to
Purchaser, all of its right, title and interest in and to the Purchased Assets
and the Origination Business; and (ii) Purchaser shall assume and agree to pay,
perform and discharge, and shall pay, perform and discharge, as the same become
due and payable or when required to be performed, all of the Assumed
Liabilities. It is expressly understood and agreed that Purchaser shall not be
liable for any of the obligations or liabilities of Seller of any kind or nature
other than (i) the Assumed Liabilities and (ii) such other obligations or
liabilities which Purchaser expressly assumes pursuant to any other provision of
this Agreement.
ARTICLE III
-----------
CONSIDERATION AND PAYMENTS
--------------------------
3.1 THE PURCHASE PRICE.
The Purchase Price for the Purchased Assets and the Origination
Business shall be equal to:
1. 25% of the net book value (as determined in
accordance with GAAP) of the Fixed Assets; PLUS
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2. $5.0 million.
3.2 PAYMENT OF THE ESTIMATED PURCHASE PRICE.
At the Closing, Purchaser shall pay to Seller the Estimated Purchase
Price for the Purchased Assets and the Origination Business. For purposes of
this Agreement, the Estimated Purchase Price means the amount equal to 100% of
the Purchase Price as calculated pursuant to Section 3.1 as of the Cut-Off Date
as determined on the basis of the best information reasonably available to
Seller and Purchaser as of the Cut-Off Date.
3.3 POST-CLOSING DATE CALCULATION AND SETTLEMENT OF FINAL PURCHASE
PRICE.
(a) No later than 60 days following the Closing Date,
Purchaser and Seller will mutually agree to and complete a post-closing audit
(the "Post Closing Audit") of the Fixed Assets. On the basis of the Post Closing
Audit, Seller and Purchaser shall calculate the Final Purchase Price. For
purposes of this Agreement, the Final Purchase Price means the amount equal to
100% of the Purchase Price as calculated pursuant to Section 3.1 of this
Agreement as of the Closing Date as determined on the basis of the information
available to Seller and Purchaser as a result of the Post Closing Audit. The
calculation of the Final Purchase Price shall be completed no later than two (2)
Business Days following the completion of the Post Closing Audit. If the Final
Purchase Price is different from the Estimated Purchase Price calculated as
provided in Section 3.2, then Purchaser (if the Final Purchase Price exceeds the
Estimated Purchase Price) or Seller (if the Estimated Purchase Price exceeds the
Final Purchase Price) shall immediately pay such excess amount in immediately
available funds to the other Party, together with interest on such excess from
the Closing Date to the date of payment at a simple per annum rate, without any
compounding, at the effective federal funds rates (based on the average of the
closing bid and offered quotations) as published daily by THE WALL STREET
JOURNAL.
(b) In the event the Post Closing Audit does not occur by the
time hereinabove specified and Purchaser and Seller have not agreed in writing
to an extension of the date by which the Post Closing Audit must be completed,
the Estimated Purchase Price, with such adjustments as have been made by such
date, shall be considered the Final Purchase Price and neither Purchaser nor
Seller shall have any right or obligation to make any adjustments thereto.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
The representations and warranties of Seller contained in this
Agreement shall continue and survive the purchase of the Origination Business
for the period contemplated in Sections 9.3 and 11.6, and shall inure to the
benefit of Purchaser and its successors and assigns. In addition to
representations and warranties, if any, made elsewhere in this Agreement, Seller
represents and warrants to Purchaser, as of the Execution Date and the Closing
Date (or as of such other date as specifically provided herein) that, except as
set forth in the Seller Disclosure Schedule:
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4.1 CORPORATE ORGANIZATION.
Seller is duly incorporated, validly existing and in good standing as a
corporation under the laws of the State of Delaware; it has all requisite
corporate power and authority and all necessary authorizations, approvals and
orders of and from all governmental regulatory officials and bodies to own,
operate and lease its properties and to conduct its business in the manner in
which it is presently being conducted and is duly qualified and is in good
standing in all other jurisdictions where the character or nature of its
business requires such qualifications except for qualifications and good
standing status the lack of which, either singly or in the aggregate, has not
had and will not have a material adverse effect upon Seller, the Origination
Business or Seller's properties.
4.2 AUTHORIZATION.
Seller has all requisite corporate power and authority and has, or will
have as of the Closing Date, all necessary authorizations, approvals and orders
of and from all governmental regulatory officials and bodies, to execute and
deliver this Agreement and the other Transaction Documents and to carry out the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents. The execution and delivery of this Agreement and each of
the Transaction Documents and the consummation of the transactions contemplated
herein have been duly authorized by all necessary corporate action required to
be taken on the part of Seller; and, upon execution and delivery by Seller, this
Agreement and the other Transaction Documents will be valid and binding
obligations of Seller, enforceable against Seller in accordance with their
terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, fraudulent transfer and other similar laws relating to or affecting
the enforcement of creditors' rights generally and to general principles of
equity, whether considered in a proceeding at law or in equity.
4.3 SUBSIDIARIES.
Seller has no operating subsidiaries.
4.4 SELLER FINANCIAL STATEMENTS.
(a) The Seller Financial Statements were derived from the
Seller Parent Financial Statements.
(b) There were no material audit adjustments or post-closing
audit adjustments related to Seller which were not included in the Seller Parent
Financial Statements.
(c) There were no passed audit adjustments related to Seller
not included in the Seller Parent Financial Statements because they were
immaterial to Seller Parent.
(d) Seller has previously provided to Purchaser true and
accurate copies of all minutes of meetings of its Board of Directors and its
stockholders since the Commencement of Seller's Operations. Such minutes
constitute a complete and correct record of all actions taken by the Board of
Directors and by the stockholders of Seller with respect to Seller.
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4.5 LITIGATION.
(a) There are no pending or, to the best of Seller's
knowledge, threatened actions, suits or proceedings, against Seller or, to the
best of Seller's knowledge, any Originator, before any court, governmental
agency, arbitrator or instrumentality (i) which purport to affect the legality,
validity or enforceability of this Agreement or might affect Seller's ability to
perform its obligations hereunder, (ii) which could result in a material adverse
change in the Purchased Assets or the Origination Business, or (iii) which in
any manner question the validity or enforceability of any Originator Agreement
or Seller's right or authority to originate, close and sell any Mortgage Loans
or conduct the Origination Business. Seller has received no notice from any
Regulatory Authority indicating that such authority would oppose the
transactions contemplated hereby or would not grant or issue its consent or
approval, if required with respect to the transactions contemplated hereby.
(b) Other than with respect to immaterial claims or complaints
that would not adversely affect Purchaser's conduct of the Origination Business
after Closing, (i) Seller has provided to Purchaser copies of all written
complaints or claims by consumers or Regulatory Authorities, Investors and
Insurers received by Seller since the Commencement of Seller's Operations, which
are in Seller's possession and which relate to or concern Seller's conduct of
the Origination Business or the Origination Practices of Seller, any Originator
or any Prior Originator, (ii) there is no pending or, to the best of Seller's
knowledge, threatened claim or complaint by a consumer or any Regulatory
Authorities, Investors and Insurers against Seller or any Originator, and (iii)
since the Commencement of Seller's Operations, Seller has not discarded or
destroyed any written complaints or claims against Seller or any Originator by
consumers or Regulatory Authorities, Investors and Insurers.
(c) To the best of Seller's knowledge, Seller is not under
investigation by any Regulatory Authorities with respect to the Origination
Business or the Origination Practices of Seller.
4.6 FINDERS OR BROKERS.
Seller has not engaged or employed a broker or finder in connection
with this Agreement.
4.7 MORTGAGE BANKING LICENSES AND COMPLIANCE WITH MORTGAGE BANKING
REGULATIONS; AUDITS AND INVESTIGATIONS.
(a) Seller holds and has at all times held all licenses,
certificates, franchises, permits and other governmental authorizations
necessary for the lawful conduct of its business and operations and such
licenses, certificates, franchises, permits and other governmental
authorizations are in full force and effect and Seller is in all respects
complying therewith. Without limiting the foregoing, Seller (i) is qualified (a)
by FHA as a mortgagee for FHA Loans, and (b) by the VA as a correspondent lender
of Seller Parent for VA Loans; and (ii) has all other certifications,
authorizations, franchises, licenses, permits and other approvals (together with
the items set forth in clause (i) above, the "Licenses") necessary to conduct
its current mortgage banking business, and is in good standing under all
applicable federal, state and local laws and regulations thereunder as
13
a mortgage lender. Seller has complied with all such Licenses, and Seller knows
of no threatened suspension, cancellation or invalidation of, or penalties
(including fines or refunds) under, any such License.
(b) Seller has been and is (including without limitation, with
respect to (i) the ownership and operation of its properties and (ii) the
Origination Practices and conduct of the Origination Business) in compliance
with all Applicable Requirements. Without limiting the generality of the
foregoing, Seller, and to the best of Seller's knowledge, each Originator and
each Prior Originator, has been and is in compliance in all material respects
with all requirements of the Investors and Insurers which are applicable to it,
and with all applicable underwriting standards of such Investors and Insurers.
(c) Seller has not violated, and has no knowledge of any
violations by any Originator, which could have a material adverse effect upon
Seller, the Origination Business or Seller's properties of, any laws,
ordinances, statutes, orders, rules, regulations or requirements of any
Regulatory Authority in connection with the conduct of its Origination Business.
Seller has delivered to Purchaser copies of all audits, reports, letters, and
written inquiries related to the Origination Business received from any
Regulatory Authority related to or regarding Seller's conduct of its Origination
Business and received since the Commencement of Seller's Operations.
(d) Seller has delivered to Purchaser copies of all written
reports, letters and materials received or sent by Seller related to the
Origination Business in connection with all audits, investigations, complaints
and inquiries by an Investor or Insurer received since the Commencement of
Seller's Operations. No such audit or investigation is pending or, to the best
knowledge of Seller, threatened.
4.8 REAL PROPERTY.
(a) There is no Owned Real Property.
(b) The Leased Real Property is listed on Schedule 7. Seller
has provided to Purchaser true and correct copies of all of the Real Property
Leases, including all exhibits, schedules and amendments. All Real Property
Leases are valid and binding and in full force and effect. As of the Execution
Date, there has been no breach or default (nor has there been any occurrence or
condition which with the giving of notice or passage of time or both, would
constitute a breach or default) on the part of Seller, nor, to the best of
Seller's knowledge, a subtenant, or lessor under any Real Property Lease. As of
the Closing Date, there will have been no breach or default (nor has there been
any occurrence or condition which with the giving of notice or passage of time
or both, would constitute a breach or default) on the part of Seller, nor, to
the best of Seller's knowledge, a subtenant or lessor under any Real Property
Lease except with respect to these matters as to which Purchaser has been
notified in writing.
(c) Seller is conducting business at each of the Leased Real
Property locations in a manner consistent with applicable zoning laws.
14
(d) There are no leases, subleases, licenses or similar
agreements permitting any party, whether affiliated or not affiliated with
Seller, to lease, use or occupy space in the Leased Real Property.
(e) On the Closing Date, the leasehold and other improvements
pertaining to the Leased Real Property will be in as good repair and condition
as they were on the date of this Agreement, reasonable wear and tear excepted.
On the Execution Date, the plumbing, heating, air conditioning, electrical and
sewage systems at each of the Leased Real Property are in good working condition
and the roofs are free of leaks. On the Closing Date, the plumbing, heating, air
conditioning, electrical and sewage systems at each of the Leased Real Property
will be in good working condition and the roofs will be free of leaks except
with respect to those matters as to which Purchaser and the related subtenant or
lessor has been notified in writing.
(f) There are no facts or circumstances existing, or to the
best knowledge of Seller threatened, that could result in a material adverse
change in the present or future use of the Leased Real Property as mortgage loan
origination offices. Seller has delivered to Purchaser all written reports,
notices or claims it has received regarding violations at any Leased Real
Property of any fire, zoning, health, building, hazardous waste or environmental
code, ordinance, statute, regulation or order of any governmental authority or
any agency, body or subdivision thereof.
4.9 PERSONAL PROPERTY.
(a) The Owned Personal Property is listed in Schedule 8. The
Leased Personal Property is listed in Schedule 6.
(b) Seller has, and on the Closing Date will have, good and
marketable title to all of its Owned Personal Property, free and clear of all
liens and encumbrances.
(c) All Owned Personal Property and all Leased Personal
Property is in good working condition and repair (normal wear and tear
excepted), suitable for the purposes for which it is currently utilized and
complies in all material respects with all laws, ordinances, regulations, orders
and other governmental requirements relating thereto now in effect. Seller has
provided to Purchaser true and correct copies of all of the Personal Property
Leases, including all exhibits, schedules, and amendments. All Personal Property
Leases are valid, binding and enforceable obligations of the lessor therein
(subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity). Seller has not breached nor is
Seller in default under (nor has there been any occurrence or condition which,
with the giving of notice or passage of time or both, would constitute a breach
or default by Seller under) any Personal Property Lease, which would, if
uncured, result in the substantial likelihood of a forfeiture of such property
or termination of such lease.
(d) The Data Processing Equipment and Software have been
reasonably maintained and repaired, are in good working condition, are suitable
for the purposes for which they are currently utilized and comply with all laws,
ordinances, regulations, orders and other
15
governmental requirements relating thereto now in effect or known by Seller to
be scheduled to come into effect.
4.10 CONTRACTS.
Seller has provided to Purchaser true and correct copies of all of the
Contracts, including all exhibits, schedules and amendments. All Contracts are
listed on Schedule 2. All of the Contracts are valid and binding upon Seller,
and to the best of Seller's knowledge upon the other parties to the Contracts,
and in full force and effect. Seller is not in default and Seller has no
knowledge of any defaults, events of default, or events, occurrences, or acts
which, with the giving of notice or lapse of time, or both, would constitute
defaults by parties other than Seller under or with respect to any of the
Contracts. Seller has fully performed all of its responsibilities and duties
under each of the Contracts.
4.11 TAXES.
There are no material disputes pending, or claims asserted by any
taxing authority against Seller related to the Origination Business or which
could have a material adverse effect on the Origination Business. Seller is not
a party to any tax-sharing agreement with Seller Parent.
4.12 NON-CONTRAVENTION.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the compliance by Seller with the
covenants and conditions of this Agreement does not, and subject to the receipt
of the Regulatory Approval, Contract Consents and Lessor Consents, will not,
constitute (a) a breach or violation of, or default under, or cause the loss of
benefit under, or permit acceleration of any obligation under, any law, rule,
regulation, judgment, decree, order, governmental or other permit, license,
agreement, indenture, mortgage, contract, lease or instrument to which Seller
is, or any of its properties are, subject or (b) a breach or violation of the
by-laws, certificate of incorporation, charter or other organizational documents
of Seller. The consummation of the transactions contemplated hereby will not (a)
require any consent, approval or waiver under any law, rule, regulation,
judgment, decree, order, governmental or other permit, license, agreement,
indenture, mortgage, contract, lease or instrument other than the Regulatory
Approval and the Lessor Consents and the Contract Consents or (b) result in the
creation or imposition of any lien, charge or encumbrance of any nature upon the
Purchased Assets or the Origination Business except any that are created hereby.
4.13 ORIGINATOR AGREEMENTS.
(a) All Originators are listed on Schedule 4.13(a)(i). Seller
has provided to Purchaser a true and correct copy of the form of each of the
Originator Agreements and each Originator Agreement is identical to such form in
all material respects. No later than fifteen (15) days following the Execution
Date, Seller shall deliver to Purchaser Schedule 4.13(a)(ii), which shall set
forth a list of all Originator Agreements in effect, including the name, Seller
code number, address, telephone and telecopy numbers and principal contact at
each Originator, and whether the
16
Originator is a HUD sponsored broker, and Schedule 4.13(a)(ii) will be true and
correct as of the Closing Date. Each of the Originator Agreements is a valid,
binding and enforceable obligation of the Originator therein and neither Seller
nor Originator is in default under any Originator Agreement nor has there been
any occurrence or condition which, with the giving of notice or passage of time,
or both, would constitute a breach or default under any Originator Agreement.
The terms and conditions of each Originator Agreement are in full compliance
with all Applicable Requirements and Seller's and, to the best of Seller's
knowledge and as they pertain to loans originated for Seller, each Originator's
Origination Practices and conduct of all business and activities related to the
Origination Agreements have been in full compliance with all Applicable
Requirements. Each Originator Agreement is assignable by Seller without the
consent of any other Person.
(b) Except for the Originator Agreements, Seller has not
entered into any agreement with any Person, which agreement is currently in
effect, whereby such Person takes mortgage applications for Seller or refers
mortgage applicants to Seller, processes, underwrites or originates mortgage
loans for or on behalf of Seller or closes and funds loans on behalf of or for
sale to Seller.
4.14 ABSENCE OF CERTAIN CHANGES.
(a) Since December 31, 1997, there has not been:
1. Any change in the Origination Business of Seller,
or any occurrence, development or event of any nature, which has caused,
individually or in the aggregate, a material adverse change in the Purchased
Assets or the Origination Business;
2. Any action or inaction by Seller which constitutes
a breach or default by Seller under any contract, agreement, obligation, lease
or license to which Seller is a party or by which it or its property is bound
and which would, if uncured, result in a material adverse change in the
Purchased Assets or the Origination Business;
3. Except in the ordinary course of business
consistent with past practice, any acquisition or disposition by Seller of any
Owned Personal Property or entering into by Seller of any lease for Leased Real
Property or Leased Personal Property;
4. Any change in any method of accounting or
accounting practice by Seller related to the Origination Business; or
5. Any action taken or omitted by Seller which would
have been a breach of Section 6.3 of this Agreement had such been in effect at
the time.
(b) Since the date of the Seller Financial Statements,
there has not been any material adverse change in the financial condition or
results of operations of Seller.
17
4.15 AGREEMENTS AND ARRANGEMENTS.
Seller is not a party to any of the following types of agreements
(written or oral):
1. any plan, or any other program, arrangement,
agreement or commitment which is an employment, consulting or deferred
compensation agreement, incentive or fringe benefit compensation contract, or an
executive compensation, percentage compensation, incentive bonus or other bonus,
employee pension, profit-sharing, savings retirement, supplemental retirement,
stock option, stock purchase, service award, change in control, executive
security, severance payment, life, health, disability, accident insurance, or
vacation plan, or other employee benefit plan, program, arrangement, agreement
or commitment, including, without limitation, "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") (individually, a "Plan," and collectively, the "Plans");
2. any collective bargaining or other contract or
agreement with any labor union;
3. any agreements concerning Seller keeping secret or
confidential any information or intellectual property with respect to the
Origination Business (other than credit applications or agreements with
customers for or relating to the borrowing of funds or otherwise pursuant to
law);
4. any agreements or continuing commitments for
charitable contributions in excess of $5,000.00 in the aggregate;
5. any agreements in which Seller is a general
partner or joint venturer;
6. any agreements which contain a covenant not to
compete or other agreement which limits, restricts or prohibits Seller's conduct
of all or part of the Origination Business in any area or in any manner which
will limit, restrict or prohibit Purchaser's conduct of all or part of the
Origination Business in any area or in any manner on or after the Closing Date;
or
7. any other agreements which have or could result in
a material adverse change in the Purchased Assets or the Origination Business.
If Seller has listed any exceptions to this representation in the
Seller Disclosure Schedule, Seller has provided Purchaser true and correct
copies of all of the agreements listed therein.
4.16 INSURANCE.
The business operations and all insurable properties and assets of
Seller that comprise the Purchased Assets are insured for its benefit, in such
amounts with such deductibles and against such risks and losses as are, in the
reasonable opinion of Seller, adequate for the business engaged in, including
errors and omissions and fidelity insurance coverage. Seller has provided
Purchaser with a true and correct copy of each such insurance policy or a true
and accurate description thereof.
18
Seller is not in default in the payment of any premium or in the performance of
any other obligation under said policies, does not currently have outstanding
any claim in excess of $10,000 with respect to such insurance coverage and has
not received notification of and has no knowledge of the existence of any
grounds for, the cancellation or proposed cancellation of any such policies or
bonds or any reason why any such policies or bonds would not be valid, binding
and enforceable.
4.17 PIPELINE LOANS.
All Pipeline Loans have been originated and, if applicable, processed
by Seller and, to the best of Seller's knowledge, the Originators and the Prior
Originators, in the ordinary and usual course of business consistent with past
practice and in accordance with all Applicable Requirements and, if underwritten
prior to the Closing Date, conform in all respects to the Correspondent Manual,
the Underwriting Guidelines and to the warranties and representations and other
requirements for loans as contained in the related Originator Agreement. All of
the Pipeline Loans that Seller has underwritten and priced have been
underwritten and priced in the ordinary course of business consistent with past
practice. None of the Pipeline Loans will be secured by (i) shares of stock in a
cooperative corporation, (ii) mobile homes or manufactured housing, or (iii)
units in a timeshare residence. The tape or electronic media to be delivered
pursuant to Section 6.17 hereof lists all of the Pipeline Loans as of the
Pipeline Loan Cut-Off Date.
4.18 [INTENTIONALLY OMITTED]
4.19 HAZARDOUS MATERIALS.
(a) Seller is in compliance with all federal, state or local
laws, ordinances, rules, regulations or policies governing Hazardous Materials
and Seller has not used Hazardous Materials on or affecting any Leased Real
Property or Personal Property in any manner which violates federal, state or
local laws, ordinances, rules, regulations or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
(b) To the best of Seller's knowledge, no owner or prior owner
of any such Leased Real Property or Personal Property nor any tenant, subtenant,
prior tenant or prior subtenant have used Hazardous Materials on, or affecting
such property in any manner which materially violates federal, state or local
laws, ordinances, rules, regulations, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials.
4.20 INTELLECTUAL PROPERTY.
Schedule 4.20 contains a true and accurate description of all of the
Intellectual Property owned by Seller and used in the Origination Business.
Seller has the right to use and continue to use the Intellectual Property and
from and after the Closing Date, to the extent assignable, Purchaser shall have
the unrestricted right to use and continue to use such Intellectual Property.
Seller has not received notice that it is infringing or violating any patent,
copyright, trademark, servicemark, label filing or trade name owned or otherwise
held by any other Person. Seller's conduct of the
19
Origination Business does not constitute an infringement or violation of any
trademark, servicemark, trade name, copyright, patent, license or trade secret
of any person.
4.21 REGULATORY APPROVALS.
No approval from any Regulatory Authority is required for Seller to
enter into and perform this Agreement and the transactions contemplated hereby.
4.22 LABOR AND EMPLOYMENT MATTERS.
(a) Seller is and has been in compliance with all applicable
laws of the United States, or of any state or local government or any
subdivision thereof or of any foreign government respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, ERISA, the Internal Revenue Code of 1986, as
amended (the "Code"), the Immigration Reform and Control Act, the Worker
Adjustment and Retraining Notification Act (the "WARN Act"), any laws respecting
employment discrimination, sexual harassment, disability rights or benefits,
equal opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, continuation of health
insurance ("COBRA"), labor relations, employee leave issues, wage and hour
standards, occupational safety and health requirements and unemployment
insurance and related matters, and is not engaged in and has not engaged in any
unfair labor practices.
(b) There is no labor strike, dispute, slowdown or stoppage
actually pending or, to the best knowledge of Seller, threatened against or
directly affecting Seller or the Origination Business.
(c) No union representation question or union organization
activity exists or is threatened respecting the employees of Seller nor has any
union representation question or union organization activity existed or been
threatened respecting the employees of Seller within the last ten (10) years.
(d) No collective bargaining agreement exists which is binding
on Seller nor has Seller been a party to any collective bargaining agreement
within the last ten (10) years.
(e) Seller is not delinquent in payments to any of its
officers, directors, employees or agents for any wages, salaries, commissions,
bonuses or other direct compensation for any services performed by them or
amounts required to be reimbursed to such officers, directors, employees or
agents.
(f) In the event of termination of the employment of any of
said officers, directors, employees or agents for any reason Purchaser will not,
pursuant to any agreement or by reason of anything done prior to the Closing
Date by Seller, be liable to any of said officers, directors, employees or
agents for so-called "severance pay," any payments due any employee under any
executive security, change in control or similar agreement or any other benefits
or similar
20
payments, including without limitation, pension, post-employment health care or
life or other insurance benefits.
(g) All officers, directors, employees and consultants of
Seller are employed at will.
(h) To the best of Seller's knowledge, neither Seller, nor any
Affiliate of Seller, nor any current director, officer, or other person employed
by or acting as agent or representative for Seller related to the Origination
Business is ineligible for employment in the Origination Business as a result of
being barred from participation as a result of action by any federal, state or
local regulatory authority.
4.23 [INTENTIONALLY OMITTED]
4.24 ASSETS, INVESTORS AND INSURERS.
(a) There is no material asset owned and used by, or
reasonably necessary to, Seller in the conduct of the Origination Business as
currently conducted by Seller which is not included in this transaction as a
Purchased Asset.
(b) There is no approval or consent from an Investor or
Insurer required by, or reasonably necessary to, Seller in the conduct of the
Origination Business as currently conducted by Seller, except any as have been
obtained.
4.25 GOOD TITLE.
Seller is the sole owner and holder of all right, title and interest in
and to the Purchased Assets and Origination Business. The sale, transfer and
assignment by Seller to Purchaser of the Purchased Assets and Origination
Business, and the instruments required to be executed by Seller and delivered to
Purchaser pursuant to this Agreement, are, or will be on the Closing Date, valid
and enforceable in accordance with their terms and will vest in Purchaser good
and marketable title to the Purchased Assets and Origination Business, free and
clear of any and all liens, Claims, or encumbrances.
4.26 MARKETING, SOLICITATION AND ORIGINATION MATERIALS.
As of the Closing Date, Seller will provide to Purchaser true and
accurate copies of all of the solicitation and marketing materials, application
and commitment documents and materials, compliance and disclosure materials,
loan closing and funding documents and materials and all other documents and
materials prepared by or for Seller and used by Seller, any Originator or any
Prior Originator in connection with or in relation to the Origination Business.
21
4.27 CONDITION OF SELLER.
Seller has no knowledge of any event or circumstance relating to or
affecting Seller or of any conflict, violation or default by Seller which
individually or in the aggregate would materially adversely affect Seller's
ability to consummate the transactions contemplated by this Agreement.
4.28 ADEQUATE RESOURCES.
Seller or Seller Parent, on Seller's behalf, as of the Execution Date
has, and as of the Closing Date will have, adequate resources to perform any
necessary post-closing adjustments pursuant to Sections 3.3 and 6.2 and to
perform any indemnification obligations that may be required of Seller in
accordance with Section 9.1.
ARTICLE IV A
REPRESENTATIONS AND WARRANTIES OF SELLER PARENT
The representations and warranties of Seller Parent contained in this
Agreement shall continue and survive the purchase of the Origination Business
for the period contemplated in Sections 9.3 and 11.6 and shall inure to the
benefit of Purchaser and its successors and assigns. In addition to
representations and warranties, if any, made elsewhere in this Agreement, Seller
Parent represents and warrants to Purchaser, as of the Execution Date and the
Closing Date (or as of such other date as specifically provided herein) that,
except as set forth in the Seller Parent Disclosure Schedule:
4.1A CORPORATE ORGANIZATION.
Seller Parent is duly incorporated, validly existing and in good
standing as a corporation under the laws of the State of Delaware; it has all
requisite corporate power and authority and all necessary authorizations,
approvals and orders of and from all governmental regulatory officials and
bodies to own, operate and lease its properties and to conduct its business in
the manner in which it is presently being conducted and is duly qualified and is
in good standing in all other jurisdictions where the character or nature of its
business requires such qualifications except for qualifications and good
standing status the lack of which, either singly or in the aggregate, has not
had and will not have a material adverse effect upon Seller Parent, the
Origination Business or Seller Parent's properties.
4.2A AUTHORIZATION.
Seller Parent has all requisite corporate power and authority and has,
or will have as of the Closing Date, all necessary authorizations, approvals and
orders of and from all governmental regulatory officials and bodies, to execute
and deliver this Agreement and the other Transaction Documents and to carry out
the consummation of the transactions contemplated by this Agreement and the
other Transaction Documents. The execution and delivery of this Agreement and
each of the
22
Transaction Documents and the consummation of the transactions contemplated
herein have been duly authorized by all necessary corporate action required to
be taken on the part of Seller Parent; and, upon execution and delivery, this
Agreement and the other Transaction Documents will be valid and binding
obligations of Seller Parent, enforceable against Seller Parent in accordance
with their terms, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, fraudulent transfer and other similar laws relating to or
affecting the enforcement of creditors' rights generally and to general
principles of equity, whether considered in a proceeding at law or in equity.
4.3A SELLER PARENT FINANCIAL STATEMENTS.
(a) The Seller Parent Financial Statements fairly present the
consolidated financial condition and results of operations of Seller Parent and
its subsidiaries, including Seller as of the date thereof and for the period
covered thereby, and have been prepared in accordance with GAAP. Without
limiting the generality of the foregoing, the Seller Parent Financial Statements
make full and adequate provision for all material obligations and liabilities
(fixed or contingent) of Seller Parent and its subsidiaries, including Seller,
as of its date, and as of such date, there was no liability of Seller Parent and
its subsidiaries, including Seller, which in accordance with GAAP, should have
been reflected or disclosed in the Seller Parent Financial Statements that was
not so reflected or disclosed.
(b) Seller Parent maintains books and records which accurately
and validly reflect in all material respects its transactions in reasonable
detail for Seller Parent and its subsidiaries, including Seller, to conduct its
respective business, and maintains accounting controls, policies and procedures
sufficient to insure that such transactions are (i) executed in accordance with
its management's general or specific authorization and (ii) recorded in
accordance with GAAP.
4.4A LITIGATION.
(a) There are no pending or, to the best of Seller Parent's
knowledge, threatened actions, suits or proceedings against Seller or, to the
best of Seller Parent's knowledge, any Originator, before any court,
governmental agency, arbitrator or instrumentality which purport to affect the
legality, validity or enforceability of this Agreement or might affect Seller
Parent's ability to perform its obligations hereunder. There are no pending or,
to the best of Seller Parent's knowledge, threatened actions, suits or
proceedings of a material nature against Seller Parent as it relates to Seller
before any court, governmental agency, arbitrator or instrumentality which
purport to affect the legality, validity or enforceability of this Agreement or
might affect Seller Parent's ability to perform its obligations hereunder.
Seller Parent has received no notice from any Regulatory Authority indicating
that such Regulatory Authority would oppose the transactions contemplated hereby
or would not grant or issue its consent or approval, if required with respect to
the transactions contemplated hereby.
(b) Other than with respect to immaterial claims or complaints
that would not adversely affect Purchaser's conduct of the Origination Business
after Closing, (i) Seller Parent has provided to Purchaser copies of all written
complaints or claims by consumers or Regulatory Authorities, Investors and
Insurers received by Seller Parent since Commencement of Seller's
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Operations, which are in Seller Parent's possession and which relate to or
concern Seller's conduct of the Origination Business or the Origination
Practices of Seller, any Originator or any Prior Originator; (ii) there is no
pending or, to the best of Seller Parent's knowledge, threatened claim or
complaint by a consumer or any Regulatory Authorities, Investors and Insurers
against Seller or Seller Parent as it relates to Seller or any Originator; and
(iii) since Commencement of Seller's Operations, Seller Parent has not discarded
or destroyed any written complaints or claims against Seller or Seller Parent as
it relates to Seller or any Originator by consumers or Regulatory Authorities,
Investors and Insurers.
4.5A FINDERS OR BROKERS.
Except for fees due to UBS Securities LLC, for which Seller Parent
accepts full responsibility for payment, Seller Parent has not engaged or
employed a broker or finder in connection with this Agreement.
4.6A NON-CONTRAVENTION.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the compliance by Seller Parent with the
covenants and conditions of this Agreement does not, and subject to the receipt
of the Regulatory Approval, Contract Consents and Lessor Consents, will not,
constitute (a) a breach or violation of, or default under, or cause the loss of
benefit under, or permit acceleration of any obligation under, any law, rule,
regulation, judgment, decree, order, governmental or other permit, license,
agreement, indenture, mortgage, contract, lease or instrument to which Seller
Parent is, or any of its properties are, subject or (b) a breach or violation of
the by-laws, certificate of incorporation, charter or other organizational
documents of Seller Parent.
4.7A REGULATORY APPROVALS.
No approval from any Regulatory Authority is required for Seller Parent
to enter into and perform this Agreement and the transactions contemplated
hereby.
4.8A CONDITION OF SELLER PARENT.
Seller Parent has no knowledge of any event or circumstance relating to
or affecting Seller or Seller Parent or of any conflict, violation or default by
Seller or Seller Parent which individually or in the aggregate would materially
adversely effect Seller's or Seller Parent's ability to consummate the
transactions contemplated by this Agreement.
4.9A ADEQUATE RESOURCES.
Seller Parent, as of the Execution Date has, and as of the Closing Date
will have, adequate resources to perform any necessary post-closing adjustments
pursuant to Sections 3.3 and 6.2 and to perform any indemnification obligations
that may be required of Seller Parent in accordance with Section 9.1.
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4.10A AUDITS AND INVESTIGATIONS.
Seller Parent has delivered to Purchaser copies of all written reports,
letters and materials received or sent by Seller Parent related to the
Origination Business in connection with all audits, investigations, complaints
and inquiries by an Investor or Insurer received since Commencement of Seller's
Operations. No such audit or investigation is pending or, to the best knowledge
of Seller Parent, threatened.
4.11A ABSENCE OF CERTAIN CHANGES.
Except as described in the Seller Parent Financial Statements, since
Commencement of Seller's Operations, there has not been:
(a) Any action or inaction by Seller Parent which constitutes
a breach or default by Seller Parent under any contract, agreement, obligation,
lease or license to which Seller Parent is a party or by which it or its
property is bound and which would, if uncured, result in a material adverse
change in the Purchased Assets or the Origination Business; or
(b) Any action taken or omitted by Seller Parent which would
have been a breach of Section 6.3 of this Agreement had such been in effect at
the time.
4.12A SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller's representations and warranties set forth herein, and all
information provided by Seller to Purchaser herein or pursuant hereto, are true
and correct in all material respects as of the date(s) specified herein with
respect thereto.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
The representations and warranties of Purchaser contained in this
Agreement shall continue and survive the purchase of the Origination Business,
for the period contemplated in Sections 9.3 and 11.6, and shall inure to the
benefit of Seller and Seller Parent. In addition to representations and
warranties, if any, made elsewhere in this Agreement, Purchaser represents and
warrants to Seller and Seller Parent, as of the Execution Date and the Closing
Date (or as of such other date as expressly provided herein) that:
5.1 CORPORATE ORGANIZATION.
Purchaser is duly organized, validly existing and in good standing as a
federally chartered stock savings bank; it has all requisite corporate power and
authority and all necessary authorizations, approvals and orders of and from all
governmental regulatory officials and bodies to own, operate and lease its
properties and to conduct its business in the manner in which it is
25
presently being conducted, and is duly qualified and is in good standing in all
other jurisdictions where the character or nature of its business requires such
qualification except for qualifications and good standing status the lack of
which, either singly or in the aggregate, has not had and will not have a
material adverse effect upon Purchaser or Purchaser's properties.
5.2 AUTHORIZATION.
Purchaser has all requisite corporate power and authority, and all
necessary authorizations, approvals and orders of and from all governmental
regulatory officials and bodies to execute and deliver this Agreement and to
carry out the Closing, other than the Regulatory Approval. The execution and
delivery of this Agreement and each of the Transaction Documents and the
consummation of the transactions contemplated herein have been duly authorized
by all necessary corporate action required to be taken on the part of Purchaser;
and, upon execution and delivery, this Agreement and the other Transaction
Documents will be valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent
transfer and other similar laws relating to or affecting the enforcement of
creditors' rights generally and to general principles of equity, whether
considered in a proceeding at law or in equity.
5.3 NON-CONTRAVENTION.
The execution and delivery of this Agreement and the consummation of
the Closing by Purchaser does not, and subject to the receipt of the Regulatory
Approval will not constitute (a) a breach or violation of or default under any
law, rule, or regulation, or any judgment, decree, order, governmental permit,
or license, or agreement, indenture, or instrument to which Purchaser is
subject; or (b) a breach or violation of or a default under the by-laws,
certificate of incorporation, charter or other organizational documents of
Purchaser. The consummation of the transactions contemplated hereby will not
require any consent, waiver or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit, or license or the consent or
approval of any other party to any such agreement, indenture, or instrument
other than the Regulatory Approval, the Lessor Consents and the Contract
Consents.
5.4 LITIGATION.
There are no pending or, to the best of Purchaser's knowledge,
threatened actions, suits or proceedings before any court, governmental agency,
arbitrator or instrumentality which seeks to alter or rescind the validity or
propriety of this Agreement or which challenges the validity of this Agreement
or which might affect Purchaser's ability to perform it obligations hereunder.
Purchaser has received no notice from any Regulatory Authority indicating that
such Regulatory Authority would oppose the transactions contemplated hereby or
would not grant or issue its consent or approval, if required with respect to
the transactions contemplated hereby.
26
5.5 FINDERS OR BROKERS.
Except as described in Schedule 5.5, Purchaser has not engaged or
employed a broker or finder in connection with this Agreement.
5.6 ADEQUATE RESOURCES.
Purchaser, as of the Execution Date has, and as of the Closing Date
will have, adequate resources to pay the Purchase Price to Seller as of the
Closing Date, to perform any necessary post-closing adjustments pursuant to
Sections 3.3 and 6.2, to meet the Assumed Liabilities and to perform any
indemnification obligations that may be required of Purchaser in accordance with
Section 9.2.
5.7 CONDITION OF PURCHASER.
Except for the Regulatory Approval, Purchaser has no knowledge of any
event or circumstance relating to or affecting Purchaser or of any conflict,
violation or default by Purchaser which individually or in the aggregate would
materially adversely affect Purchaser's ability to consummate the transactions
contemplated by this Agreement. For purposes of this representation, material
adverse effect shall not be deemed to include a material adverse effect arising
from or caused by general economic or industry trends or developments.
5.8 REGULATORY APPROVALS.
The only Regulatory Approval from any Regulatory Authority required for
Purchaser to enter into and perform this Agreement and the transactions
contemplated hereby is the non-objection of
the OTS.
ARTICLE VI
----------
COVENANTS OF THE PARTIES
------------------------
6.1 EMPLOYEE INCENTIVE PAYMENTS.
Purchaser and Seller Parent, acting in good faith, shall negotiate and
enter into an escrow and paying agent agreement (the "Escrow and Paying Agent
Agreement") governing (i) the deposit by Seller Parent in an escrow account with
Purchaser of sufficient funds to compensate certain employees of Seller in an
amount not less than approximately $500,000 or more than approximately
$1,000,000, to be determined by Seller Parent in its sole discretion, and
specified in the Escrow and Paying Agent Agreement, for remaining in the
employment of Purchaser or an Affiliate of Purchaser on the date 90 days
following the Closing Date and (ii) any other matters pertaining thereto.
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6.2 CLOSED LOANS AND PIPELINE LOANS.
(a) Purchaser shall have no obligation to purchase any Closed
Loan.
(b) With respect to Pipeline Loans, the Parties agree as set
forth below. All Pipeline Loans purchased by Seller Parent hereunder shall be
purchased pursuant to the Correspondent Agreement.
1. Any Pipeline Loan that is Agency-type
Product with respect to retail production
and that is closed by Purchaser within sixty
(60) days after the Closing Date shall be
purchased by Seller Parent, on a servicing
released basis, within five (5) Business
Days following Seller Parent's receipt of
all the documents specified in Section 4 of
the Correspondent Agreement with respect to
the related Pipeline Loan, at a price equal
to the effective locked-in commitment price
for such Pipeline Loan without the payment
of a servicing released premium therefor.
Seller Parent agrees that with respect to
each such Pipeline Loan so purchased, it
will waive the administrative fee owed it
under the Correspondent Agreement.
2. Any Pipeline Loan that is Agency-type
Product with respect to retail production
and that is closed by Purchaser between
sixty-one (61) days and one hundred twenty
(120) days after the Closing Date shall be
purchased by Seller Parent, on a servicing
released basis, within five (5) Business
Days following Seller Parent's receipt of
all the documents specified in Section 4 of
the Correspondent Agreement with respect to
the related Pipeline Loan, at a price equal
to the effective locked-in commitment price
for such Pipeline Loan. Seller Parent shall
pay Purchaser a servicing released premium
equal to 1.0% of the original principal
amount of each such Pipeline Loan netted
against an administrative fee of $150 that
shall be due Seller Parent in connection
with each such Pipeline Loan so purchased.
3. Any Pipeline Loan that is Agency-type
Product with respect to wholesale production
and that is closed by Purchaser within sixty
(60) days after the Closing Date shall be
purchased by Seller Parent, on a servicing
released basis, within five (5) Business
Days following Seller Parent's receipt of
all the documents specified in Section 4 of
the Correspondent Agreement with respect to
the related Pipeline Loan, at a price equal
to the effective locked-in commitment price
for such Pipeline Loan. Seller Parent shall
pay Purchaser a servicing released premium
equal to the servicing released premium
offered by Seller Parent in its servicing
released premium schedule for correspondent
loan purchases in effect on the date of the
applicable effective locked-in commitment
price minus 50 basis points. Seller
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Parent agrees that with respect to each such
Pipeline Loan so purchased, it will waive
the administrative fee owed it under the
Correspondent Agreement.
4. Any Pipeline Loan that is Agency-type
Product with respect to wholesale production
and that is closed by Purchaser between
sixty-one (61) days and one hundred twenty
(120) days after the Closing Date shall be
purchased by Seller Parent, on a servicing
released basis, within five (5) Business
Days following Seller Parent's receipt of
all the documents specified in Section 4 of
the Correspondent Agreement with respect to
the related Pipeline Loan, at a price equal
to the effective locked-in commitment price
for such Pipeline Loan. Seller Parent shall
pay Purchaser a servicing released premium
equal to the servicing released premium
offered by Seller Parent in its servicing
released premium schedule for correspondent
loan purchases in effect on the date of the
applicable effective locked- in commitment
price minus 25 basis points, netted against
an administrative fee of $150 that shall be
due Seller Parent in connection with each
such Pipeline Loan so purchased.
In each case set forth above, (i) Purchaser shall be entitled to retain all
origination fees received by Purchaser with respect thereto and all other
non-servicing fee revenues associated with such Pipeline Loan after the Closing,
and shall bear all expenses incurred after the Closing with respect thereto and
(ii) Seller shall be entitled to retain all origination fees received by Seller
with respect thereto and all other non-servicing fee revenues associated with
such Pipeline Loan prior to the Closing, and shall bear all expenses incurred
prior to the Closing with respect thereto. Notwithstanding the foregoing,
however, in the event that Seller has received with respect to any Pipeline
Loan, prior to the Closing Date, any prepaid fees in the nature of application
fees or other fees intended to reimburse or compensate Seller for the
out-of-pocket costs and expenses incurred or to be incurred by Seller in the
origination of such Pipeline Loan (the "Prepaid Fees"), Seller shall be entitled
to retain such Prepaid Fees. Purchaser shall bill Seller Parent on a monthly
basis for Purchaser's out-of-pocket costs and expenses with respect to each
Pipeline Loan as well as for any such amounts due to be refunded to the related
Mortgagor, as to which such Prepaid Fees were collected by Seller, and Seller
Parent shall promptly reimburse Purchaser with respect thereto to the extent of
the related Prepaid Fees. Purchaser, Seller and Seller Parent shall review the
Prepaid Fees balance 180 days following the Closing Date and shall mutually
agree to either continue or end the process outlined above with respect to
Prepaid Fees. Furthermore, Purchaser agrees (x) that it shall not delay the
closing of any Pipeline Loan that is Agency-type Product except for legitimate
reasons related to the particular Pipeline Loan and (y) any such Pipeline Loan
that has its interest rate locked with Seller following the Pipeline Loan
Cut-Off Date shall be delivered on a mandatory basis (if closed) to Seller
Parent under the terms of the Correspondent Agreement. Each of Purchaser and
Seller agrees that, with respect to each Pipeline Loan, it shall continue to
employ the same review process as was in effect as of the Execution Date. In the
event that either Purchaser or Seller determines that a Pipeline Loan does not
comply with all Applicable Requirements and the Correspondent Manual, including
the underwriting guidelines, as in effect as of the applicable lock-in
commitment date, the
29
Party discovering such deficiency shall promptly notify the other Party, in
writing, of such deficiency.
6.3 CONDUCT OF BUSINESS.
During the period from the date of this Agreement to the Closing Date,
except as set forth in Schedule 6.3 or as otherwise consented to in writing by
Purchaser, Seller and Seller Parent shall, with respect to the Origination
Business:
(a) carry on the Origination Business in all material respects
in accordance with Applicable Requirements and in the ordinary course of
business consistent with past practice and use all reasonable efforts to
preserve intact its present business organization, and preserve its
relationships with Originators, customers, suppliers and others having business
dealings with it;
(b) not take or omit to take any action materially
inconsistent with the representations, warranties and covenants contained in
this Agreement;
(c) not mortgage, pledge or subject to any lien (except for
taxes not yet due and payable), security interest, charge or encumbrance any of
the Purchased Assets;
(d) except in the ordinary course of business consistent with
past practice, not sell, transfer or otherwise dispose of any of the Purchased
Assets;
(e) not increase or agree to increase the salary, remuneration
or compensation of any employees employed in the conduct of the Origination
Business (other than those employees to whom Purchaser has indicated that it
will not offer employment) other than in accordance with Seller's customary
policies or pay or agree to pay any bonus not already committed to be paid to
any such employees;
(f) not solicit any employees employed in the conduct of the
Origination Business (other than those employees to whom Purchaser has indicated
that it will not offer employment) to
transfer employment to another division or affiliate of Seller;
(g) not terminate, except for cause, the employment of any
employees employed in the conduct of the Origination Business (other than those
employees to whom Purchaser has indicated that it will not offer employment) and
shall not, except in the ordinary course of business
consistent with past practice, hire any new employees;
(h) other than entering into renewals, not renegotiate or
change the terms of any of the Contracts, Personal Property Leases, Licenses or
Real Property Leases that result in a change
in the obligations assumed by Purchaser;
(i) pay, perform and discharge, when due, all liabilities and
obligations imposed on Seller related to the Purchased Assets and the
Origination Business;
30
(j) give reasonable prior notice to Purchaser prior to
settling any lawsuits related to or affecting the Origination Business or the
Purchased Assets for an amount in excess of
$25,000;
(k) maintain in full force and effect all of Seller's
insurance policies currently in effect and related to the Origination Business;
(l) not establish any new Plan that covers solely employees of
Seller or amend any such Plan except as may be necessary to comply with
applicable law;
(m) except in the ordinary course of business consistent with
past practice, not alter or vary its Origination Practices, excluding the
manner, methods, procedures, forms, documents and agreements used by Seller in
connection with warehousing, pricing, modifying, selling or pooling mortgage
loans;
(n) not purchase or otherwise acquire, or agree to acquire,
any business or corporation;
(o) except in the ordinary course of business consistent with
past practice, not create, incur or assume any material borrowings;
(p) not make any capital expenditures in excess of $25,000;
and
(q) not establish or make any commitment relating to the
establishment of any new branch or other office facilities.
6.4 LESSOR CONSENTS AND CONTRACT CONSENTS.
(a) Seller, Seller Parent and Purchaser shall use all
reasonable efforts to obtain the Lessor Consents and the Contract Consents.
Seller and/or Seller Parent shall pay all costs related to obtaining the Lessor
Consents and the Contract Consents. In the event the Lessor Consents for any of
the Leased Real Property cannot be obtained, the Parties shall use all
reasonable efforts to obtain the lessor's consent to sublease such Leased Real
Property to Purchaser on substantially the same terms and conditions as if
Purchaser were the prime lessee of such Leased Real Property. Seller and/or
Seller Parent shall pay all costs related to obtaining any such consent to a
sublease.
(b) In the event the Parties are unable to obtain consent to
assign or sublease any of the Leased Real Property, such Leased Real Property
shall be removed from Schedule 7 and the parties shall use all reasonable
efforts to have Purchaser locate and enter into a lease for comparable office
space in the same geographic area. Seller and/or Seller Parent shall be
responsible for all costs resulting from the inability to obtain the consent to
assignment or sublease of the Leased Real Property substantially on the same
terms as in effect on the date hereof, including without limitation additional
rental payments and any costs and expenses reasonably incurred by Purchaser that
are associated with relocation; PROVIDED, HOWEVER, that Purchaser shall not be
entitled to any abatement of the Purchase Price as a result thereof. Such costs
will be paid by Seller or Seller Parent promptly upon receipt of Purchaser's
invoice with respect thereto.
31
(c) [Intentionally omitted.]
(d) In the event the Parties are unable to obtain consent to
assign any of the Leased Personal Property by the Closing Date, such Leased
Personal Property shall be removed from Schedule 6; PROVIDED, HOWEVER, that
Purchaser shall not be entitled to any abatement of the Purchase
Price as a result thereof.
(e) In the event the Parties are unable to obtain consent to
assign any of the Contracts by the Closing Date, such Contract shall be removed
from Schedule 2; PROVIDED, HOWEVER, that Purchaser shall not be entitled to any
abatement of the Purchase Price as a result thereof.
6.5 REGULATORY APPROVAL.
Neither Seller nor Seller Parent shall take any action that
would adversely affect or delay the ability of Purchaser to obtain the
Regulatory Approval.
6.6 FURTHER ASSURANCES; TRANSITIONAL MATTERS.
(a) From the date hereof through the Closing Date, Seller and
Seller Parent shall provide Purchaser all reasonable assistance requested by
Purchaser in order to effect the Closing including but without limitation, such
information reasonably necessary or desirable to Purchaser
in obtaining the Regulatory Approval.
(b) During the period from the date hereof through the Cut-Off
Date, Seller or Seller Parent shall furnish to Purchaser a copy of (i) each
state or local income tax or franchise tax return filed by or for Seller related
to Seller with any state or local taxing authority and (ii) monthly financial
statements related to Seller in the form attached hereto as Exhibit A.
(c) From the date hereof up to the Closing Date, Purchaser
shall provide Seller all reasonable assistance requested by Seller in order to
effect the Closing including, but without limitation, such information
reasonably necessary or desirable to Seller in obtaining the Contract
Consents and the Lessor Consents.
(d) During the period between the Execution Date and the
Closing Date: (i) Purchaser shall have reasonable access to officers and
employees of Seller and Seller Parent, at their respective offices, related to
the Origination Business for informational meetings regarding human resource
matters and the procedures, policies and operations which Purchaser plans to
implement from and after the Closing Date; (ii) Seller and Seller Parent shall
cooperate with Purchaser in arranging for meetings between Purchaser and
Originators at the reasonable request of Purchaser; and (iii) Seller and Seller
Parent shall cooperate with Purchaser so as to facilitate Purchaser forwarding
mutually acceptable correspondence and communication to Originators regarding
this Agreement, the transactions contemplated hereby and Purchaser's plans for
conduct of the Origination Business after Closing.
32
(e) No Party shall take any action or omit to take any action
that would adversely affect or delay the ability of any Party to perform its
obligations hereunder on a timely basis.
6.7 NO SOLICITATION.
Neither Seller, Seller Parent, any Affiliate of Seller or Seller
Parent, nor any officer, employee, representative, agent, financial advisor of
Seller or Seller Parent or any Affiliate of Seller or Seller Parent shall
directly or indirectly encourage or solicit, or hold negotiations with, any
Person, entity or group other than Purchaser concerning any sale of the
Purchased Assets and the
Origination Business.
6.8 ALLOCATION OF PURCHASE PRICE.
Seller and Purchaser shall each allocate the Purchase Price of the
Purchased Assets acquired by Purchaser hereunder as each Party deems
appropriate.
6.9 PREPARATION OF CLOSING DATE SCHEDULE OF PURCHASED ASSETS.
Seller shall prepare and deliver to Purchaser, at least five (5)
Business Days prior to the Closing Date, the Closing Date Schedule of Purchased
Assets prepared on the basis of the best information reasonably available to
Seller and Purchaser at that time in accordance with Section 3.2 of this
Agreement.
6.10 PRORATION OF OPERATING REVENUES, COSTS AND EXPENSES.
All revenues, costs and other expenses attributable to the Purchased
Assets and the Origination Business shall be prorated as of the Closing Date.
Except as otherwise provided in this Agreement, all revenues, costs and expenses
relating to the Purchased Assets and the conduct of the Origination Business
prior to the Closing Date shall be Seller's responsibility, and all revenues,
costs and expenses relating to the Purchased Assets and the conduct of the
Origination Business on and after the Closing Date shall be Purchaser's
responsibility. To the extent a Real Property Lease is assigned to Purchaser and
Seller or Seller Parent had paid the related landlord or sublessor (i) a
security deposit or (ii) pre-paid rent or other advance of funds attributable to
any period subsequent to the Closing, Purchaser shall pay to Seller Parent on
the Closing Date the aggregate of such amounts together with any accrued
interest that may be owing to Seller or Seller Parent, as the case may be, which
amounts are set forth on Schedule 6.10 and are derived from the Seller Financial
Statements. To the extent that any operating costs, property taxes, wages,
salaries, commissions, bonuses and other direct compensation to Seller's
employees or agents or other amounts have been incurred but are not as yet due
and owing or are not yet paid as of the Closing Date, Seller or Purchaser, as
the case may be, shall promptly pay or reimburse Purchaser or Seller, as the
case may be, for Purchaser's or Seller's, as the case may be, pro-rata part
thereof upon receipt by Purchaser or Seller, as the case may be, of the invoice
or paid invoice, as the case may be. Purchaser and Seller shall use all
reasonable efforts to perform a final proration of all revenues, costs and other
expenses attributable to the Purchased Assets and the Origination Business
within 60 days of the Closing
33
Date; provided, however, that in no event shall such final proration occur more
than 120 days following the Closing Date.
6.11 EMPLOYEES.
(a) Purchaser shall have the right to employ on or after the
Closing Date any employees of Seller employed as of the Execution Date in the
conduct of the Origination Business who choose to be so employed; provided,
however, that Purchaser shall offer three year employment agreements in the form
of Exhibit M attached hereto to the President and the seven branch managers of
Seller, all of whom are listed in Schedule 6.11, and employment to all other
employees of Seller. Purchaser shall determine the terms and conditions of
employment of the employees of Seller who are employed by Purchaser; provided,
however, that compensation would be at levels standard in the mortgage banking
industry and would be substantially equivalent to current compensation levels
and that the other terms and conditions of employment of the employees of Seller
who are employed by Purchaser shall be substantially equivalent to the terms and
conditions of their current employment subject to compliance by Purchaser with
all applicable laws. Purchaser shall offer to those employees listed in Schedule
6.11 an aggregate of 25,000 non-qualified stock options to purchase shares of
common stock of Purchaser Parent, which stock options will be granted at the
Fair Market Value thereof at the date of grant and will vest over a three year
period. Purchaser covenants that, within ten (10) Business Days following the
Execution Date, it shall present to at least 90% of Seller's loan officers a
form of compensation agreement, which agreements shall be effective immediately
upon the Closing. As early as practicable, but not later than the Closing Date,
Purchaser will notify Seller of the names of the employees who have accepted
Purchaser's offer of employment. Seller shall use all reasonable efforts to
assist Purchaser in obtaining the employment of those employees to whom
Purchaser desires to offer employment. Seller's provision of notice under the
WARN Act shall not be deemed to be a failure to use all reasonable efforts to
assist Purchaser in obtaining the employment of those employees to whom
Purchaser desires to offer employment. Except as otherwise agreed to among
Purchaser, Seller and any employee of Seller as of the Execution Date who is
employed by Purchaser on the Closing Date in the conduct of the Origination
Business, all severance pay, unemployment compensation, accrued vacation or sick
pay, withholding and FICA taxes, COBRA benefits, pension benefits,
post-employment health care and life insurance benefits, and any payments due
any employee under any executive security, change in control or similar
agreement, or any other expenses or liabilities of any nature associated with
any employees related to their employment by Seller prior to the Closing Date,
including without limitation any expenses or liabilities associated with any
contract set forth in Schedule 4.15, shall be the sole responsibility of Seller.
Any compensation (including management bonuses) due any employee for Mortgage
Loans closed prior to the Closing Date, whether or not purchased by Purchaser,
shall be the responsibility of Seller. Except as otherwise provided herein or as
Purchaser may agree with a particular employee, any employees accepting
employment with Purchaser shall be employed as new hires and on an employment at
will basis. Employees of Seller employed as of the Execution Date shall not be
third party beneficiaries of this Agreement.
(b) Except as otherwise agreed to among Purchaser, Seller and
any employee of Seller as of the Execution Date who is employed by Purchaser on
the Closing Date in the conduct of the Origination Business, Purchaser is not
assuming, and it shall have no responsibility for the
34
continuation of, or any liabilities under or in connection with, any of the
following: (i) any contract as set forth in Section 4.15; or (ii) any notices
required to be given to Seller's employees pursuant to the WARN Act, COBRA or
any other applicable federal or state law.
(c) Seller and Seller Parent agree that, for a period of three
years after the Closing Date, neither Seller nor Seller Parent nor any Affiliate
controlled by Seller Parent will directly or indirectly solicit employment of or
employ any employee of Seller hired by Purchaser pursuant to this Agreement. Any
non-competition agreements between an employee hired by Purchaser pursuant to
this Agreement and Seller, Seller Parent or Affiliates controlled by Seller
Parent shall terminate as of the time such employee commences employment with
Purchaser.
6.12 NO OTHER LIABILITIES.
Except for the Assumed Liabilities, Purchaser assumes no other
liabilities or obligations of Seller.
6.13 NON-SOLICITATION OF CUSTOMERS.
Neither Seller nor any Affiliate of Seller shall make use of any lists
of current or former mortgagors of Seller or any Originator or former Originator
in any manner and shall not divulge to any other Person any such mortgagor
lists, lists of Originators or other information with respect thereto or attempt
to profit from any such list or information which is or comes into the
possession of Seller or any Affiliate of Seller. Purchaser covenants and agrees
that it shall not, during the one-year period beginning on the Closing Date,
take any action to solicit the refinancing of any Mortgage Loan originated by
Seller; provided, however, that the foregoing shall not preclude Purchaser from
(a) engaging in solicitations to the general public by newspaper, radio,
television or other media which are not directed solely toward the Mortgagors;
(b) refinancing the Mortgage Loan of any Mortgagor who, without solicitation,
contacts Purchaser or an Affiliate thereof to request the refinancing of the
related Mortgage Loan; or (c) targeting any Mortgagor or group of Mortgagors for
other products or services of CFS Bank or Purchaser Parent.
6.14 USE OF EXISTING MARKETING, SOLICITATION AND ORIGINATION
MATERIALS OF SELLER.
Seller, as of the Closing Date and at its own expense, shall cease
using the Intercounty Mortgage name and shall change its name on all stationery,
forms and other similar documents used in the ordinary course of business to a
name which is not in any way similar to Seller's name prior to the Closing Date,
and which is generally acceptable to Purchaser.
6.15 MAINTENANCE OF RESOURCES.
(a) From the Closing Date, Purchaser shall maintain sufficient
resources to meet its obligations hereunder.
(b) From the Closing Date, Seller or Seller Parent shall
maintain sufficient resources to meet Seller's obligations hereunder.
35
6.16 AGREEMENT NOT TO COMPETE.
Neither Seller nor Seller Parent nor any Affiliate controlled by Seller
Parent shall directly or indirectly: (a) originate or close on a retail basis
any Agency-type Product during the two year period following the Closing Date;
(b) solicit for purchase on a wholesale basis, from any Originator from whom
Seller has purchased a mortgage loan in the twelve months prior to the Closing
Date and who is identified on Schedule 6.16 attached hereto, any Agency-type
Product during the period following the Closing Date ending on the earlier to
occur of (i) the one year anniversary of the Closing Date and (ii) the date on
which Purchaser terminates the Correspondent Agreement; or (c) purchase any
Person having an office in any of New York, New Jersey, Pennsylvania,
Connecticut or Massachusetts that is primarily in the retail business of
originating any Agency-type Product during the two year period following the
Closing Date.
6.17 PIPELINE LOAN INFORMATION.
Seller or Seller Parent shall deliver to Purchaser on the next Business
Day following the Pipeline Loan Cut-Off Date a tape or electronic media which
sets forth the following true and correct information, as of the Pipeline Loan
Cut-Off Date with respect to each Pipeline Loan: (a) the loan number of each
such Pipeline Loan; (b) the principal balance of each such Pipeline Loan; (c)
the Originator of each such Pipeline Loan; (d) the interest rate of each
Pipeline Loan with a locked rate and the proposed interest rate of each Pipeline
Loan with a floating rate, and whether such rate is adjustable; (e) the state in
which the property securing each such Pipeline Loan is located; and (f) all
other terms of lock-in, registration or binding commitment with respect to the
Pipeline Loan.
6.18 ASSIGNMENT OF TRADEMARK AND SERVICEMARK.
If Seller has trademarked the Intercounty Mortgage name or the acronym
IMI (or any name or initials similar thereto) or any trademarks, trade names,
logos or other symbols, Seller shall deliver the executed Assignment of
Trademark and Servicemark Agreement to Purchaser in the form
of Exhibit H.
6.19 PROCESSING, UNDERWRITING AND CLOSING SYSTEMS.
During the term of the Correspondent Agreement, to the extent Seller
Parent provides access to any automated mortgage loan processing, underwriting
or closing systems to any correspondent equivalent to Purchaser, Seller Parent
shall provide equivalent access to such automated mortgage loan processing,
underwriting or closing systems to Purchaser. Nothing set forth herein shall be
deemed to require equivalent access to automated mortgage loan processing,
underwriting or closing systems provided on a pilot program or Beta test basis;
provided, however, that if Seller Parent provides access to any automated
mortgage loan processing, underwriting or closing system to five or more parties
on a pilot program or Beta test basis, Seller Parent shall provide equivalent
access to such automated mortgage loan processing, underwriting or closing
system to Purchaser.
36
6.20 LEASED SOFTWARE.
It is understood that the Personal Property Leases with respect to the
Leased Software shall not be assigned to Purchaser; provided, however, that such
Personal Property Leases that are not being assigned shall be maintained by
Seller or Seller Parent at Seller's or Seller Parent's expense during the period
ending six (6) months after the Closing Date. Seller shall assist Purchaser in
the use of the Leased Software during the transition. Purchaser shall use all
reasonable efforts to complete the transition of the Origination Business onto
its own computer software and to release Seller from its obligations under this
Section 6.20 as promptly as is practicable. Any cost of terminating any Personal
Property Lease with respect to the Leased Software shall be solely the
obligation of Seller and/or Seller Parent.
6.21 WAIVER OF COMPLIANCE WITH BULK SALES ACT PROCEDURES.
The Parties hereby waive compliance with any applicable bulk sales act
procedures, and Seller and Seller Parent shall indemnify Purchaser with respect
to any liability arising out of such lack of compliance.
6.22 TRANSFER TAX.
In the event that any transfer tax is due and payable in connection
with the assignment of any Real Property Leases, Seller and Seller Parent shall
be responsible for the preparation of the transfer tax returns and for the
payment of any transfer taxes due and payable.
6.23 AUDIT OPINION.
Seller Parent shall provide to Purchaser at or before Closing a copy of
the audit opinion related to the Seller Parent Financial Statements, including
consolidating schedules.
6.24 REGULATORY APPROVAL.
Purchaser shall, within fifteen (15) days following the Execution Date,
submit to the OTS a completed notice requesting Regulatory Approval.
ARTICLE VII
-----------
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
------------------------------------------
The obligations of Purchaser under this Agreement are subject to
satisfaction of the following conditions at or prior to the Closing Date, which
conditions may be waived in the discretion of Purchaser:
37
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND SELLER
PARENT.
The representations and warranties of Seller and Seller Parent
contained in this Agreement and the information contained in the Exhibits and
Schedules and other Transaction Documents delivered by Seller pursuant to this
Agreement shall be true and correct, in all material respects, at the Closing
Date with the same effect as though made at such time (unless such
representations and warranties speak as of a different date), except to the
extent (i) waived by Purchaser hereunder; (ii) such representation or warranty
is no longer true due to action or inaction of Seller or Seller Parent that was
consented to in writing by Purchaser; or (iii) the failure or failures of any
such representations or warranties to be so true and correct, either singly or
in the aggregate, do not have a material adverse effect on either the
consummation of the transactions contemplated by this Agreement, the Purchased
Assets or operation of the Origination Business by Purchaser. Seller and Seller
Parent shall have performed in all material respects all obligations and
agreements, and shall have materially complied with all terms, covenants and
conditions contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date.
7.2 CORPORATE RESOLUTION.
Purchaser shall have received from Seller and Seller Parent prior to
the Closing Date certified copies of resolutions of the Board of Directors of
each of Seller and Seller Parent authorizing and approving the execution of this
Agreement and the Transaction Documents, and completion of the transactions
contemplated by this Agreement.
7.3 OFFICER'S CERTIFICATIONS.
(a) Purchaser shall have received an Officer's Certification
from the President or an Executive Vice President of Seller dated the Closing
Date to the effect that (x) all of the representations and warranties of Seller
contained in this Agreement and the information contained in the Exhibits and
Schedules and other Transaction Documents delivered by Seller pursuant to this
Agreement are true and correct, in all material respects, at the Closing Date
with the same effect as though made at such time (unless such representations
and warranties speak as of a different date), except to the extent (i) waived by
Purchaser hereunder; (ii) such representation or warranty is no longer true due
to action or inaction of Seller that was consented to in writing by Purchaser;
or (iii) the failure or failures of any such representations or warranties to be
so true and correct, either singly or in the aggregate, do not have a material
adverse effect on either the consummation of the transactions contemplated by
this Agreement, the Purchased Assets or operation of the Origination Business by
Purchaser; and (y) Seller has performed in all material respects all obligations
and agreements, and has materially complied with all terms, covenants and
conditions contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date, in substantially the form set forth in Exhibit
J.
(b) Purchaser shall have received an Officer's Certification
from the Vice Chairman and Managing Director or an Executive Vice President of
Seller Parent dated the Closing Date to the effect that (x) all of the
representations and warranties made by Seller Parent under this Agreement and
the information contained in the Exhibits and Schedules and other Transaction
38
Documents delivered by Seller Parent pursuant to this Agreement are true and
correct, in all material respects, at the Closing Date with the same effect as
though made at such time (unless such representations and warranties speak as of
a different date), except to the extent (i) waived by Purchaser hereunder; (ii)
such representation or warranty is no longer true due to action or inaction of
Seller Parent that was consented to in writing by Purchaser; or (iii) the
failure or failures of any such representations or warranties to be so true and
correct, either singly or in the aggregate, do not have a material adverse
effect on either the consummation of the transactions contemplated by this
Agreement, the Purchased Assets or operation of the Origination Business by
Purchaser; and (y) Seller Parent has performed in all material respects all
obligations and agreements, and has materially complied with all terms,
covenants and conditions contained in this Agreement to be performed or complied
with by it prior to or at the Closing Date, in substantially the form set forth
in Exhibit K.
7.4 [INTENTIONALLY OMITTED]
7.5 OPINION OF COUNSEL TO SELLER AND SELLER PARENT.
Purchaser shall have received an opinion, dated the Closing Date, of
Jordan D. Dorchuck, Esq., counsel to Seller, and Jordan D. Dorchuck, Esq.,
senior vice president and general counsel of Seller Parent, in substantially the
form of Exhibit C and Exhibit D, respectively.
7.6 REGULATORY APPROVAL.
The Regulatory Approval shall have been obtained and all necessary
conditions, including all legally required waiting, protest or appeal periods,
of or relating to such approvals shall have expired or been fully satisfied;
provided, however, that Purchaser may deem this condition unfulfilled if the
Regulatory Approval is subject to qualifications or conditions which, in the
reasonable judgment of Purchaser, (i) prohibit Purchaser or its Affiliates from
engaging in any material activity which they currently conduct or which they may
conduct under applicable law, (ii) impose any condition or requirement on
Purchaser which is or would become applicable to Purchaser and which will
materially adversely affect Purchaser's conduct of the Origination Business or
Purchaser's reasonable prospects for the Origination Business, or (iii) has a
material adverse effect on the Purchased Assets or the Origination Business.
7.7 LITIGATION.
There shall be no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or governmental action against any of
Seller, Seller Parent or Purchaser for the purpose of enjoining or preventing
the transfer of the Purchased Assets or the Origination Business, or otherwise
preventing the consummation of the Closing or otherwise claiming that this
Agreement or the transfer of the Purchased Assets or the Origination Business or
the consummation of the Closing is illegal or unauthorized.
39
7.8 FILINGS.
If necessary, Seller shall have made all filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and all required statutory
waiting periods under such Act shall have
terminated.
7.9 ENVIRONMENTAL MATTERS.
There shall exist no proceeding, claim or action regarding the release
or existence of any Hazardous Materials at or in connection with any Leased Real
Property, Purchased Asset or Assumed Liability.
7.10 [INTENTIONALLY OMITTED]
7.11 [INTENTIONALLY OMITTED]
7.12 [INTENTIONALLY OMITTED]
7.13 LOAN LEVELS.
The 1998 First Quarter Loan Production shall have been equal to or
greater than $156.25 million principal amount; provided, however, that in the
event the 1998 First Quarter Loan Production is less than $156.25 million
principal amount, then the component of the Purchase Price set forth in clause
(ii) of Section 3.1 shall be reduced to an amount that, expressed as a ratio, is
to be calculated as follows: $5 million / $625 million = x / (the 1998 First
Quarter Loan Production multiplied by 4), where x is the amount that shall
replace the figure $5 million appearing in clause (ii) of Section 3.1 and
provided, further, that if the 1998 First Quarter Loan Production was less than
$125 million principal amount, then Purchaser shall be entitled to terminate
this Agreement in accordance with Section 10.1(e).
7.14 EMPLOYEES.
Seller's loan officers who shall have accepted employment with
Purchaser or an Affiliate thereof in accordance with Section 6.11 ("Continued
Production Employees") shall be individuals who were responsible for at least
$140 million principal amount of the 1998 First Quarter Loan Production;
provided, however, that if the Continued Production Employees were responsible
for less than $140 million principal amount of the 1998 First Quarter Loan
Production, then the component of the Purchase Price set forth in clause (ii) of
Section 3.1 shall be reduced to an amount that, expressed as a ratio, is to be
calculated as follows: $5 million / $560 million = x / (the 1998 First Quarter
Loan Production provided by the Continued Production Employees multiplied by 4),
where x is the amount that shall replace the figure $5 million appearing in
clause (ii) of Section 3.1; and provided, further, that if the Continued
Production Employees were responsible for less than $125 million principal
amount of the 1998 First Quarter Loan Production, then Purchaser shall be
entitled to terminate this Agreement in accordance with Section 10.1(e). In
addition, all of the
40
employment agreements with all of the people (except for Gary Canonico) listed
on Schedule 6.11 shall be in place and shall have not been rescinded prior to
Closing.
The Purchase Price adjustments provided in this Section 7.14 and the
preceding Section 7.13 are exclusive and not cumulative and, to the extent
applicable, Purchaser shall be entitled to use the calculation under whichever
of the two sections results in the lower Purchase Price.
7.15 BILL OF SALE.
Seller shall have executed and delivered to Purchaser the Bill of Sale
in substantially the form of Exhibit F, and Purchaser shall have received at the
Closing such other bills of sale, endorsements, assignments and other
instruments of transfer and conveyance as shall reasonably be requested by
Purchaser to vest in Purchaser full right, title and interest in and to the
Purchased Assets and the Origination Business, and at the Closing Seller shall
allow Purchaser to take actual possession and operating control of the Purchased
Assets and the Origination Business.
7.16 ASSIGNMENT OF TRADEMARK AND SERVICEMARK.
If required pursuant to Section 6.18, Seller shall have delivered the
executed Assignment of Trademark and Servicemark Agreement to Purchaser in the
form of Exhibit H.
7.17 CORRESPONDENT AGREEMENT.
Seller Parent shall have delivered an executed copy of the
Correspondent Agreement in the form of Exhibit G to Purchaser, which shall
provide for the terms and conditions under which, after the Closing, Seller
Parent shall purchase from Purchaser (i) Agency-type Product Pipeline Loans and
(ii) FHA, VA, conventional conforming or conventional non-conforming (jumbo)
mortgage loans that are eligible for sale to FNMA or FHLMC (or, but for their
size, would be so eligible) under than applicable FNMA/FHLMC guidelines and that
are secured by one-to-four family residential properties.
7.18 ESCROW AND PAYING AGENT AGREEMENT.
Seller Parent shall have delivered an executed copy of the Escrow and
Paying Agent Agreement to Purchaser.
7.19 [INTENTIONALLY OMITTED]
7.20 [INTENTIONALLY OMITTED]
7.21 CERTIFICATES OF GOOD STANDING.
Purchaser shall have received long-form good standing certificates with
respect to Seller and Seller Parent, which include tax status.
41
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER AND SELLER PARENT
The obligations of Seller and Seller Parent under this Agreement are
subject to satisfaction of the following conditions at or prior to the Closing
Date, which conditions may be waived in the
discretion of Seller or Seller Parent:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
The representations and warranties of Purchaser contained in this
Agreement and the information contained in the Exhibits, Schedules and other
Transaction Documents delivered by Purchaser pursuant to this Agreement shall be
true and correct, in all material respects, at the Closing Date with the same
effect as though made at such time (unless such representations and warranties
speak as of a different date), except to the extent (i) waived hereunder by
Seller or Seller Parent, (ii) such representation or warranty is no longer true
due to action or inaction of Purchaser that was consented to in writing by
Seller or Seller Parent, or (iii) the failure or failures of any such
representations or warranties to be so true and correct, either singly or in the
aggregate, do not have a material adverse effect on the ability of Purchaser to
complete the transactions contemplated by this Agreement. Purchaser shall have
performed in all material respects all obligations and agreements, and shall
have materially complied with all terms, covenants and conditions, contained in
this Agreement to be performed or complied with by it prior to or at the Closing
Date.
8.2 OPINION OF COUNSEL TO THE PURCHASER.
Seller and Seller Parent shall have received an opinion dated the
Closing Date of Thacher Proffitt & Wood, counsel to Purchaser, in substantially
the form set forth in Exhibit E.
8.3 CORPORATE RESOLUTION.
Seller shall have received from Purchaser prior to the Closing Date
certified copies of resolutions of the Board of Directors of Purchaser
authorizing and approving the execution of this Agreement and the Transaction
Documents, and completion of the transactions contemplated by this
Agreement.
8.4 OFFICER'S CERTIFICATION.
Seller shall have received an Officer's Certification from the
President or Senior Vice President of Purchaser dated the Closing Date to the
effect that (x) all of the representations and warranties made by Purchaser
under this Agreement and the information contained in the Exhibits and Schedules
and other Transaction Documents delivered by Purchaser pursuant to this
Agreement are true and correct, in all material respects, at the Closing Date
with the same effect as though made at such time (unless such representations
and warranties speak as of a different date), except to the extent (i) waived by
Seller or Seller Parent hereunder; (ii) such representation or warranty is no
longer true due to action or inaction of Purchaser that was consented to in
writing by Seller and/or
42
Seller Parent; or (iii) the failure or failures of any such representations or
warranties to be so true and correct, either singly or in the aggregate, do not
have a material adverse effect on the ability of Purchaser to complete the
transactions contemplated by this Agreement; and (y) Purchaser has performed in
all material respects all obligations and agreements, and has materially
complied with all terms, covenants and conditions contained in this Agreement to
be performed or complied with by it prior to or at the Closing Date, in
substantially the form set forth in Exhibit L.
8.5 REGULATORY APPROVAL.
Purchaser shall have obtained the Regulatory Approval and all necessary
conditions, including all legally required waiting, protest or appeal periods,
of or relating to such Regulatory Approval shall have expired or been fully
satisfied.
8.6 LITIGATION.
There shall be no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or governmental action against any of
Seller, Seller Parent or Purchaser for the purpose of enjoining or preventing
the transfer of the Purchased Assets or the Origination Business, or otherwise
preventing the consummation of the Closing or otherwise claiming that this
Agreement or the transfer of the Purchased Assets or the Origination Business or
the consummation of the Closing is illegal or unauthorized.
8.7 FILINGS.
If necessary, Purchaser shall have made all filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and all required statutory
waiting periods under such Act shall have terminated.
8.8 ESCROW AND PAYING AGENT AGREEMENT.
Purchaser shall have delivered an executed copy of the Escrow and
Paying Agent Agreement to Seller Parent.
8.9 [INTENTIONALLY OMITTED]
8.10 ASSUMPTION AGREEMENT.
Purchaser shall have executed and delivered to Seller the Assumption
Agreement substantially in the form of Exhibit I.
8.11 CORRESPONDENT AGREEMENT.
Purchaser shall have delivered an executed copy of the Correspondent
Agreement in the form of Exhibit G to Seller Parent, which shall provide for the
terms and conditions under which, after the Closing, Seller Parent shall
purchase from Purchaser (i) Agency-type Product Pipeline Loans
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and (ii) FHA, VA, conventional conforming or conventional non-conforming (jumbo)
mortgage loans that are eligible for sale to FNMA or FHLMC (or, but for their
size, would be so eligible) under than applicable FNMA/FHLMC guidelines and that
are secured by one-to-four family residential properties.
ARTICLE IX
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INDEMNIFICATION
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9.1 INDEMNIFICATION BY SELLER AND SELLER PARENT.
Seller and Seller Parent shall jointly and severally indemnify and hold
harmless Purchaser, any Affiliate of Purchaser and each officer, director,
employee or agent, whether past, present or future, of Purchaser or any
Affiliate of Purchaser, from and against, and will reimburse each of them for,
any and all Damages or Losses to the extent arising out of, relating to or
resulting from:
(a) the inaccuracy or breach of any representation or warranty
made by Seller or Seller Parent in this Agreement;
(b) any item listed in the Seller Disclosure Schedule hereto
as an exception to Seller's representations and warranties in Article IV hereof
that materially and adversely affects Purchaser's conduct of the Origination
Business after Closing;
(c) the failure by Seller or Seller Parent to perform or
observe any covenant or agreement on the part of Seller or Seller Parent
contained in this Agreement;
(d) the failure of Seller prior to the Closing Date to comply
with the Applicable Requirements relating to the conduct of its business,
including the Origination Business, or the act or failure to act of Seller prior
to the Closing Date relating to the Purchased Assets;
(e) any obligation or liability of Seller that is not
expressly assumed by Purchaser pursuant to this Agreement;
(f) any Damages or Losses related to any Claim asserted prior
to or after the Closing and attributable to the period prior to the Closing and
related to the business of Seller;
(g) Seller's conduct of its business on or after the Closing;
(h) any and all Damages or Losses related to any Claims
related to the employment or termination of employment, including a constructive
termination, of any employee of Seller from employment with Seller either prior
to or after Closing;
(i) as to Pipeline Loans, (i) any fraud in the origination of
a Pipeline Loan, which fraud occurred prior to the Closing Date and for which
Seller had issued an underwriting
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commitment prior to the Closing Date; (ii) the failure of any Pipeline Loan, for
which an underwriting commitment was made prior to the Closing Date and to which
underwriting commitment Purchaser adhered in processing such Pipeline Loan, to
be in compliance and conformity with the Applicable Requirements, the
Underwriting Guidelines or the requirements of the Originator Agreement, which
failure occurred prior to the Closing Date; or (iii) Seller's failure or any
Originator's failure to comply, prior to the Closing Date, with the Applicable
Requirements, the Underwriting Guidelines or the requirements of the Originator
Agreement in processing any Pipeline Loan;
(j) in those instances where Purchaser is subleasing Leased
Real Property from Seller, any and all Damages or Losses related to any Claims
brought against Purchaser concerning the use of Hazardous Materials prior to
Closing by a current or prior owner, tenant, subtenant, or current or prior
tenant or subtenant on or affecting any Leased Real Property or Leased Personal
Property in any manner which materially violated federal, state or local laws,
ordinances, rules, regulations, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials;
(k) any criminal activity of an employee of Seller in
connection with the business of Seller, prior to the Closing Date, whether or
not Seller knew of such criminal activity;
(l) any criminal activity, prior to Closing, of an employee of
Seller which was documented in the records of Seller or an Affiliate of Seller
and/or of which Seller or an Affiliate of Seller had knowledge; or
(m) lack of compliance with the bulk sales act procedures as
provided in Section 6.21.
Provided, however, that Seller shall not indemnify Purchaser or hold
Purchaser harmless for any Damages or Losses for which Purchaser is obligated to
indemnify Seller pursuant to Section 9.2 hereof.
9.2 INDEMNIFICATION BY PURCHASER.
Purchaser shall indemnify and hold harmless Seller, any Affiliate of
Seller and each officer, director, employee or agent, whether past, present or
future, of Seller or any Affiliate of Seller, from and against, and will
reimburse each of them for, any and all Damages or Losses to the extent arising
out of, relating to or resulting from:
(a) the inaccuracy or breach of any representation or warranty
made by Purchaser in this Agreement in each case without regard to any
limitation or qualification contained herein as to materiality or Purchaser's
knowledge;
(b) any item listed in any Schedule hereto as an exception to
Purchaser's representations or warranties in Article V hereof;
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(c) the failure by Purchaser to perform or observe any
covenant or agreement on the part of Purchaser contained in this Agreement;
(d) any Damages or Losses related to any Claim asserted after
the Closing and attributable to the period after the Closing and related to the
business of Purchaser;
(e) Purchaser's conduct of its business on or after the
Closing;
(f) any and all Damages or Losses related to any Claims
relating to the employment of or termination of employment, including a
constructive termination, of any employee of Purchaser or an Affiliate thereof
on or after the Closing;
(g) the failure of Purchaser after the Closing to comply with
the Applicable Requirements relating to the conduct of its business, including
the Origination Business, or the act or failure to act of Purchaser after the
Closing relating to the Purchased Assets or Assumed Liabilities;
(h) any obligation or liability of Seller that is expressly
assumed by Purchaser pursuant to this Agreement, except for a liability or
obligation attributable to the period prior to the Closing Date;
(i) any and all Damages or Losses related to any Claims
related to Purchaser's continued use of Seller's name as provided in Section
6.14 and excluding any Claim related to breach of a servicemark, trademark,
patent or other license; or
(j) as to Pipeline Loans, (i) any fraud in the origination of
a Pipeline Loan, which fraud occurred subsequent to the Closing and for which
Seller or Purchaser had issued an underwriting commitment; (ii) the failure of
any Pipeline Loan, for which an underwriting commitment had been issued by
Seller or Purchaser, to be in compliance and conformity with the Applicable
Requirements, the Underwriting Guidelines or the requirements of the Originator
Agreement, which failure occurred subsequent to Closing; or (iii) Purchaser's
failure or any Originator's failure to comply, subsequent to Closing, with the
Applicable Requirements, the Underwriting Guidelines or the requirements of the
Originator Agreement in processing any Pipeline Loan.
Provided, however, that Purchaser shall not indemnify Seller
or any Affiliate of Seller or hold Seller or any Affiliate of Seller harmless
for any Damages or Losses for which Seller or any Affiliate of Seller is
obligated to indemnify Purchaser pursuant to Section 9.1 hereof.
9.3 LIMITATIONS ON INDEMNIFICATION.
(a) Except with respect to Losses or Damages related to: (i)
fraud by the Party against whom indemnification is sought; or (ii) a Claim
relating to an undisclosed liability of Seller existing as of the Closing Date,
all of which will be subject to the applicable statute of limitations for
recovery with respect thereto, the obligations of Seller, Seller Parent and
Purchaser pursuant to
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Sections 9.1 and 9.2, respectively, shall terminate and expire and shall be
without any further force or effect whatsoever from and after the date eighteen
(18) months after the Closing Date unless the Person seeking indemnification
shall on or prior to the end of such eighteen (18) month period serve written
notice on the Party from whom indemnification hereunder is sought setting forth
in reasonable detail any claims which such Party may elect to assert.
(b) No Party shall be required to indemnify or hold another
Person harmless from, or assert a claim against the other for, any of the
following:
1. Damages or Losses which arise from or in
connection with any Claim made by one Party against the other Party for
consequential damages consisting of lost investment opportunity or business
opportunity, damages of reputation, punitive damages, exemplary damages, treble
damages and nominal damages unless such Damages or Losses are incurred by
Purchaser, Seller or Seller Parent to an unaffiliated third party as a sole and
direct result of a third party claim, asserted against Purchaser, Seller or
Seller Parent, respectively. In no event will this subsection (i) limit a claim
for diminution in value of a Pipeline Loan.
2. Losses attributable to or arising from overhead
allocations or general and administrative costs and expenses of Purchaser,
Seller or any Affiliate of Purchaser or Seller.
9.4 NOTICE AND SETTLEMENT OF CLAIMS; PAYMENT OF AMOUNTS DUE.
(a) Except as provided in Section 9.4(b), any amount which is
required to be paid by the Indemnitor to any indemnified party, shall be paid
within thirty (30) days of request therefor. For the purposes of administering
the indemnification provisions of Sections 9.1 and 9.2, the following procedures
shall apply from and after the Execution Date:
1. Each indemnified party shall notify the Indemnitor
of any Indemnification Event in writing within 30 days following the receipt of
notice of the commencement of any action or proceeding or within 60 days of (A)
the assertion of any claim against such indemnified party or (B) the discovery
by such indemnified party of any loss or occurrence giving rise to indemnity
pursuant to Section 9.1 or 9.2 (any 30 or 60 day notification requirement shall
begin to run, in the case of a claim which is amended so as to give rise to an
Indemnification Event, from the first day such claim is amended to include any
claim which is an Indemnification Event hereunder) and shall indicate in such
notification whether such indemnified party is requesting indemnification with
respect to such Indemnification Event. Each indemnified party shall act in a
commercially reasonable manner as if no right of indemnification existed under
this Agreement with respect to an assertion of a claim or any facts giving rise
to a loss for which indemnity may be sought pursuant to Section 9.1 or 9.2,
provided, however, that the foregoing shall not obligate either indemnified
party to commence legal proceedings. The failure to give notice as required by
this Section 9.4 in a timely fashion shall not result in a waiver of any right
to indemnification hereunder except to the extent that the Indemnitor's ability
to defend against the event with respect to which indemnification is sought is
materially and adversely affected by the failure of the indemnified party to
give notice in a timely fashion as required by this Section 9.4.
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2. After notification is given as aforesaid, the
Indemnitor shall be entitled (but not obligated), to assume the defense or
settlement of any such action or proceeding, or to participate in any
negotiations or proceedings to settle or otherwise eliminate any claim;
provided, however, that in the event the Indemnitor assumes any such defense or
settlement or any such negotiations, it shall pursue such defense, settlement or
negotiations in good faith. If the Indemnitor fails to elect in writing within
fifteen (15) Business Days of the notification referred to above to assume the
defense, the indemnified party may engage counsel to defend, settle or otherwise
dispose of such action or proceeding, which counsel shall be reasonably
satisfactory to the Indemnitor.
3. In the case where the Indemnitor has assumed the
defense or settlement with respect to an Indemnification Event, the Indemnitor
shall be entitled to assume the defense or settlement thereof with counsel of
its own choosing, which counsel shall be reasonably satisfactory to the
indemnified party, provided that: (A) the indemnified party (and its counsel)
shall be entitled to continue to participate at its own cost in any such action
or proceeding or in any negotiations or proceedings to settle or otherwise
eliminate any claim for which indemnification is being sought; and (B) the
Indemnitor shall not be entitled to settle, compromise, decline to appeal, or
otherwise dispose of any such action, proceeding or claim without the consent or
agreement of the indemnified party (which consent will not be unreasonably
withheld or delayed), provided that if such consent is withheld and the proposed
disposition releases the indemnified party from all damages in respect of the
claim other than the damages satisfied by the Indemnitor, the Indemnitor's
liability shall be limited to the amount for which the Indemnitor agreed with
the claimant to settle together with costs and attorneys' fees of the Indemnitor
and of the indemnified party, as is the case, to the date such settlement was
rejected by the indemnified party.
4. Notwithstanding anything to the contrary contained
herein, if (i) an Indemnitor has abandoned control of any case, or (ii) the
indemnified party has determined that its control of any case is necessary to
assure that its methods of doing business or its authority, licenses, permits
and approvals to conduct business and originate and purchase loans are not
impaired, the indemnified party shall have the right, at the sole cost and
expense of the Indemnitor, to take control of such case and may contest, pay,
settle or compromise any such case in such manner as it may deem appropriate at
the sole cost and expense of the Indemnitor. In addition, in any case in which
the Indemnitor shall have reasonably concluded and notified the indemnified
party that there is a conflict of interest between the Indemnitor and the
indemnified party in the conduct of the defense of such case or that there are
specific defenses available to the indemnified party which are different from or
additional to those available to the Indemnitor which could be adverse to the
Indemnitor, then the indemnified party shall have the right to assume and direct
the defense of such case on its own behalf. In such an event, the Indemnitor
shall pay the fees and disbursements of both the counsel to the Indemnitor and
the indemnified party.
5. Except as provided in Subsection 9.4(a)(iv), in
any case where an Indemnitor shall have assumed the defense or settlement of any
action, proceeding or claim and the indemnified party is entitled to continue to
participate therein pursuant to the terms of this Agreement and shall have
elected to continue to participate therein, it shall do so at its own expense.
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6. In the event indemnification is requested, the
relevant Indemnitor, its representatives and agents shall have access to the
premises, books and records of the indemnified party or parties seeking such
indemnification to the extent reasonably necessary to assist it in defending or
settling any action, proceeding or claim; provided, however, that such access
shall be conducted in such manner as not to interfere unreasonably with the
operation of the business of the indemnified party or parties and shall only
take place in the presence of a representative of the indemnified party or
parties unless otherwise so agreed and the indemnified party shall not be
required to participate in the defense of any claim to be indemnified hereunder
(except as otherwise expressly set forth herein), unless such participation is
otherwise required or reasonably necessary in the defense of any claim to be
indemnified hereunder.
(b) Any amount which is required to be paid by the Indemnitor
as a result of the failure of Purchaser to perform the obligations of Purchaser
under Section 3.2 or Section 3.3 (if any) or the failure of Seller or Seller
Parent to perform the obligations of Seller or Seller Parent under Section 3.3
(if any), shall be paid, after any such amount shall become due and payable
pursuant to this Agreement, within three (3) Business Days of receipt by the
Indemnitor of written request therefor from the Party seeking indemnification.
Any amount which is required to be paid by the Indemnitor as a result of the
failure of Purchaser to perform the obligations of Purchaser to fund the
Pipeline Loans as provided herein, and in accordance with the terms and
conditions of the applicable Pipeline Loan, shall be paid within five (5)
Business Days of receipt by the Indemnitor of written request therefor from
Seller or Seller Parent.
9.5 RECORD RETENTION.
From the date hereof until the expiration of the applicable statute of
limitations period, each Party to this Agreement agrees to retain all documents
with respect to all matters pertaining to which indemnity may be sought under
this Agreement. Before disposing of or otherwise destroying any such documents,
the possessor thereof shall give reasonable notice to such effect and deliver to
the other Party, at such Party's expense and upon its request, a copy of any
such documents. In addition, each Party to this Agreement agrees to use its
reasonable efforts to cause its employees to cooperate with and assist the
appropriate Indemnitor and indemnified party in connection with any claim,
action or proceeding for which indemnity is sought hereunder or with respect to
which an Indemnitor has elected to participate in the defense.
ARTICLE X
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TERMINATION
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10.1 TERMINATION OF AGREEMENT.
This Agreement shall terminate and be of no further force or effect as
between the parties hereto, except as otherwise provided in Section 10.4, upon
the occurrence of any of the following:
(a) Mutual consent of Seller, Seller Parent and Purchaser;
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(b) Immediately upon the expiration of thirty (30) days from
the date that Seller or Seller Parent has given notice to Purchaser of a breach
or default by Purchaser in the performance of any covenant, agreement,
representation, warranty, duty or obligation hereunder, provided, however, that
no such termination shall be effective if, within such thirty (30) day period,
Purchaser shall have substantially corrected and cured to the reasonable
satisfaction of Seller or Seller Parent the grounds for termination as set forth
in such notice of termination or Seller or Seller Parent shall have waived such
default or breach or shall have extended the time for such cure;
(c) Immediately upon the expiration of thirty (30) days from
the date that Purchaser has given notice to Seller or Seller Parent of a breach
or default by Seller or Seller Parent in the performance of any covenant,
agreement, representation, warranty, duty or obligation hereunder, provided,
however, that no such termination shall be effective if, within such thirty (30)
day period, Seller shall have substantially corrected and cured to the
reasonable satisfaction of Purchaser the grounds for termination as set forth in
such notice of termination or Purchaser shall have waived such default or breach
or shall have extended the time for such cure;
(d) If the Closing has not occurred on or before the date
which is 75 days after the Execution Date (i) by Seller if the reason therefor
is the failure of Purchaser to have satisfied the conditions set forth in
Article VIII on its part to have been satisfied including, without limitation,
Purchaser's failure to have obtained the Regulatory Approval or (ii) by
Purchaser if the reason therefor is the failure of Seller or Seller Parent to
have satisfied the conditions set forth in Article VII on its part to have been
satisfied; or
(e) the occurrence of the events set forth in Sections 7.13 or
7.14 entitling Purchaser to terminate this Agreement.
10.2 IMMATERIAL BREACH.
Notwithstanding anything to the contrary contained herein, no Party
hereto shall have the right to terminate this Agreement on account of its own
breach or because of any immaterial breach by any other Party hereto of any
covenant, agreement, representation, warranty, duty or obligation
hereunder.
10.3 WAIVER OF RIGHT TO TERMINATE.
Any Party may, at its election, waive its right to terminate this
Agreement under the foregoing provisions of this Article X.
10.4 EFFECT OF TERMINATION.
Except as otherwise provided in this Agreement, in the event of
termination of this Agreement, each Party shall be responsible for its own
expenses and neither Party shall be liable in damages to the other unless
termination results from the breach or default of this Agreement by one
of the Parties.
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ARTICLE XI
MISCELLANEOUS
11.1 NOTIFICATION OF MORTGAGORS, INSURANCE COMPANIES, ETC.
After the Regulatory Approval has been obtained but prior to the
Closing and in compliance with all applicable laws and regulations, Purchaser
and Seller shall jointly inform Originators, applicants, customers, mortgage
brokers and other Persons having relationships with Seller of the anticipated
Closing and Seller agrees to cooperate with Purchaser and to provide to
Purchaser the necessary and appropriate information so as to enable Purchaser to
provide the information and notices as described above. At Purchaser's option,
Seller agrees to do such mailings prior to Closing on Purchaser's behalf,
provided that the costs of same shall remain the liability of Purchaser.
11.2 SUPPLEMENTARY INFORMATION.
From time to time prior to and after the Closing Date, Seller or Seller
Parent shall furnish to Purchaser, to the extent permitted by law, such
information supplementary to the information contained in the documents and
schedules delivered pursuant hereto as Purchaser may reasonably require or which
may be necessary to enable Purchaser to conduct the Origination Business.
11.3 ACCESS TO INFORMATION.
(a) Prior to the Closing Date, Seller shall permit Purchaser
and its authorized representatives, accountants, independent appraisers and
counsel (collectively, "Representatives") to have access during regular business
hours, upon prior reasonable notice and in such manner as will not unreasonably
interfere with the conduct of Seller's business, to all of Seller's properties
and non-privileged books and records related to the Origination Business, and to
all other non-privileged information with respect to the business affairs,
financial condition, assets and liabilities of Seller related to the Origination
Business, as Purchaser may from time to time reasonably request. Seller will
permit Purchaser and its Representatives to make copies of such books, records,
and other documents at Purchaser's expense and upon the consent of Seller, which
shall not be unreasonably withheld or delayed, to discuss the business affairs,
condition (financial and otherwise), and assets of Seller related to the
Origination Business with such officers, employees and agents of Seller as
Purchaser or its Representatives deem reasonably necessary or appropriate. Any
such investigations and any information obtained by Purchaser shall not affect
any representations and warranties made by Seller hereunder.
(b) During the period following the Closing Date, Purchaser
shall permit Seller and its authorized representatives, accountants and counsel
(collectively, "Seller's Representatives") to have access to and copy during
regular business hours, upon prior reasonable notice and in such manner as will
not unreasonably interfere with the conduct of Purchaser's business, all of
Seller's books and non-privileged records transferred to Purchaser hereunder,
and to all other non-privileged information with respect to the business
affairs, financial condition, assets and liabilities of Seller related to the
Origination Business and pertaining to the period prior to the Closing Date, as
Seller
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may from time to time reasonably request in connection with any pending or
threatened litigation against Seller, tax audit or other governmental
investigation of Seller, or for any other valid business purpose not
inconsistent with the provisions of this Agreement (but which purposes shall not
include competitive purposes). Purchaser shall maintain such books, records and
information in such manner and location as to make them reasonably accessible to
Seller and Seller's Representatives for a period of at least equal to the
retention period of Seller as in effect immediately prior to the Closing Date.
Seller shall maintain, and shall cause Seller's Representatives and Affiliates
to maintain, the confidentiality of all books and records and other information
obtained from Purchaser hereunder and, after use, shall either return same or
destroy same and provide written confirmation to Purchaser of such destruction.
(c) Purchaser and Seller shall provide each other promptly
with information as to any significant developments in the performance of this
Agreement or in any document or agreement delivered in connection with this
Agreement and shall promptly notify the other if either discovers that any of
its representations and warranties contained in this Agreement or in any
document delivered in connection with this Agreement was or were not true and
correct in all material respects or becomes or became untrue or incorrect in any
material respect.
11.4 NO BROKER'S FEES.
Each Party represents and warrants to the other that, except as
disclosed in Section 4.5A or Schedule 5.5, it has made no agreement to pay any
agent, finder, or broker or any other representative, any fee or commission in
the nature of a finder's or broker's fee arising out or in connection with the
subject matter of this Agreement. Seller, Seller Parent and Purchaser shall each
be solely responsible for fees and commissions payable to the broker each has
retained in connection with the transaction. The Parties hereto covenant with
each other and agree to indemnify and hold each other harmless from and against
any such obligation or liability and any expense incurred by the other in
investigating or defending (including reasonable attorneys' fees) any Claim
based upon the other party's breach or alleged breach under this Section 11.4.
11.5 FURTHER ASSURANCES.
Seller, Seller Parent and Purchaser shall each, at any time and from
time to time, promptly, and upon the reasonable request of the other Party or
its representatives, execute, acknowledge, deliver or perform all such further
acts, deeds, assignments, transfers, conveyances, and assurances as may be
required for the better vesting and confirming to Purchaser and its successors
and assigns of title to the Origination Business, the Purchased Assets, or as
shall be necessary to effect the transactions provided for in this Agreement.
Seller shall execute such assignments of mortgage or other documents as are
necessary to transfer to Purchaser any Pipeline Loan or other loan that is
originated in the name of Seller after the Closing Date. Purchaser, Seller and
Seller Parent shall cooperate in good faith to consummate the transactions and
perform the covenants contemplated by this Agreement.
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11.6 SURVIVAL.
Except as limited by Section 9.3(a) of this Agreement, all warranties,
representations, covenants, indemnities and other agreements of the Parties to
this Agreement shall survive the Closing Date.
11.7 GOVERNMENTAL AUTHORITIES; LAWS AND SEVERABILITY.
The terms and provisions to this Agreement are expressly made subject
to applicable Federal and State statutes, laws, and rules and regulations
promulgated thereunder, as amended from time to time. In the event any provision
of this Agreement is deemed by a court of competent jurisdiction to be in
violation of any of the above, such provision shall be of no force or effect,
and this Agreement shall be interpreted as though such superseded provision were
not contained in this Agreement.
11.8 FORM OF PAYMENT TO BE MADE.
All payment to be made by a Party to another Party shall be made by
wiring immediately available funds to the accounts designated by the Party
receiving the payment.
11.9 PAYMENT OF COSTS.
Except as is otherwise specifically provided in this Agreement, whether
or not the Closing takes place or whether this Agreement is terminated, each
party shall pay its own costs and expenses in connection with this Agreement and
the transactions contemplated hereby, including, but not by way of limitation,
all regulatory fees, attorney's fees, investment banking fees, accounting fees
and other expenses.
11.10 NOTICES.
All notices, demands, and other such communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered in person or
by FedEx or similar overnight courier service, fees prepaid, or by facsimile
transmission (followed by telephone communication and hard copy) or otherwise
actually delivered, addressed as follows:
(a) If to Seller, to:
Mr. Richard M. Duncan
Intercounty Mortgage, Inc.
c/o Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, South Carolina 29223
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With a copy to:
Jordan D. Dorchuck, Esq.
Intercounty Mortgage, Inc.
c/o Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, South Carolina 29223
(b) If to Purchaser, to:
Ms. Catherine Califano
Senior Vice President and Chief Financial
Officer
CFS Bank
93-22 Jamaica Avenue
Woodhaven, New York 11421
With a copy to:
Omer S.J. Williams, Esq.
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
(c) If to Seller Parent, to:
Mr. Richard M. Duncan
Senior Executive Vice President
Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, South Carolina 29223
With a copy to:
Jordan D. Dorchuck, Esq.
Senior Vice President and General Counsel
Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, South Carolina 29223
The persons or addresses to which deliveries shall be made may change
from time to time by notice given pursuant to the provisions of this Section
11.10.
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11.11 SUCCESSORS AND ASSIGNS.
All terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective transferees,
successors, and assigns, provided, however this Agreement and all rights,
privileges, duties, and obligations of the parties hereto may not be assigned or
delegated by either Party hereto without the prior written consent of the other
Party, which may be withheld in the sole discretion of either Party to this
Agreement and provided further that in case of any such assignment or
delegation, the Party assigning or delegating also shall remain responsible as a
Party hereto. Notwithstanding the foregoing, however, (a) without any
requirement of obtaining the consent of Seller or Seller Parent or the execution
or filing of any paper or any further act on the part of any of the parties
hereto, any Person into which Purchaser may be merged or consolidated, or any
corporation resulting from any merger or consolidation to which Purchaser shall
be a party, shall be the successor of Purchaser hereunder, and (b) without any
requirement of obtaining the consent of Seller or Seller Parent, Purchaser may
assign its rights and privileges and delegate its duties and obligations
hereunder to a wholly owned subsidiary of Purchaser, provided that Purchaser
shall remain responsible as a Party hereto and such subsidiary assumes the
duties and obligations of Purchaser hereunder, and such assignee shall be the
successor to Purchaser hereunder.
11.12 THIRD-PARTY BENEFICIARIES.
Except as specifically set forth in this Agreement, each Party hereto
intends that this Agreement shall not benefit or create any right or cause of
action in or on behalf of any person other than the Parties hereto.
11.13 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one instrument.
11.14 GOVERNING LAW.
This Agreement is made and entered into in the State of New York and
the laws of that State (without regard to its conflicts of law principles) shall
govern the validity and interpretation hereof and the performance of the parties
hereto of their respective duties and obligations hereunder.
11.15 ENTIRE AGREEMENT; AMENDMENTS.
The making, execution, and delivery of this Agreement by the Parties
hereto have been induced by no representations, statements, warranties, or
agreements other than those herein expressed. This Agreement embodies the entire
understanding of the Parties, and there are no further or other agreements or
understandings, written or oral, in effect between the Parties relating to the
subject matter hereof. This instrument and the agreements contained herein may
be amended or modified only by an instrument of equal formality signed by the
Parties or their duly authorized agents.
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11.16 CONSENTS OF THIRD PARTIES.
Any consent necessary in connection with the consummation of the
transaction shall be in writing and in form and substance reasonably
satisfactory to Purchaser. A consent shall be deemed necessary if, in the
reasonable judgment of Purchaser or its counsel, rights may not be effectively
transferred or the transaction otherwise consummated as provided herein without
such consent.
11.17 CONFIDENTIALITY.
(a) The Parties hereto agree to maintain all information
regarding the negotiation and execution of this Agreement, the consummation of
the Closing and all information obtained pursuant hereto in strict confidence
and shall not disclose any such information, except such information as may be
in the public domain, unless required by law or by the financial or other
reporting standards applicable to the parties and/or their Affiliates.
(b) Except as otherwise specifically provided in this
Agreement, prior to the Closing Date, neither Purchaser, Seller nor Seller
Parent shall, except as otherwise required by law or by the financial or other
reporting standards applicable to the parties and/or their Affiliates, make any
public announcements or announcements to employees or customers with respect to
this Agreement or the transactions contemplated hereby, without the consent of
Seller, Seller Parent and Purchaser. Purchaser, Seller and Seller Parent agree
that each shall keep confidential the Purchase Price and any adjustments
thereto, and other terms and conditions of this Agreement, except as otherwise
required by law or by the financial or other reporting standards applicable to
the parties and/or their Affiliates or except to Investors and Regulatory
Authorities with jurisdiction over either.
(c) Purchaser shall cause all materials and other information
(other than information which is a matter of public knowledge or is provided in
other sources readily available to the public) pertaining to Seller and Seller
Parent obtained by Purchaser, its counsel or other authorized representatives in
connection with the negotiation and performance of this Agreement to be held in
confidence, not to be disclosed or disseminated to any Person not an employee or
authorized representative of Purchaser without the prior written consent of
Seller or Seller Parent (except as may be required by law or as may be necessary
to obtain the Regulatory Approval), and shall cause all copies of all such
materials and other information to be returned to Seller or Seller Parent or
destroyed promptly upon any termination of this Agreement without the Closing
having been held. Purchaser shall cause its representatives and agents to comply
with the provisions of this Section 11.17. Notwithstanding anything contained
herein to the contrary, the obligation of Purchaser to maintain confidentiality
with respect to any matter related to the Purchased Assets, Assumed Liabilities
or the Origination Business shall terminate effective as of the Closing Date.
(d) Seller and Seller Parent shall cause all materials and
other information (other than information which is a matter of public knowledge
or is provided in other sources readily available to the public) pertaining to
Purchaser obtained by Seller or Seller Parent, its counsel or other authorized
representatives to be held in confidence, not to be disclosed or disseminated to
any Person not an employee or authorized representative of Seller or Seller
Parent without the prior written consent of Purchaser (except as may be required
by law), and shall cause all copies of all
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such materials and other information to be returned to Purchaser or destroyed
promptly upon any termination of this Agreement without the Closing having been
held or upon the Closing occurring. Seller and Seller Parent shall cause its
representatives and agents to comply with the provisions of this Section 11.17.
11.18 PRESS RELEASES.
No press release will be issued relating to the transactions
contemplated by this Agreement without prior approval of the Parties hereto.
However, any Party or Purchaser Parent may issue at any time any press release
it believes, on the advice of its counsel, it is obligated to issue to avoid
liability under any law relating to disclosures, but the party issuing such a
press release shall make every reasonable effort to give the other party prior
notice and an opportunity to participate in such release and any press release
shall conform to the confidentiality provisions of Section 11.17.
11.19 EXHIBITS AND SCHEDULES AND HEADINGS.
All Exhibits and Schedules referred to herein or attached hereto shall
constitute a part of this Agreement. Section, paragraph and subparagraph
headings and the table of contents preceding this Agreement are not to be
considered part of this Agreement, are for convenience and reference only, and
are not to be deemed to be full or accurate descriptions of the contents of any
paragraph or subparagraph.
11.20 QUALIFICATIONS TO REPRESENTATIONS.
(a) In no event shall an action or inaction of Seller, Seller
Parent or Purchaser be conclusively deemed to constitute bad faith, misconduct,
misrepresentation or fraud by Seller, Seller Parent or Purchaser, as the case
may be, solely as a result of Seller, Seller Parent or Purchaser, as the case
may be, having breached any of its representations and warranties.
(b) The term "to the best of Seller's knowledge," whenever
used in Article IV hereof, shall mean (i) the actual knowledge of any of those
Persons listed on Schedule 11.20(b) attached hereto, or (ii) that knowledge that
any such Person listed in Schedule 11.20(b) attached hereto should have obtained
upon reasonable examination of the applicable books, records and accounts of
Seller or upon any other inquiry or examination appropriate under the
circumstances.
(c) The term "to the best of Seller Parent's knowledge,"
whenever used in Article IVA hereof, shall mean (i) the actual knowledge of any
of those Persons listed on Schedule 11.20(c) attached hereto, or (ii) that
knowledge that any such Person listed in Schedule 11.20(c) attached hereto
should have obtained upon reasonable examination of the applicable books,
records and accounts of Seller Parent or upon any other inquiry or examination
appropriate under the circumstances.
(d) The knowledge of Purchaser whenever referred to in Article
V hereof, shall mean (i) the actual knowledge of any of those Persons listed on
Schedule 11.20(d) attached hereto, or (ii) that knowledge that any such Person
listed in Schedule 11.20(d) attached hereto should have
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obtained upon reasonable examination of the applicable books, records and
accounts of Purchaser or upon any inquiry or examination appropriate under the
circumstances.
11.21 MATERIAL ADVERSE CHANGE.
For the purpose of this Agreement, a material adverse change (material
adverse effect in the case of Sections 4.27 and 4.8A) shall not be deemed to
include (i) except in the case of Section 4.5(a)(ii), a material adverse change
(material adverse effect in the case of Sections 4.27 and 4.8A) arising from or
caused by general economic or industry trends or developments.
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IN WITNESS WHEREOF, each of the undersigned parties to this Agreement
has caused this Agreement to be duly executed in its name by one of its
authorized officers, all as of the date first above written.
CFS BANK
Purchaser
By: /s/ Catherine Califano
---------------------------------
Name: Catherine Califano
Title: Senior Vice President
INTERCOUNTY MORTGAGE, INC.
Seller
By: /s/ Richard M. Duncan
---------------------------------
Name: Richard M. Duncan
Title: Secretary and Treasurer
RESOURCE BANCSHARES
MORTGAGE GROUP, INC.
Seller Parent
By: /s/ Richard M. Duncan
---------------------------------
Name: Richard M. Duncan
Title: Senior Executive Vice
President
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