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STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of May 19, 1998 at Walnut Creek, California,
among Finet Holdings Corporation, a Delaware corporation ("Buyer") and Xxxx
X. Xxxxxx, individually and as Trustee utd 10/28/93, Xxxxx X. Xxxxx,
individually and as Trustee utd 2/22/90 and Xxxxxx X. Xxxxxxx, individually
and as Trustee utd 8/15/89 (collectively "Shareholders") and MICAL
Mortgage, Inc., a California corporation ("Corporation").
RECITALS
Shareholders have represented that they own all of the issued and
outstanding stock of Corporation. Buyer desires to purchase from
Shareholders and Shareholders desire to sell to Buyer all of the
outstanding stock of Corporation (the "Shares"). Corporation desires that
this transaction be consummated.
In consideration of the mutual covenants, agreements, representations,
and warranties contained in this Agreement, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1. Tax-Free Reorganization. Shareholders and Buyer adopt this
Agreement as a plan of reorganization under the Internal Revenue Code
Section 368(a)(1)(B).
1.2. Purchase and Sale of Shares. Subject to the terms of and
conditions set forth in this Agreement, on the Closing Date, Shareholders
will transfer, convey and deliver the Shares to Buyer, and Buyer will
acquire the Shares from Shareholders. At Closing Buyer will execute and
deliver to Shareholders an irrevocable proxy to vote the Shares for all
purposes until such time as all state licensing requirements applicable to
the conduct of the Corporation's business as contemplated by the Buyer have
been complied with by the parties hereto.
2. CONSIDERATION
2.1. Purchase Price. The purchase price to be paid by Buyer to
Shareholders in exchange for the Shares shall be 552,430 shares of Buyer's
common stock (the "Purchase Price Stock"), adjusted as set forth below.
2.2. Payment of Purchase Price. Subject to the Pledge as provided in
Section 2.3, the Buyer will issue and deliver an aggregate of 552,430
shares of the Purchase Price Stock to the Shareholders (as defined in
Section 11) in the amounts set forth on Exhibit A hereto according to a
deferred payment schedule to be mutually agreed upon by the parties. Of
such shares, 100,000 will be pledged by Shareholders as provided in Section
2.3 below.
2.3. Pledge. As security for Shareholders' obligations set forth in
Section 13.3 hereof, Shareholders shall execute and deliver to Buyer at the
Closing a pledge and security agreement in the form of Exhibit B hereto
(the "Pledge Agreement"), giving Buyer a first security interest in 100,000
shares of the Purchase Price Stock as provided in the Pledge Agreement.
2.4. Adjustment to Purchase Price. The Purchase Price Stock shall be
subject to an adjustment in the amount of 20,460 shares (the "Reserved
Shares") pending resolution of an action by the California Department of
Transportation ("CalTrans"), among others, requiring Corporation to make
certain improvements to the drainage system at 0000 Xxxxxx Xxxxxx Xxxx (the
"CalTrans Action"). In the event the CalTrans Action is settled or the
property remediated for an
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amount that is less than $70,000, the amount of Reserved Shares to be
issued and delivered shall be reduced by the settlement or remediation
amount. In the event the CalTrans Action is settled or the property
remediated for an amount that is more than $70,000, none of the Reserved
Shares will be issuable. For purposes of this adjustment, the Reserved
Shares shall be valued at an amount equal to the average Closing price of
Buyer's common stock over the immediately preceding ten (10) trading days
prior to adjustment. The Closing price on any trading day shall be the last
reported Closing bid quotation for such day of the stock on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ").
All Purchase Price adjustments shall be applied pro rata to the Sellers in
accordance with their percentage ownership set forth in Exhibit A hereto.
2.5. Registration Rights. Buyer agrees to provide Shareholders with
registration rights covering the Purchase Price Stock pursuant to a
registration rights agreement in the form of Exhibit C hereto (the
"Registration Rights Agreement").
3. WARRANTIES OF SHAREHOLDERS
Shareholders, jointly and severally, warrant and represent to Buyer as
follows:
3.1. Due Organization; Good Standing. Corporation is duly organized,
valid and existing, and in good standing under the laws of the state of
California, has all necessary corporate powers, licenses, authorizations,
and permits to own its properties, and to conduct its businesses now owned
and operated by it, and is duly qualified to do intrastate business and is
in good standing in those jurisdictions set forth on Schedule 3.1 hereto.
These are the only jurisdictions in which the nature of the Corporation's
business or of its properties makes such qualification necessary.
3.2. Capitalization. The authorized Stock of the Corporation consists
of five thousand (5,000) shares of common stock, having a par value of
$100.00 per share, of which one thousand two hundred sixty seven (1,267)
shares (the Shares) are issued and outstanding. All the Shares are validly
issued, fully paid and not assessable, and such shares have been so issued
in full compliance with all federal and state securities laws. There are no
outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating Corporation to
issue or to transfer from treasury any additional shares of its capital
stock of any class.
3.3. Title to and Ownership of Shares. Shareholders are the owners,
beneficially and of record, of all of the Shares free and clear of all
liens, encumbrances, security agreements, equities, options, claims,
charges, and restrictions. Shareholders have the full power to transfer the
Shares to Buyer without obtaining the consent or approval of any other
person or governmental authority.
3.4. Subsidiaries and Investments. Corporation does not own, directly
or indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, business, trust, or other entity.
3.5. Financial Statements. Schedule 3.5(i) hereto sets forth the
balance sheets of the Corporation as of April 30, 1996, and April 30, 1997,
and the related statements of income and retained earnings for the fiscal
years ending on those dates, audited by Peat Marwick, Corporations'
independent public accountants, whose opinions with respect to those
Financial Statements appear in that schedule. Schedule 3.5(ii) hereto sets
forth the unaudited balance sheets of the Corporation as of February 28,
1998 together with related unaudited statements of income and retained
earnings for eleven month period ending on that date, certified by the
individual Shareholders as accurately reflecting the financial condition of
the Corporation for those periods and accurately reflecting all information
normally reported to Corporations' independent public accountants for the
preparation of Corporation's Financial Statements. The Financial Statements
of Schedules 3.5(i) and 3.5(ii) as well as the Closing Balance Sheet
(defined herein) are collectively referred to herein as the "Financial
Statements". The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently followed by
Corporation throughout the periods indicated, and fairly present
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the financial position of Corporation on the respective dates of the
balance sheets included in the Financial Statements, and the results of its
operations for the respective periods indicated.
3.6. No Change in Financial Condition. Since February 28, 1998, there
has not been any change in the financial condition or operations of
Corporation, except changes in the ordinary course of business, or as is
set forth in Schedule 3.6 hereto.
3.7. Audited Closing Balance Sheet; Closing Date Stockholders' Equity.
As soon as practicable after the Closing Date, Buyer shall cause Xxxxxx X.
Xxxxx & Co., or another nationally recognized firm of independent public
accountants, to audit the books and records of the Corporation as of April
30, 1998 ("Closing Balance Sheet"). The Closing Balance Sheet shall (i)
present fairly, in accordance with GAAP, consistently applied, the
financial position of the Corporation as of the Closing Date, and (ii) make
adequate provisions for all reserves, liabilities and obligations (fixed or
contingent) of the Corporation as of the Closing Date, to the extent such
liabilities, alone or in the aggregate, are required to be reflected or
reserved against in accordance with GAAP, consistently applied. Such
Closing Balance Sheet shall be prepared and delivered not later than June
30, 1998.
3.8. No Liabilities. Corporation has no debt, liability, or obligation
of any nature, whether accrued, absolute, contingent, or otherwise, and
whether due or to become due, that is not reflected or reserved against in
the Corporation's balance sheet as of February 28, 1998, included in the
Financial Statements or set forth in Schedule 3.8 hereto, except for (1)
those that may have been incurred after the date of that balance sheet and
(2) those that are not required by generally accepted accounting principles
to be included in a balance sheet. All debts, liabilities, and obligations
incurred after that date were incurred in the ordinary course of business
and are usual and normal in amount both individually and in the aggregate.
3.9. Taxes. Within the times and in the manner prescribed by law,
Corporation has filed all federal, state and local tax returns required by
law and have paid all taxes, assessments, and penalties due and payable.
All such tax returns were true, correct and complete in all material
respects. The provisions for taxes reflected in Corporation's Closing
Balance Sheet are adequate for federal, state, county, and local taxes for
the period ending on the date of that balance sheet and for all prior
periods, whether disputed or undisputed. There are no present disputes
about taxes of any nature payable by Corporation. Corporation has never
filed, and will not file on or before the Closing Date, any consent under
Internal Revenue Code Section 341(f). Corporation has paid or deposited,
within the period prescribed by law, all payroll taxes that relate to
periods before the Closing Date.
3.10. Title. Except where Corporation uses any properties and assets
pursuant to contracts and other agreements with third parties in the
ordinary course of its business, Corporation has good and marketable title
to, or a valid leasehold interest in, all of its properties and assets (the
"Assets"), including, without limitation, all assets and property of
Corporation reflected on its Closing Balance Sheet, referred to in Section
3.5, and all assets and property thereafter acquired by Corporation before
the Closing Date, except those assets disposed of in the ordinary course of
its business. All such Assets are now and will be free and clear of
restrictions on or conditions to transfer or assignment and free and clear
of mortgages, liens, pledges, charges, encumbrances, equities or
restrictions, except for (1) those disclosed in Corporation's balance sheet
as of February 28, 1998, or in Schedule 3.14 hereto; (2) the lien of
current taxes not yet due and payable; and (3) possible minor matters that,
in the aggregate, are not substantial in amount and do not materially
detract from or interfere with the present or intended use of any of the
Assets or materially impair business operations.
3.11. Real Property. Corporation owns no real property other than as
set forth on Schedule 3.11. Schedule 3.11 lists all real property leased or
subleased to Corporation (the "Premises") under terms of those leases set
forth in Schedule 3.11 hereto, copies of which have been, or will prior to
the Closing Date be, disclosed to Buyer. Corporation is not in default or
in arrears in any material respect under any lease, except as is set forth
in Schedule 3.11. All premises occupied by Corporation and all of the
tangible personal property of Corporation that is necessary to the
operation of
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their businesses is in good operating condition and repair, ordinary wear
and tear excepted. Corporation is in possession of all Premises leased to
it from others. Neither Shareholders, nor any officer, director, or
employee of Corporation, nor any spouse, child, or other relative of any of
these persons, owns, or has any interest, directly or indirectly, in any of
the property owned by or leased to Corporation or any copyrights, patents,
trademarks, tradenames, or trade secrets licensed by Corporation except as
is set forth on Schedule 3.11. Corporation does not occupy any real
property in violation of any law, regulation or decree.
3.12. Absence of Specified Changes. Since February 28, 1998, there
has not been any of the foregoing, except as is set forth in Schedule 3.12
hereto:
(a) Transaction by Corporation, except in the ordinary course of
business as conducted on that date;
(b) Capital expenditure by Corporation exceeding ten thousand
($10,000) dollars;
(c) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Corporation;
(d) Destruction, damage to, or loss of any asset of the Corporation
(whether or not covered by insurance) that materially and adversely affects
the financial condition, business, or prospects of the Corporation;
(e) Labor trouble or other event or condition of any character
materially and adversely affecting the financial condition, business,
assets or prospects of the Corporation;
(f) Change in accounting methods and practices, including, without
limitation, any change in depreciation or amortization policies or rates by
Corporation;
(g) Revaluation by the Corporation of any of its assets;
(h) Declaration, setting aside, or payment of a dividend or any
other distribution in respect of the capital stock of the Corporation, or
any direct or indirect redemption, purchase or other acquisition by
Corporation of any of its shares of capital stock;
(i) Increase in the salary or other compensation payable or to
become payable by the Corporation to any of its officers, directors, or
employees, or the declaration, payment, or commitment, or obligation of any
kind for the payment, by Corporation, of a bonus or other additional salary
or compensation to any such person;
(j) Sale or transfer of any asset of the Corporation except in the
ordinary course of business;
(k) Amendment or termination of any contract, agreement or license
to which Corporation is a party, except in the ordinary course of business;
(l) Loan by Corporation to any person or entity, or guaranty by
Corporation of any loan;
(m) Mortgage, pledge, or other encumbrance of any asset of the
Corporation;
(n) Waiver or release of any right or claim of Corporation, except
in the ordinary course of business;
(o) Other event or condition of any character that has, or might
reasonably have a material and adverse effect on the financial condition,
business, assets or prospects of the Corporation;
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(p) Issuance or sale by Corporation of any shares of its capital
stock of any class, or of any of its other securities; or
(q) Agreement by Corporation to do any of the things described in
the preceding clauses of this Section 3.12.
3.13. Agreement Will Not Cause Violation. Except as set forth on
Schedule 3.13 hereto, the consummation of the transactions contemplated by
this Agreement will not result in or constitute any of the following: (i) a
breach of any term or provision of this Agreement; (ii) a default of an
event that, with notice or lapse of time or both, would be a default,
breach, or violation of the Articles of Incorporation or bylaws of
Corporation or any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust of other
agreement, instrument, or arrangement to which Shareholders, Corporation or
any Subsidiary is a party or by which any of them or the property of any of
them is bound; (iii) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other
obligation of Corporation; or (iv) the creation or imposition of any lien,
charge, or encumbrance on any of the properties of Corporation. Except as
set forth in Schedule 3.13 hereto, neither Corporation nor Shareholders
needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any authority in order for the
parties to consummate the transactions contemplated by this Agreement.
3.14. Equipment, Furniture, etc. Schedule 3.14 hereto is a complete
and accurate schedule describing and specifying the location of all
equipment, furniture, supplies, and other tangible personal property owned
by, whether in possession or not of, the Corporation, or used by
Corporation in connection with its business. The property listed in
Schedule 3.14 constitutes all such tangible personal property necessary for
the conduct by Corporation of its business now conducted. No such property
is held under any lease, security agreement, conditional sales contact, or
other title, retention or security arrangement, or is located other than in
the possession of Corporation, except as disclosed in Schedule 3.14.
3.15. Books and Records. Corporation has disclosed to Buyer and made
available for Buyer's inspection, or will do so prior to Closing Date, all
books, records, files and other documents and information, whether stored
by document, electronically or otherwise, concerning all transactions,
constituting the business of Corporation, including, without limitation,
records of all debts, obligations and liabilities and of all accounts
receivable held by Corporation.
3.16. Tradenames, Trademarks, etc. Schedule 3.16 hereto is a schedule
of all trade names, trademarks, service marks, and copy rights and their
registrations, owned by Corporation or in which it has any rights or
licenses, together with a brief description of each. Corporation and
Shareholders have no knowledge of any infringement or alleged infringement
by others of any tradename, trademark, service xxxx, or copyright.
Corporation has not infringed, and is not now infringing on any tradename,
trademark, service xxxx, or copy right belonging to any other person, firm,
or corporation. Except as set forth in Schedule 3.16, Corporation is not a
party to any license, agreement, or arrangement, whether as licensor,
licensee, or franchisor, franchisee, or otherwise, with respect to any
trademarks, service marks, trade names, or applications for them, or any
copyrights. Corporation owns, or holds adequate licenses or other rights to
use, all trademarks, tradenames, service marks, and copy rights necessary
for its respective businesses as now conducted by it (including without
limitation those listed in Schedule 3.16), and that use does not, and will
not, conflict with, infringe on, or otherwise violate any rights of others.
Corporation has the right to sell or assign to Buyer all owned trademarks,
tradenames, service marks, and all such licenses and other rights.
3.17. Trade Secrets. Schedule 3.17 hereto is a complete list, without
extensive or revealing descriptions, of Corporation's trade secrets,
including all customer lists, processes, know how, computer programs and
routines, and other technical data. The specific location of each trade
secrets' documentation, including its complete description, specifications,
charts, procedures, and other material relating to it, is also set forth in
that schedule. Each trade secret's documentation is current, accurate, and
sufficient in detail and content to identify and explain it and to allow
its full and proper use by Buyer without reliance on the special knowledge
or memory of others. Corporation is a sole owner of each of these trade
secrets, free and clear of any liens, encumbrances, restrictions, or legal
or equitable claims of others, except as specifically stated in Schedule
3.17. Corporation has taken all reasonable security measures to protect the
secrecy, confidentiality, and value of these trade secrets; any of their
employees and other persons who, either alone or in concert with others
have knowledge of or access to these secrets, or who have knowledge of or
access to information relating to them, have been put on notice and, if
appropriate, have entered into agreements that these secrets are
proprietary to the Corporation and are not to be divulged or misused. All
these trade secrets are presently valid and protectable and are not part of
the public knowledge or literature; they have not, to Shareholder's
knowledge, been used, divulged, or appropriated for the benefit of any past
or present employees or other persons, or to the detriment of Corporation.
3.18. [Reserved]
3.19. Insurance Policies. Schedule 3.19 hereto is a description of all
insurance policies held by Corporation concerning its businesses and
properties. All these policies are in their respective principal amounts as
set forth in Schedule 3.19. Corporation has maintained and now maintains
(1) insurance on all of its assets and businesses of a type customarily
insured, covering property damage and loss of income by fire or other
casualty, and (2) adequate insurance protection against all liabilities,
claims and risks against which it is customary to insure. Corporation is
not in default with respect to payment of premiums on any such policy.
Except as set forth in Schedule 3.19, no claim is pending under any such
policy.
3.20. Burdensome Agreements. Corporation is not a party to, nor is
the Corporation either bound by, any agreement not entered into in the
ordinary course of business, or any agreement that is unusual in nature,
duration, or amount (except the agreements listed in Schedule 3.20, copies
of which have been furnished to or made available to Buyer.) There is no
default or event that, with notice, a lapse of time, or both, would
constitute a default by any party to any of these agreements. Corporation
has not received notice that any party to any of these agreements intends
to cancel or terminate any of these agreements or to exercise or not
exercise any options under any of these agreements. Corporation is not a
party to, nor is the property of Corporation bound by, any agreement that
is materially adverse to the businesses, properties or financial condition
of Corporation.
3.21. Compliance with Laws. Corporation has not received notice of any
violation of any applicable federal, state or local statute, law, or
regulation (including any applicable building, zoning, environmental
protection, or other law, ordinance or regulation) affecting its properties
or the operation of its business; and to the best of the knowledge of
Shareholders and Corporation there are no such violations.
3.22. Litigation. Except as set forth in Schedule 3.22, there is no
pending, or, to the best knowledge of Shareholders and Corporation,
threatened, suit, action, arbitration, or legal, administrative, or other
proceeding or governmental investigation against or affecting Corporation,
or any of its businesses, assets or financial conditions. The matters set
forth in Schedule 3.22, if decided adversely to Corporation, will not
result in a material adverse change in the business, assets, or financial
condition of Corporation, except as is set forth in Schedule 3.22 attached
hereto. Shareholders have furnished or made available to Buyer copies of
all relevant court papers and other documents relating to the matters set
forth in Schedule 3.22. Corporation is not in default with respect to any
order, writ, injunction, or decree of any federal, state, local or foreign
court, department, agency, or instrumentality. Except as set forth in
Schedule 3.22, neither Corporation nor Shareholders are presently engaged
in any legal action to recover money due to any of them or damages
sustained by any of them.
3.23. Agreement Will Not Cause Breach or Violation. The consummation
of the transactions contemplated by this Agreement will not result in or
constitute any of the following:
(a) a breach of any term or provision of this Agreement;
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(b) a default or an event that, with notice, lapse of time, or
both, would be a default, breach, or violation of the articles of
incorporation or bylaws of Corporation or any lease, license, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of
trust, or other agreement, instrument, or arrangement to which any
Shareholder or Corporation is a party or by which any of them or the
property of any of them is bound;
(c) an event that would permit any party to terminate any agreement
or to accelerate the maturity of any indebtedness or other obligation of
Corporation; or
(d) the creation or imposition of lien, charge, or encumbrance on
any of the properties of Corporation.
3.24. Power of Shareholders. Shareholders have the rights, power,
legal capacity and authority to enter into and perform their respective
obligations under this Agreement; and no approvals or consent of any
persons other than Shareholders are necessary in connection with it, other
than as may be listed on Schedule 3.13, and which have been obtained by the
Closing Date. This Agreement is, and as of the Closing Date, the other
agreements will be, the legal, valid and binding obligations of
Shareholders enforceable in accordance with their respective terms.
3.25. Authority to Execute and Perform Agreements; Due
Authorization; Enforceability. Corporation has all requisite power,
authority and approvals required to enter into, execute and deliver this
Agreement, and all other agreements executed and delivered in connection
herewith, and to perform fully its obligations hereunder and thereunder.
The execution and delivery of this Agreement by Corporation shall have been
duly authorized by all necessary corporate action. This Agreement is, and
as of the Closing Date, the other agreements will be, the legal, valid and
binding obligations of Corporation enforceable in accordance with their
respective terms
3.26. Corporate Records. Shareholders have furnished to Buyer for its
examination: (1) copies of the articles of incorporation and bylaws of
Corporation; (2) the minute books of Corporation containing all records
required to be set forth of all proceedings, consents, actions, and
meetings of the Shareholders and boards of directors of Corporation; (3)
all permits, orders, and consents issued by any governmental authority of
the State of California regarding the Corporation, or any security of
either of them, and all applications for such permits, orders, and
consents; and (4) the stock transfer books of Corporation setting forth all
transfers of any capital stock.
3.27. Officers, Directors, Employees and Agents. Schedule 3.27 is a
list of the names and addresses of all officers, directors, employees, and
agents of Corporation stating the rates of compensation payable to each,
and their dates of hiring.
3.28. Employment Agreements. Schedule 3.28 is a list of all
Corporation's material employment contracts; collective bargaining
agreements; and pension, bonus, profit sharing, stock option or other
agreements providing for employee remuneration or benefits. To the best of
Shareholders' knowledge, Corporation is not in default under any of these
agreements. There have been no claims of defaults, and to the best
knowledge of Corporation or Shareholders, there are no facts or conditions
that if continued, or on notice, will result in a default under these
contracts or arrangements. There is no pending or, to Corporation's or
Shareholders' knowledge, threatened labor dispute, strike, or work stoppage
affecting Corporation's business. Corporation has complied with all
applicable laws for each of their respective employee benefit plans,
including the provisions of the Employee Retirement Income Security Act of
1974 (ERISA) if and to the extent applicable. There are no threatened or
pending claims by or on behalf of any such benefit plan, by or on behalf of
any employee covered under any such plan, or otherwise involving any such
benefit plan, that allege a breach of fiduciary duties or in violation of
other applicable state or federal laws; nor is there, to Shareholders'
knowledge, any basis for such a claim. Except as is set forth in Schedule
3.28, Corporation has not entered into any deferred compensation
arrangement or any severance or similar arrangement with any present or
former employee that will result in any obligation, absolute or contingent,
of Buyer or Corporation, to make any payment to any present or former
employee following termination of employment. Schedule 3.28 contains a
complete list of all employee welfare benefit
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plans, pension plans, deferred or incentive compensation plans, bonus
plans, stock option plans, employee stock purchase plans, retirement plans,
health plans, insurance plans, travel allowance plans, profit sharing
plans, and any other employee benefit or fringe benefit plan, agreement,
arrangement, or commitment, other than normal payroll practices and
policies concerning holidays, vacations, and salary continuation during
short absences for illness or other reasons, maintained by Corporation.
True and complete copies of all documents relating to each plan or
arrangement described in Schedule 3.28 have been made available by
Corporation to Buyer for Buyer's review, or will be so made available prior
to the Closing Date.
3.29. Powers of Attorney; Bank Accounts. Schedule 3.29 hereto lists:
(1) the names and addresses of all persons holding a power of attorney on
behalf of Corporation and (2) the names, and addresses of all banks or
other financial institutions in which Corporation has an account, deposit,
or safe deposit box, with the account numbers and the names of all person
authorized to draw on these accounts or deposits or to have access to these
boxes.
3.30. Environmental Matters. As of the date of this Agreement and the
Closing Date, Corporation is not, and will not be, in violation of any
federal, state or local law, ordinance or regulation relating to industrial
hygiene, soil, water, or environmental conditions on, under or about any
premises occupied or used by Corporation during the period that Corporation
has occupied any such property, there has been no use, presence, disposal,
storage, generation, release, or threatened release (as those terms are
used in the Environmental Laws, and hereinafter collectively referred to as
"Use") of Hazardous Materials on, from or under such premises, except as
previously disclosed by Corporation or Shareholders to Buyer in writing.
Shareholders have no knowledge of any use of Hazardous Materials on, from
or under such premises which may have occurred prior to the Corporation
taking possession of such premises, except as previously disclosed to Buyer
in writing. During the period that Corporation has occupied such premises,
there has been no enforcement action or litigation brought or threatened
against the Corporation, nor any settlements reached by or with any party
or parties alleging the Use of Hazardous Materials on, from or under such
premises, except as previously disclosed to Buyer in writing. For purposes
hereof, "Environmental Laws," shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 1901 et seq.;
the Hazardous Materials Transportation Act, 39 U.S.C. 1801 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.; the Federal
Clean Water Act, 33 U.S.C. 1251 et seq.; and any other federal, state or
local law, statute, code, regulation, ordinance or other mode of governance
concerning Hazardous Materials. "Hazardous Materials" shall mean any and
all flammable, explosive, asbestos, radioactive material, hazardous waste,
toxic substance or related material, including but not limited to those
materials and substances defined as "hazardous substances", "hazardous
materials", "hazardous waste" or "toxic substance" in the Environmental
Laws.
3.31. No Defaults. Corporation is not in default under any agreement,
lease, indenture, mortgage, deed of trust or instrument to which it is a
party or by which it may be bound or subject, concerning any premises
occupied or in the possession of Corporation, or to which Corporation holds
any rights to any interest or use.
3.32. Full Disclosure. None of the warranties or representations made
by Shareholders herein, or made in any certificate or memorandum furnished
or to be furnished by any of them or on their behalf in relation to this
transaction, contains or will contain any untrue statement of a material
fact, or omits to state any material fact necessary to make the statements
made.
4. BUYER'S REPRESENTATIONS AND WARRANTIES
4.1. Buyer represents and warrants that:
(a) Buyer is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware. The execution and
delivery of this Agreement and the consummation of this transaction by
Buyer have been duly
237
authorized, and no further corporate authorization is necessary on the part
of Buyer.
(b) Buyer need make or obtain no consent, approval, or authorization
of, or declaration, filing, or registration with, any federal or state
governmental or regulatory authority in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement.
(c) At the Closing, Buyer knows of no event, liability or material
change in Buyer's business or its prospects that would have a materially
adverse affect on the trading price of Buyer's stock.
(d) Buyer is acquiring the Shares hereunder for its own account for
investment purposes only and not with a view to, or resale in connection
with any public distribution thereof or with any present intention of
selling, distributing or otherwise disposing the Shares.
5. SHAREHOLDER'S OBLIGATIONS BEFORE CLOSING
5.1. Shareholders covenant that, from the date of this Agreement until
the Closing:
(a) Buyer and its counsel, accountants and other representatives
will have full access during normal business hours to all properties,
books, accounts, records, contracts and documents of or relating to
Corporation. Shareholders and Corporation will furnish or cause to be
furnished to Buyer and its representatives all data and information
concerning the business, finances, and properties of Corporation that may
reasonably be requested.
(b) Corporation will carry on its businesses and activities
diligently and in substantially the same manner as they previously have
been carried out and will not institute any unusual or novel method of
operation, business practice, management, accounting or operation that vary
materially from those methods used by Corporation as of the date of this
Agreement.
(c) Corporation will use its best efforts, without making any
commitments on behalf of Buyer, to preserve its respective business
organizations in tact; to keep available to Corporation its present
officers and employees; and to preserve its present relationships with
lenders, investors, brokers, customers, and others having business
relationships with it.
(d) Corporation will not: (1) amend its articles of incorporation
or bylaws; (2) issue any shares of its capital stock; (3) issue or create
any warrants, obligations, subscriptions, options, convertible securities,
or other commitments under which any additional shares of its capital stock
of any class might be directly or indirectly authorized, issued, or
transferred from treasury; or (4) agree to do any of the acts listed above.
(e) Corporation will continue to carry its existing insurance,
subject to variations and amounts required by the ordinary operations of
its businesses. At the request of Buyer and at Buyer's sole expense, the
amount of insurance against fire and other casualties that, at the date of
this Agreement, Corporation carries on any of its properties or in respect
of its operations will be increased by the amount or amounts Buyer will
specify.
(f) Corporation will not agree to: (1) make any change in
compensation payable or to become payable by it to any officer, employee,
sales agent, or representative; (2) make any change in benefits payable to
any officer, employee, sales agent, or representative under any bonus or
pension plan or other contract or commitment; or (3) modify any collective
bargaining agreement to which it is a party or by which it may be bound.
(g) Corporation will not agree to do, without Buyer's consent, any
of the following: (1) enter into any contract, commitment or transaction
not in the usual and ordinary course of its business; (2) make any capital
238
expenditures in excess of $5,000 for any single item or enter into any
lease of capital equipment or real or personal property under which the
annual lease charge is in excess of $5,000; or (3) sell or dispose of any
capital asset with a net book value exceeding $5,000.
(h) Corporation will not: (1) declare, set aside, or pay any
dividend or make any distribution in respect of its capital stock; (2)
directly or indirectly purchase, redeem or otherwise acquire any shares of
its capital stock; (3) enter into any agreement obligating it to do any of
the foregoing prohibited acts.
(i) Corporation will not, or will not agree to: (1) pay any
obligation or liability, fixed or contingent, other than a current
liability; (2) waive or compromise any right or claim; or (3) cancel,
without full payment, any note, loan, or other obligation owed to
Corporation.
(j) Corporation will not, or will not agree to, modify, amend,
cancel or terminate any of its existing contracts or agreements, except in
the ordinary course of business.
6. CONSENTS OF OTHERS
As soon as reasonably practicable after the execution and delivery of this
Agreement, and in any event on or before the Closing Date, Shareholders
will obtain the written consent of the persons described in Schedule 3.13
to this Agreement and will furnish to Buyer an executed copy of those
consents. Buyer will exercise its best efforts, and promptly execute and
deliver any documents and instruments that may be reasonably required, to
assist Shareholders in obtaining such consents; provided, however, that
Buyer will not be obligated under the Section to execute any guarantee,
assumption of liability, or other document or instrument requiring it to
assume obligations not contemplated by this Agreement.
7. REPRSENTATIONS AND WARRANTIES TRUE AT CLOSING
All representations and warranties of Shareholders and the Corporation set
forth in this Agreement and in any written statements delivered to Buyer by
Shareholders under this Agreement will also be true and correct on the
Closing Date as if made on that date.
8. BUYER CONFIDENTIALITY
Whether or not the Closing takes place, Shareholders waive any cause of
action, right, or claim arising out of the access of Buyer or its
representatives to any trade secrets or other confidential business
information of Corporation from the date of this Agreement until the
Closing Date, except for the intentional competitive misuse by Buyer or its
representatives of such trade secrets or their confidential business
information if the Closing does not take place. Buyer agrees that, unless
and until the Closing has been consummated, Buyer and its officers,
directors and other representatives will hold in strict confidence, and
will not use to the detriment of Shareholders or Corporation, all data and
information about the business of Corporation obtained in connection with
the transaction or agreement, except as far as the data and information may
be required by law to be disclosed to its shareholders or other parties. If
the transactions contemplated by this Agreement are not consummated, Buyer
will return to Shareholders all that data and the information that
Shareholders may reasonably request, including documents prepared by or
made available to Buyer in connection with this transaction.
9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Shares under this Agreement are
subject to the satisfaction, at or before Closing, of all the conditions
set forth below in this Section 9. Buyer may specifically waive in writing
any or all of these conditions in whole or in part without prior notice;
provided, however, that no such waiver of a condition will constitute
239
a waiver by Buyer of any of its other rights or remedies, at law or in
equity, if Shareholders or Corporation are in default of any of their
representations, warranties, or covenants under this Agreement.
(a) Except as otherwise permitted by this Agreement, all warranties by
each of the Shareholders in this Agreement, or in any written statement
that will be delivered to Buyer by any of them under this Agreement, must
be true in all material respects on the Closing Date as though made at that
time.
(b) Shareholders must have performed, satisfied and complied in all
material respects with all covenants, agreements, and conditions required
by this Agreement to be performed or complied
with by them, or any of them, by the Closing Date.
(c) During the period from February 28, 1998 to the Closing Date,
there shall not have been any material adverse change in the financial
condition or the results of operations of Corporation, and Corporation will
not have sustained any insured or uninsured loss or damage to its assets
that materially affects its ability to conduct a material part of its
business, except as is set forth in Schedule 3.12 attached hereto.
(d) Buyer will have received a certificate in the form of Exhibit G
hereto, dated the Closing Date, signed and verified by Shareholders and by
Corporation's president and its chief financial officer, certifying, in
such detail as Buyer and its counsel may reasonably request, that to the
best of their knowledge the conditions specified in Sections 3, 5 and 9 of
this Agreement have been fulfilled.
(e) Buyer will have received from Shareholders' counsel an opinion
dated the Closing Date in form and substance satisfactory to Buyer and its
counsel and attached hereto as Exhibit H, that:
(i) Corporation is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of California,
and has all necessary corporate power to own its properties as now owned
and operate its business as now operated.
(ii) Corporation is duly qualified or licensed as a foreign
corporation in good standing in each jurisdiction where the nature of its
activities or of its properties owned or leased makes such qualification or
licensing necessary and failure to be so qualified or licensed would have a
material adverse impact on its business.
(iii) The authorized capital stock of Corporation consists of five
thousand (5,000) shares of capital stock of $100.00 par value, of which,
one thousand two hundred sixty seven (1,267) shares are issued and
outstanding. All outstanding shares are validly issued, fully paid, and non-
assessable. That there are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments
obligating Corporation to issue or transfer from treasury any additional
shares of its stock of any class.
(iv) This Agreement has been duly and validly authorized and, when
executed and delivered by Shareholders, will be valid, binding, and
enforceable against each of them in accordance with its terms, except as
limited by bankruptcy and insolvency laws and other laws and equitable
principles affecting the rights of creditors generally.
(v) That Shareholders are the record owners of one thousand two
hundred sixty seven (1,267) shares of stock of the Corporation, which
comprise all of the Corporation's issued and outstanding shares at Closing.
On the transfer and delivery of the Shares to Buyer in accordance with this
Agreement, Buyer will acquire the rights and the Shares free of any adverse
claim, so long as Buyer is a purchaser for value in good faith and without
notice of any adverse claim.
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(vi) Neither execution or delivery of this Agreement nor the
consummation of the transaction contemplated in this Agreement will
constitute (a) a default or an event that would, with notice, lapse of
time, or both-constitute a default under, or violation or breach of,
Corporation's articles of incorporation or bylaws, or to the best of
counsel's knowledge, any indenture, license, lease, franchise, mortgage,
instrument, or other agreement to which any of the Shareholders or
Corporation is a party or by which they or the properties of Corporation
may be bound; or (b) an event that would permit any party to any agreement
or instrument to terminate it or accelerate the maturity of any
indebtedness or other obligation of Corporation; or (c) an event that would
result in the creation or imposition of any lien, charge, or encumbrance on
any asset of Corporation.
(vii) Except as set forth in Schedule 3.22 to this Agreement, to
the best of counsel's knowledge, there is no suit, action, arbitration, or
legal, administrative or other proceeding or governmental investigation
pending or threatened against or affecting Corporation, or any of its
businesses or properties or financial or other condition.
(f) No action, suit, or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, will have been instituted or
threatened on or before the Closing Date.
(g) Buyer will have received from Corporation's chief financial
officer a letter in the form of Exhibit I hereto, which shall be joined in
and signed by Shareholders, dated at the Closing Date, stating that on the
basis of a review of the latest available accounting records of
Corporation, consultations with other responsible officers of Corporation
and with Shareholders, and any other pertinent inquiries that he may deem
necessary, he has no knowledge or reason to suspect that during the period
from February 28, 1998 to a specified date not more than five (5) business
days before the Closing Date, there was any change in the financial
conditions or results of operations of Corporation, except changes incurred
in the ordinary and usual course of their respective businesses during that
period that in the aggregate are not materially adverse, and any other
changes or transactions contemplated by this Agreement, except as is set
forth in Schedule 3.12 to this Agreement. For purposes of that letter,
"materially adverse" will be deemed to be an increase in liabilities equal
to or greater than Fifty Thousand Dollars ($50,000) without a corresponding
increase in assets, or a reduction in monthly operating revenue during that
period of Fifty Thousand Dollars ($50,000) or more.
(h) The execution and delivery of this Agreement by Corporation, and
the performance of its covenants and obligations under it, will have been
duly authorized by all necessary corporate action, and Buyer will have
received copies of all resolutions pertaining to that authorization,
certified by the secretary of Corporation.
(i) Buyer will have received corporation tax clearance certificates,
as of a date no more than 10 days before the Closing Date, of the
California Franchise Tax Board for Corporation.
(j) Borrower will have received a certificate of release from the
California Employment Development Department stating that, as of a date not
more than 10 days before the Closing Date, no contributions, interest or
penalties are due to the Employment Development Department from
Corporation.
(k) All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, will have been obtained
by Shareholders or Corporation and delivered to Buyer.
(l) Employment agreements with each of the Shareholders, in the forms
set forth in Exhibit D, dated the Closing Date, will have been executed and
delivered by Shareholders to Buyer.
(m) The form and substance of all certificates, instruments, opinions,
and other documents delivered by Shareholders to Buyer under this Agreement
will be satisfactory in all reasonable respects to Buyer and its counsel.
241
(n) Shareholders will have delivered to Buyer, except as otherwise
requested by Buyer, the written resignations of all of the officers and
directors of Corporation and will cause any other action to be taken with
respect to these resignations that Buyer may reasonably request.
(o) Buyer will have received from Shareholders an investment letter
agreement substantially in the form set forth in Exhibit E hereto.
10. CONDITIONS PRECEDENT TO SHAREHOLDERS' PERFORMANCE
The obligations of Shareholders to sell and transfer the Shares under this
Agreement are subject to the satisfaction, at or before the Closing, of all
the following conditions. Shareholders may waive any or all of these
conditions in whole or in part without prior notice, provided, however,
that no such waiver of a condition will constitute a waiver by Shareholders
of any their other rights or remedies, at law or in equity, if Buyer should
be in default of any of its representations, warranties or covenants under
this Agreement.
(a) All warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement must be true in
all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of that date.
(b) Buyer must have performed and complied with all covenants and
agreements and satisfied all conditions that it is required by this
Agreement to perform, comply with, or satisfy before or at the Closing.
(c) The board of directors of Buyer will have duly authorized and
approved the execution and delivery of this Agreement and all corporate
action necessary or proper to fulfill Buyer's obligations to be performed
under this Agreement on or before the Closing Date.
11. THE CLOSING
(a) The transfer of the Shares by Shareholders to Buyer (the
"Closing") will take place at the offices of Buyer located at 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000 at 10:00 a.m. local time,
on that day when all of the conditions set forth in Section 9 have been
satisfied or waived, but not later than June 1, 1998, or at such other time
and place as the parties may agree to in writing (the "Closing Date").
(b) At the Closing, Shareholders shall deliver to Buyer the following
instruments, in form and substance satisfactory to Buyer and its counsel,
against delivery of the items specified in Section 12: (1) a certificate or
certificates representing the Shares, registered in the name of
Shareholders, duly endorsed by Shareholders for transfer or accompanied by
an assignment of the Shares duly executed by Shareholders, with signatures
guaranteed by a member of the New York Stock Exchange or by a bank or trust
company, and with all required document and stock transfer stamps affixed
or accompanied by Shareholders' personal checks for the amount of these
stamps. On submission of that certificate or certificates to Corporation
for transfer, Corporation will issue to Buyer a certificate representing
the Shares, registered in the Buyer's name; (2) the stock books, stock
ledgers, minute books and corporate seal of the Corporation; (3) the
opinion of counsel as provided in Section 9(e); (4) a report of
Corporation's independent public accountants or chief financial officer, as
provided for in Section 9(g), dated as of the Closing Date; (5) except as
otherwise specified by Buyer, the written resignations of all of the
officers and directors of Corporation; (6) employment agreements between
Shareholders and Corporation dated the Closing Date, in the form set forth
in Exhibit C, executed by Shareholders and Corporation; (7) a certificate
executed by Shareholders, dated the Closing Date, certifying that their
respective representations and warranties in this Agreement are true and
correct on the Closing Date, as though each representation and warranty had
been made on that date; (8) a general release in the form set forth in
Exhibit F, in favor of Corporation,
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executed by Shareholders, dated the Closing Date; and (9) a Pledge and
Security Agreement, dated the Closing Date, between the Shareholders and
Corporation, in the form set forth in Exhibit B.
12. BUYER'S OBLIGATIONS AT CLOSING
At the Closing, Buyer shall deliver to Shareholders the following:
(a) Certified resolutions of Buyer's board of directors, authorizing
the execution and performance of this Agreement and all action to be taken
by Buyer under this Agreement and
(b) A certificate executed by its president certifying that all
Buyer's representations and warranties under this Agreement are true as of
the Closing Date, as though each of those representations and warranties
had been made on that date.
(c) An irrevocable proxy to vote the Shares for all purposes until
such time as all state licensing requirements applicable to the conduct of
the Corporation's business as contemplated by the Buyer have been complied
with by the parties hereto.
13. SHAREHOLDERS INDEMNITY
13.1. Shareholders will indemnify, defend, and hold harmless Buyer,
its officers, directors, shareholders, employees, attorneys, agents and
representatives, against and in respect of all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys'
fees, that they may incur or suffer, which arise, result from or relate to
any breach of, or failure by Corporation to perform, any of its
representations, warranties, covenants or agreements in this Agreement or
in any schedule, certificates, exhibit, or other instrument furnished or to
be furnished by Shareholders or Corporation under this Agreement.
13.2. Xxxxx x. XXXXX Litigation. In addition to the indemnification
provided for in Section 13.1, from and after the Closing Date, the Sellers
shall jointly and severally indemnify, defend, save and hold harmless Buyer
and any and all of Buyer's Affiliates from and against any and all Losses
incurred or sustained by Buyer or any of Buyer's Affiliates, up to a
maximum amount set forth herein, which shall arise out of or result from
that certain action filed in the United States District Court for the
Middle District of Georgia entitled Xxxxx x. XXXXX Mortgage, Inc. and all
matters relating thereto. The maximum amount that Shareholders shall be
obligated to indemnify Sellers under this Section 13.2 shall be the cash
equivalent value of 100,000 shares of Buyer's common stock as valued in
this Section 13.2. For purposes of this indemnification provision, the
Buyer's common shares shall be valued at an amount equal to the average
Closing price of Buyer's common stock over the immediately preceding ten
(10) trading days prior to indemnification. The Closing price on any
trading day shall be the last reported Closing bid quotation for such day
of the stock on the National Association of Securities Dealers Automated
Quotations System ("NASDAQ"). All amounts indemnified pursuant to this
Section 13.2 shall be applied pro rata to the Sellers in accordance with
their percentage ownership set forth in Exhibit A hereto. As security for
Shareholders' indemnity under this Section 13.2, Shareholders shall deliver
to Buyer at Closing a Pledge and Security Agreement providing for the grant
by Shareholders to Buyer of a first position security interest in 100,000
shares of Buyer's common stock delivered to Shareholders pursuant to this
Agreement, all on the terms and in the form set forth in Exhibit 13.
14. BUYER'S INDEMNITY
Buyer will indemnify and hold harmless Shareholders against, and in respect
of, claims, losses, expenses, costs, obligations, and liabilities they may
incur by reason of Buyer's breach of or failure to perform any of its
warranties, guaranties, commitments, or covenants in this Agreement.
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15. TERMINATION
This Agreement may be terminated prior to the Closing Date as follows:
15.1. By Shareholders (acting unanimously) or Buyer, if the Closing
has not taken place before June 1, 1998; provided, however, that such
termination will not relieve any party from any liability if such party, as
of the termination date, is in breach of any of the provisions of this
Agreement; and provided, further, that if the delay is caused by the act or
omission of a particular party, such party will not have the right to
terminate hereunder; or
15.2. By Buyer, if on the Closing Date any of the conditions set
forth in Section 9 have not been satisfied or waived by Buyer; or
15.3. By Shareholders (acting unanimously), if on the Closing Date
any of the conditions set forth in Section 10 have not been satisfied or
waived by Shareholders; or
15.4. By mutual agreement of Buyer and Shareholders evidenced by a
writing executed by all parties.
16. PUBLICITY
All notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement will be jointly planned and
coordinated by and between Buyer and Shareholders. No party will act
unilaterally in this regard without the prior written approval of the
other; however, this approval will not be unreasonably withheld.
17. COSTS
17.1. Except as set forth in Section 17.2, each party represents and
warrants that it has dealt with no broker or finder in connection with any
transaction contemplated by this Agreement, and, as far as it knows, no
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions. Shareholders and Buyer will
indemnify and hold one another harmless against any loss, liability,
damage, costs, claim, or expense incurred by reason of any brokerage,
commission or finder's fee alleged to be payable because of any act,
omission or statement of the indemnifying party.
17.2. Shareholders and Corporation have identified United Financial,
Inc. ("UFI") as the only party entitled to receive an agency, brokerage or
finders fee in connection with this transaction. Buyer agrees to
accommodate payment of a broker's fee to UFI by delivering to UFI, on the
Closing Date, a number of shares of Buyer's stock equal in value to six
percent (6%) of the value of the shares delivered to Shareholders on the
Closing Date; and shall deliver to UFI, on the Delivery Date, that number
of shares of Buyer's common stock equal in value to six percent (6%) of the
value of Buyer's stock delivered to Shareholders on the Delivery Date, all
such shares being valued as of the average Closing price of Buyer's common
stock on the Closing Date, as described in Section 2. Except as set forth
in this Section 17.2, Buyer shall have no responsibility with respect to
the payment of agency, brokerage or finder's fees payable to any party in
connection with this transaction.
17.3. Each party will pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in Closing
and carrying out the transactions contemplated by this Agreement.
18. ASSIGNMENT
This Agreement will be binding on, and will inure to the benefit of, the
parties to it and their respective heirs, legal representatives,
successors, and assigns; provided, however, the Buyer may not assign any of
its rights under this
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Agreement, except to a wholly owned subsidiary corporation of Buyer and
that Shareholders shall not be entitled to assign any of their rights or
obligations under this Agreement, jointly or severally, without prior
written consent of Buyer, which consent may be withheld in Buyer's sole
discretion.
19. ARBITRATION
Any controversy or claim arising out of, or relating to, this Agreement, or
the making, or performance, or interpretation of it, will be settled by
arbitration in San Francisco, California, under the commercial arbitration
rules of the American Arbitration Association then existing, and judgment
on the arbitration award may be entered in any court having jurisdiction
over the subject matter of the controversy. Arbitrators will be persons
experienced in negotiating, making and consummating acquisition agreements.
Absent fraud, collusion or willful misconduct by the arbitrator, the award
shall be final. In making the decision and award, the arbitrator shall
apply applicable substantive law. If a court, applying applicable
substantive law, would be authorized to award punitive or exemplary
damages, then the arbitrator shall have the same power, but the arbitrator
shall not otherwise award punitive or exemplary damages. Questions
regarding whether a claim must be arbitrated or whether a claim involves a
legally protected right shall be determined by the arbitrator.
20. LITIGATION COSTS
If any legal action or any arbitration or other proceeding is brought for
the enforcement or interpretation of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party
or parties will be entitled to recover reasonable attorneys' fees and other
costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
21. PARTIES IN INTEREST
Nothing in this Agreement, whether expressed or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties to it and their respective successors and
assigns. Nothing in this Agreement is intended to relieve or discharge the
obligations or liability of any third person to any party to this
Agreement. No provision gives any third person any right of subrogation or
action against any party to this Agreement.
22. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior
and contemporaneous agreements, representations, and understandings of the
parties, including, but not limited to, the Conditional Stock Purchase
Agreement dated March 16, 1998 and the Agreement of Purchase and Sale of
Stock dated March 20, 1998. No supplement, modification, or amendment of
this Agreement will be binding unless executed in writing by all of the
parties. No waiver of any of the provisions of this Agreement will
constitute a waiver of any other provision, whether or not similar, nor
will any waiver constitute a continuing waiver. No waiver will be binding
unless executed in writing by the party making the waiver.
23. SURVIVAL OF WARRANTIES AND REPRESENTATIONS
The representations, warranties and covenants set forth or incorporated by
reference in this Agreement shall survive the Closing Date. All
representations and warranties contained in this Agreement (including the
attached exhibits and schedules, or in any certificate delivered with
respect hereto will be deemed to be representations and warranties shall
remain in full force and effect until sixty (60) days after the expiration
of any applicable statute of limitations; provided, however, that all such
representations and warranties described above shall survive after the
applicable survival period
245
with respect to any claim made by Buyer prior to the expiration thereof
until, and shall expire when, such claim is finally resolved. All
covenants, representations, warranties and agreements made by Sellers shall
be unaffected by any investigation made by Buyer or by any knowledge
obtained as a result thereof or otherwise.
24. FORM OF AGREEMENT
The subject headings of the sections and Sections of this Agreement are
included for convenience only and will not affect the construction or
interpretation of any its provisions.
25. WORD USAGE
Unless the context clearly requires otherwise:
(a) Plural and singular numbers will each be considered to include the
other;
(b) The masculine, feminine and neuter genders will each be
considered to include the other;
(c) "shall," "will," "must," "agree," and "covenants" are each
mandatory;
(d) "may" is permissive;
(e) "or" is not exclusive; and
(f) "includes" and "including" are not limiting.
26. COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts,
each of which will be considered an original, but all of which together
will constitute one and the same instrument.
27. GOVERNING LAW
This Agreement will be construed in accordance with, and governed by, the
laws of the state of California as applied to contracts that are executed
and performed in California.
28. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of final jurisdiction, it is the intent of the parties that all other
provisions of this Agreement be construed to remain fully valid,
enforceable, and binding on the parties.
29. NOTICES
All notices, request, demands and other communications under this Agreement
must be in writing and will be considered to have been duly given on the
date of service if served personally on the party to whom notice is to be
given, or on the date of delivery if delivered by Federal Express or other
similar courier service which provides a written document evidencing date
of delivery, or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and, in each case, properly addressed as follows:
To Buyer:
Finet Holdings Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: President
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To Corporation:
Mical Mortgage, Inc.
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: President
To Shareholders:
Xxxx X. Xxxxxx, individually and as Trustee utd 10/28/93
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Xxxxx X. Xxxxx, individually and as Trustee utd 2/22/90
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Xxxxxx X. Xxxxxxx,
individually and as Trustee utd 8/15/89
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it on the date and year first above written.
BUYER:
FINET HOLDINGS CORPORATION
By:
/s/ Xxx X. Xxxxxxx
Xxx X. Xxxxxxx, President
SHAREHOLDERS:
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, individually and as Trustee utd 10/28/93
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, individually and as Trustee utd 2/22/90
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, individually and as Trustee utd 8/15/89
CORPORATION:
MICAL Mortgage, Inc., a California corporation
By:
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, President
247
By:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Secretary
EXHIBITS AND SCHEDULES
Exhibits Description
Exhibit A Shareholders and Shares
Exhibit B Pledge and Security Agreement
Exhibit C Registration Rights Agreement
Exhibit D Employment Agreement
Exhibit E Investment Letter
Exhibit F General Release
Exhibit G Shareholders' and President's Certificates re Absence of
Changes
Exhibit H Shareholders' Counsel's Opinion
Exhibit I Chief Financial Officer's Certificate re Absence of Changes
Schedules Description
Schedule 3.1 Jurisdictions in which Qualified to do Business
Schedule3.5(i) Financial Statements as of April 30, 1996 and 1997
Schedule3.5(ii) Financial Statements as of February 28, 1998
Schedule3.6 Changes in Financial Condition
Schedule 3.8 Undisclosed Liabilities
Schedule 3.10 Mortgages, Liens, Encumbrances, etc.
Schedule 3.11 Real Property
Schedule 3.12 Absence of Specified Changes
Schedule 3.13 Notice Filings and Third Party Consents
Schedule 3.14 Equipment, Furniture, etc.
Schedule 3.16 Trademarks
Schedule 3.17 Trade Secrets
Schedule 3.19 Insurance Policies
Schedule 3.22 Litigation
Schedule 3.27 Officers, Directors, Employees and Agents
Schedule 3.28 Employment Agreements
Schedule 3.29 Powers of Attorney; Bank Accounts
248
EXHBIT A
Shareholders and Shares
Shares to be delivered
at Closing including Shares to
Shareholders Shares Owned Pledged Shares be pledged
----------------- ------------- ----------------------- ----------
Xxxx X. Xxxxxx 475.125 207,161 37,500
Xxxxx X. Xxxxx 475.125 207,161 37,500
Xxxxxx X. Xxxxxxx 316.750 138,107 25,000
Total 1,267,000 552,430 100,000
