<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): June 30, 1999
BINGHAM FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 0-23381 38-3313951
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
260 East Brown Street, Birmingham, MI 48009
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (248) 644-5470
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 30, 1999, pursuant to a Reorganization Agreement dated as of
June 30, 1999 (the "Reorganization Agreement") Bingham Financial Services
Corporation ("Bingham") acquired all of the issued and outstanding stock of
Hartger & Willard Mortgage Associates, Inc. ("Hartger & Willard") from DMR
Financial Services, Inc., an affiliate of Detroit Mortgage and Realty Company.
Pursuant to the terms of the Reorganization Agreement, 66,667 shares of Bingham
common stock, without par value, were issued to DMRFS. The terms of the
transaction were determined on the basis of arm's length negotiations between
the parties. Hartger & Willard is in the commercial mortgage lending and
servicing business.
The description of the acquisition included herein does not purport to
be complete and is qualified in its entirety by reference to the Reorganization
Agreement which is filed as Exhibit 2.1 hereto.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is impracticable
at this time to provide the required financial statements. The
required financial statements will be filed with an amendment
to this Form 8-K as soon as practicable, and in any event no
later than 60 days after the date that this report is required
to be filed.
b. PRO FORMA FINANCIAL INFORMATION. It is impracticable at this
time to provide the required pro forma financial information.
The required financial information will be filed with an
amendment to this Form 8-K as soon as practicable, and in any
event no later than 60 days after the date that this report is
required to be filed.
c. EXHIBITS.
2.1 Reorganization Agreement dated as of June 30, 1999 by and
among Bingham Financial Services Corporation, a Michigan
corporation, DMR Financial Services, Inc., a Michigan
corporation, Hartger & Willard Mortgage Associates, Inc., a
Michigan corporation and Detroit Mortgage & Realty Company, a
Michigan corporation. Omitted from such exhibit, as filed, are
the remaining exhibits referenced in such agreement. The
Registrant will furnish supplementally a copy of any such
exhibits to the Commission upon request.
2.2 Lockup Agreement executed as of July 2, 1999 by DMR Financial
Services, Inc. in favor of Bingham Financial Services
Corporation.
2.3 Shareholders Agreement dated as of July 2, 1999 by and among
Bingham Financial Services Corporation, certain
"Shareholders/Directors", DMR Financial Services, Inc. and
Detroit Mortgage and Realty Company.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BINGHAM FINANCIAL SERVICES CORPORATION
/s/ Ronald A. Klein
----------------------------------------------
Name: Ronald A. Klein
Title: President and Chief Executive Officer
Dated: July 13, 1999
4
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION METHOD OF FILING
- ------- ----------- ----------------
2.1 Reorganization Agreement dated as of Filed herewith
June 30, 1999
2.2 Lockup Agreement executed as of July Filed herewith
2, 1999
2.3 Shareholders Agreement dated as of Filed herewith
July 2, 1999
5
<PAGE> 1
Exhibit 2.1
REORGANIZATION AGREEMENT
BY AND AMONG
BINGHAM FINANCIAL SERVICES CORPORATION,
DMR FINANCIAL SERVICES, INC.,
HARTGER & WILLARD MORTGAGE ASSOCIATES, INC.
AND
DETROIT MORTGAGE AND REALTY COMPANY
JUNE 30, 1999
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REORGANIZATION AGREEMENT
This Reorganization Agreement (the "Agreement") is made and entered
into as of June 30, 1999, by and among BINGHAM FINANCIAL SERVICES CORPORATION, a
Michigan corporation ("Bingham"), DMR FINANCIAL SERVICES, INC., a Michigan
corporation ("DMRFS"), HARTGER & WILLARD MORTGAGE ASSOCIATES, INC., a Michigan
corporation ("H&W"), and DETROIT MORTGAGE AND REALTY COMPANY, a Michigan
corporation and the sole shareholder of both DMRFS and H&W ("DMR"). For the
purposes of this Agreement, Bingham, DMR, H&W and DMRFS are referred to
sometimes collectively as the "Parties" and individually as a "Party".
RECITALS:
WHEREAS, Bingham, DMR, DMRFS and H&W desire to consummate the
transactions provided for in this Agreement pursuant to which Bingham will
acquire all of the issued and outstanding shares of the capital stock of H&W, as
and in the manner contemplated in this Agreement, from DMRFS in exchange for
shares of Bingham's capital stock.
WHEREAS, the Parties had originally intended that Bingham acquire all
of the issued and outstanding shares of the capital stock of DMRFS and H&W
simultaneously.
WHEREAS, for business purposes, the Parties have determined that it is
in their best interests for Bingham to accelerate acquisition of H&W by
acquiring all of the issued and outstanding shares of the capital stock of H&W
pursuant to this Agreement and subsequently acquiring all of the issued and
outstanding shares of the capital stock of DMRFS, subject to the execution of,
and satisfaction of the terms and conditions of, a mutually acceptable
Reorganization Agreement with respect to DMRFS.
WHEREAS, subject to the conditions described in the previous paragraph,
the Parties contemplate that the acquisition of H&W by Bingham would be followed
by the acquisition of DMRFS and the Parties intend that the acquisition of H&W
and DMRFS be an integrated transaction and together qualify as a tax-free
reorganization under Section 368(a)(1)(C) of the Code.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:
1.1. "Act" means the Michigan Business Corporation Act, as the same
has and may be amended.
1.2. "Bingham Business" means, collectively, the respective
businesses in which Bingham and its subsidiaries are engaged.
1.3. "Consent" means any consent, approval or authorization of, or
withholding of objection on the part of, or filing, registration
or qualification with, or notice to, any Governmental Authority
(defined in this Section 1) or any lenders, creditors,
shareholders or other third parties.
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1.4. "Code" means the Internal Revenue Code of 1986, as amended.
1.5. "DMRFS Business" means the business in which DMRFS is engaged.
1.6. [intentionally omitted]
1.7. [intentionally omitted]
1.8. [intentionally omitted]
1.9. [intentionally omitted]
1.10. [intentionally omitted]
1.11. [intentionally omitted]
1.12. [intentionally omitted]
1.13. [intentionally omitted]
1.14. [intentionally omitted]
1.15. [intentionally omitted]
1.16. "Governmental Authority" means any court, administrative agency,
commission or other governmental authority or instrumentality,
whether federal, state, local or foreign.
1.17. "H&W Assets" means all of the assets and properties, whether
known or unknown, tangible or intangible, real or personal,
wherever situated, owned by H&W or in which H&W has any right,
title or interest.
1.18. "H&W Business" means the business in which H&W is engaged.
1.19. "H&W Certificate" means certificates evidencing H&W Shares
(defined in this Section 1).
1.20. [intentionally omitted]
1.21. "H&W Shares" means the issued and outstanding shares of the
capital stock of H&W, as reflected in the books and records of
H&W as of the date of this Agreement.
1.22. "H&W Stock" means H&W's sole class of capital stock, common
stock, $1.00 par value.
1.23. "Liens" means title defects, judgments, objections, security
interests, liens, charges, liabilities, mortgages, easements,
restrictions, reservations, tenancies, agreements, rights of
redemption, third-party rights and other obligations and
encumbrances of any nature whatsoever.
1.24. "SEC" means the Securities and Exchange Commission.
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1.25. "Treasury Regulation" means any regulation promulgated under the
Code including any amendments or any substitute or successor
provisions thereto.
1.26. "'33 Act" means the Securities Act of 1933, as amended.
1.27. "'34 Act" means the Securities Exchange Act of 1934, as amended.
2. EXCHANGE OF SHARES.
2.1. General. On the terms and subject to the conditions set forth in
this Agreement, on the Closing Date (defined in Section 14.1
below), DMRFS shall transfer and otherwise convey to Bingham,
and Bingham shall acquire from DMRFS, DMRFS's entire right,
title and interest in and to all of the H&W Shares, free and
clear of all Liens, as provided in this Agreement. The Parties
intend that this transaction together with the contemplated
acquisition of DMRFS by Bingham shall constitute a
reorganization within the meaning of Section 368(a)(1)(C) of the
Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
DMR, DMRFS and H&W agree not to take any action inconsistent
with that intent, and in furtherance of that intent, Bingham
shall comply with its obligations under Section 11.6 below. None
of the Parties shall be under any other obligation to
restructure the transactions, to amend this Agreement or to take
any other action whatsoever so as to effectuate that intent, if
such transactions do not constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code, or this Agreement
does not constitute a "plan of reorganization" for the purposes
of Section 368 of the Code.
2.2. [intentionally omitted]
2.3. Directors and Officers of H&W. The directors and officers of H&W
from and after the Closing Date shall be as set forth on the
attached Schedule 2.3 (retaining their respective positions and
terms of office until their successors are duly elected and
qualified in accordance with the Articles of Incorporation and
the bylaws of H&W, as both may have been or may subsequently be
amended or restated).
2.4. [intentionally omitted]
3. ASSUMPTION OF LIABILITIES AND RELATED MATTERS.
3.1. [intentionally omitted]
3.2. [intentionally omitted]
3.3. DMR and DMRFS have fully paid, discharged and satisfied any and
all debts, liabilities and other obligations which they owe or
have to H&W.
3.4. DMR and DMRFS have caused all debts, liabilities and other
obligations H&W owes or has to DMR or any of DMR's affiliates to
be fully discharged and satisfied, and for H&W to be fully and
completely released from all such debts, liabilities and other
obligations. The discharge and satisfaction of such debts has
been structured so that H&W does not and will not incur any
income from the discharging of such debts.
3.5. [intentionally omitted]
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4. [intentionally omitted]
5. [intentionally omitted]
6. CONSIDERATION.
6.1. Initial Consideration. Effective as of the close of business
July 2, 1999, for and in consideration of the H&W Shares,
Bingham shall issue to DMRFS an aggregate of sixty-six thousand
six hundred sixty-seven (66,667) shares (the "Initial
Consideration Shares") of its common stock, without par value
("Bingham Common Stock").
6.2. [intentionally omitted]
6.3. [intentionally omitted]
6.4. [intentionally omitted]
6.5. [intentionally omitted]
6.6. [intentionally omitted]
6.7. [intentionally omitted]
6.8. [intentionally omitted]
6.9. [intentionally omitted]
7. REPRESENTATIONS AND WARRANTIES CONCERNING DMRFS. DMR and DMRFS hereby
jointly and severally represent, warrant and covenant the following to
Bingham and H&W:
7.1. Good Standing and Authority. DMRFS is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Michigan. DMRFS is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified, except
where the failure to be so qualified, individually or in the
aggregate, would not have a material adverse effect on the
business, properties, operations or financial condition
("Material Adverse Effect") of DMRFS. All such jurisdictions are
listed on the attached Schedule 7.1. DMRFS has the corporate
power and authority to enter into this Agreement and any and
all other documents contemplated in or to be executed in
connection with this Agreement (the "Attendant Documents") to
which it is or will be a party and to consummate the
transactions contemplated in this Agreement and the Attendant
Documents. This Agreement and all of the Attendant Documents to
which DMRFS is or will be a party, and the consummation of the
transactions contemplated in this Agreement, have been duly
authorized and approved by all necessary and proper corporate
action on the part of DMRFS. This Agreement, and all of the
Attendant Documents to which DMRFS is or will be a party, when
executed and delivered, will constitute legal, valid and binding
obligations of DMRFS, enforceable against DMRFS in accordance
with their respective terms, subject to DMR's and DMRFS's
shareholders approving this Agreement in accordance with
applicable law. DMR is the sole shareholder of DMRFS.
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7.2. Consents, Approvals and Authorizations. Except for (i)
[intentionally omitted],(ii) [intentionally omitted], (iii)
[intentionally omitted], (iv) [intentionally omitted], and (v)
the obtainment of those Consents listed on the attached Schedule
7.2, no Consent is required on the part of DMRFS in connection
with the valid execution and delivery of this Agreement and the
Attendant Documents to which DMRFS is or will be a party or the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents which, if not obtained or made, will
result in a breach or violation of an agreement, lease,
indenture or other instrument, or a judgment, decree, order,
award, law, rule or regulation applicable to or affecting DMRFS,
the DMRFS Business or DMRFS's properties, except where the
failure to obtain the same, individually or in the aggregate,
would not have a Material Adverse Effect on DMRFS. All Consents
listed on the attached Schedule 7.2 have been obtained and
remain in full force and effect and all statutory waiting
periods in respect thereof have expired.
7.3. [intentionally omitted]
7.4. [intentionally omitted]
7.5. [intentionally omitted]
7.6. [intentionally omitted]
7.7. [intentionally omitted]
7.8. [intentionally omitted]
7.9. [intentionally omitted]
7.10. [intentionally omitted]
7.11. [intentionally omitted]
7.12. [intentionally omitted]
7.13. [intentionally omitted]
7.14. [intentionally omitted]
7.15. Financial Information. Set forth on the attached Schedule 7.15
are: (i) the audited balance sheet of DMRFS as of December 31,
1998 and the related statements of income and expenses, retained
earnings and cash flow, and notes thereto, for the year then
ended, certified by DMR's regularly engaged certified public
accountants (collectively, the "1998 DMRFS Financial
Statements"); and (ii) the unaudited balance sheets of DMRFS as
of March 31, 1999, April 30, 1999 and May 31, 1999 and the
related statements of income and expenses, retained earnings and
cash flow for the months then ended (collectively, the
"Subsequent Monthly DMRFS Financial Statements", and together
with the 1998 DMRFS Financial Statements, the "DMRFS Financial
Statements"). All of the DMRFS Financial Statements (i) are
true, correct and complete in all material respects; (ii) have
been prepared in accordance with generally accepted accounting
principles applied consistently with all corresponding prior
fiscal periods of DMRFS; and (iii) fairly present the financial
condition, results of operation and cash flows of DMRFS as of
the dates and for the periods indicated; subject, in the case of
the
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Subsequent Monthly DMRFS Financial Statements only, to normal
year-end adjustments consistent with past practices and the
absence of footnotes (the "Missing DMRFS
Adjustments/Footnotes"). Except to the extent disclosed on the
attached Schedule 7.15, the Missing DMRFS Adjustments/Footnotes,
if presented in the Subsequent Monthly DMRFS Financial
Statements, would not differ materially from those included in
the 1998 DMRFS Financial Statements. The DMRFS Financial
Statements make substantially full and adequate provision for
all obligations, liabilities or commitments, whether fixed or
contingent, and doubtful accounts receivable of DMRFS. Bingham
acknowledges that DMRFS prepares cash flow statements on a
quarterly basis only, any other provision of this Agreement to
the contrary notwithstanding.
7.16. [intentionally omitted]
7.17. [intentionally omitted]
7.18. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which DMRFS is or
will be a party nor the consummation of the transactions
contemplated in this Agreement and the Attendant Documents will
conflict with, result in the breach or violation of or
constitute a default under the terms, conditions or provisions
of DMRFS's Articles of Incorporation or Bylaws, both as amended,
or any other agreement or instrument to which DMRFS is a party,
or by which DMRFS may be bound or to which DMRFS may be subject.
7.19. Brokerage or Finder's Fee. Neither DMRFS nor DMR has engaged any
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated in this Agreement.
7.20. Disclosure. No representation or warranty by DMR or DMRFS
contained in this Agreement and no statement contained in any of
the Attendant Documents to which DMR or DMRFS is or will be a
party or any other certificate or instrument furnished or to be
furnished pursuant to this Agreement or in connection with the
transactions contemplated in this Agreement contains or will
contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary in order to make
any of the statements not misleading.
7.21. [intentionally omitted]
7.22. Hart-Scott-Rodino Compliance. Pursuant to 16 CFR ss.802.20, no
notification filing is required pursuant to the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976 in
connection with the transactions contemplated in this Agreement.
7.23. [intentionally omitted]
7.24. [intentionally omitted]
7.25. Reorganization. DMRFS has not willfully taken or agreed to take,
and shall not take, any action, and neither DMRFS nor DMR have
knowledge of any fact or circumstance, that would prevent the
transactions contemplated in this Agreement from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Except as set forth on the attached Schedule 7.25, other than
the directors and officers of DMR and of DMRFS, there are no
"affiliates" of DMRFS, as that term is defined in Rule 144(a)
promulgated under the '33 Act.
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7.26. Knowledge. One or more of the persons listed on the attached
Schedule 17.11(a) could reasonably be expected to have
sufficient knowledge regarding the facts, matters and
circumstances underlying each of the representations and
warranties set forth in this Section 7 so as to be capable of
ascertaining whether or not they are completely accurate.
Identified on the attached Schedule 7.26 are various public
filings made by Bingham with the SEC pursuant to its EDGAR
filing requirements (the "Bingham Reports") which are available
to DMR, DMRFS and H&W over the Internet. DMR and DMRFS have had
access to, and have had sufficient time to review and consider,
such Bingham Reports and all due diligence materials provided or
otherwise made available to DMR or its representatives by or on
behalf of Bingham. DMR and DMRFS have been afforded an
opportunity to ask questions of and receive answers from
representatives of Bingham concerning the terms and conditions
of the transactions and matters described in the Bingham Reports
or such due diligence materials and to obtain any additional
information as DMR or DMRFS have identified in such documents
that DMR or DMRFS have requested.
8. REPRESENTATIONS AND WARRANTIES CONCERNING H&W. DMR and DMRFS hereby
jointly and severally represent, warrant and covenant the following to
Bingham and H&W:
8.1. Good Standing and Authority. H&W is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Michigan. H&W is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified, except
where the failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect on H&W. All
such jurisdictions are listed on the attached Schedule 8.1. H&W
has the corporate power and authority to enter into this
Agreement and the Attendant Documents to which it is or will be
a party and to consummate the transactions contemplated in this
Agreement and the Attendant Documents. This Agreement and all of
the Attendant Documents to which H&W is or will be a party, and
the consummation of the transactions contemplated in this
Agreement, have been duly authorized and approved by all
necessary and proper corporate action on the part of H&W. This
Agreement, and all of the Attendant Documents to which H&W is or
will be a party, when executed and delivered, will constitute
legal, valid and binding obligations of H&W, enforceable against
H&W in accordance with their respective terms. DMR is the sole
shareholder of DMRFS. DMRFS is the sole shareholder of H&W. H&W
does not have any subsidiaries, and H&W does not have any equity
interest in, or any right to acquire any equity interest in, any
other entity.
8.2. Consents, Approvals and Authorizations. Except for (i)
[intentionally omitted], (ii) [intentionally omitted], (iii)
[intentionally omitted], (iv) [intentionally omitted], and (v)
the obtainment of those Consents listed on the attached Schedule
8.2, no Consent is required on the part of H&W in connection
with the valid execution and delivery of this Agreement and the
Attendant Documents to which H&W is or will be a party or the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents which, if not obtained or made, will
result in a breach or violation of an agreement, lease,
indenture or other instrument, or a judgment, decree, order,
award, law, rule or regulation applicable to or affecting H&W,
the H&W Business or H&W's properties, except where the failure
to obtain the same, individually or in the aggregate, would not
have a Material Adverse Effect on H&W. All Consents listed on
the attached Schedule
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8.2, other than the approval by FHLMC of the change in control
of H&W, have been obtained and remain in full force and effect.
8.3. Accounts Receivable. Except as set forth on the attached
Schedule 8.3: (i) the accounts receivable which are reflected in
the Most Recent Balance Sheet of H&W (defined in Section 8.15
below) or which arose subsequent thereto were validly obtained
in the ordinary course of the H&W Business; and (ii) except to
the extent of applicable reserves shown in such balance sheet,
to the knowledge of DMR, DMRFS and H&W, all of the receivables
owing to H&W constitute valid and enforceable claims arising
from bona fide arms-length transactions, and H&W has not
received any written or oral claims, defenses or refusals to
pay, or granted any rights of set-off with respect to any
receivables.
8.4. Investigations; Litigation. Except as described on the attached
Schedule 8.4, there are no claims or actions by anyone against
or affecting H&W, the H&W Business or H&W's properties that are
pending or, to the knowledge of H&W, have been threatened. To
DMR, DMRFS and H&W's knowledge, there is no basis for any such
claim or action which, if asserted and decided adversely to H&W,
could reasonably be expected to have a Material Adverse Effect
on H&W.
8.5. Title to Property; Condition. Except as set forth on the
attached Schedule 8.5:
(a) H&W has good and marketable title in and to all of
the assets reflected in the Most Recent Balance Sheet
of H&W and all assets purchased or otherwise acquired
since December 31, 1998 (except for such assets as
may have been sold or otherwise disposed of in the
ordinary course of the H&W Business), subject to no
Liens (other than those Liens which secure,
exclusively, indebtedness disclosed in the H&W
Financial Statements); and
(b) H&W owns no real property.
8.6. Tax Returns. Except as disclosed on the attached Schedule 8.6:
(a) To DMR, DMRFS and H&W's knowledge, proper and
accurate amounts have been and will be withheld by
H&W from its employees and properly deposited in
appropriate accounts, for all periods up to and
through the Closing Date, in full and complete
compliance with the tax withholding, deposit and
payment provisions of applicable federal, state and
local laws. H&W has filed (or has caused to be
filed), on its behalf either separately or as a
member of a consolidated group of companies, all
federal, state and local, as well as other returns
and reports that were required to be filed for all
periods for which returns, were due up to and through
the Closing Date, and H&W has made (or has caused to
be made), on its behalf either separately or as a
member of a consolidated group of companies, payments
of all governmental taxes, levies, duties, license
and registration fees, charges or withholdings of any
nature whatsoever ("Taxes") shown to be due and
payable in respect of such returns and reports. To
DMR, DMRFS and H&W's knowledge, all such returns are
true, correct and complete in all material respects
and no penalties or interest will be asserted by any
federal, state, local or other taxing authority
(each, a "Tax Authority") arising out of a late
payment of Taxes. Neither DMR, DMRFS nor H&W owes any
deficiency for any Taxes (other than those which are
accrued as liabilities on the Most Recent Balance
Sheet of H&W), and no tax returns
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are presently under audit or examination by any Tax
Authority, and neither DMR, DMRFS nor H&W has
received notice of any adjustments proposed or
asserted by the Internal Revenue Service or any other
agency in respect of any liability for Taxes arising
out of or relating to such returns.
(b) No claim has ever been made by a Tax Authority in a
jurisdiction where H&W does not file Tax returns that
H&W is or may be subject to taxation by that
jurisdiction. There are no excess loss accounts,
gains or losses from "Deferred Intercompany
Transactions" (as defined in Treasury Regulations
Section 1.1502-13 in effect before July 12, 1995) or
"Intercompany Transactions" (as defined in Treasury
Regulations Section 1.1502-13 in effect on or after
July 12, 1995) pertaining to H&W (whether or not they
are taken into account as a result of the
transactions contemplated in this Agreement).
(c) H&W has accrued, adequately reserved and shown on the
H&W Financial Statements as a liability, all Taxes
for any taxable period (or portions thereof) which
ends on or before the Closing Date. Any Tax return
for any taxable period ending on or before the
Closing Date has been prepared in a manner consistent
with the accrual method of accounting.
(d) H&W has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time
with respect to any Tax assessment or deficiency.
(e) H&W (i) has not filed a consent under Code Section
341(f) concerning collapsible corporations; (ii) has
not made any payment, is not obligated to make any
payment, and is not a party to any agreement that
under certain circumstances could obligate it to make
any payment that will not be deductible under Code
Section 280G; (iii) has not been a United States real
property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii); (iv) is
not a party to any Tax allocation or sharing
agreement; (v) has not been a member of an
"Affiliated Group" (meaning any affiliated group
within the meaning of Code Section 1504(a) or any
similar group defined under a similar provision of
state, local or foreign law) filing a consolidated
federal income Tax return, other than the Affiliated
Group consisting of DMR, DMRFS, H&W and those other
entities, if any, identified on the attached Schedule
7.6; (vi) has no liability for the Taxes of any
person under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign
law) as a transferee or successor, by contract, or
otherwise; (vii) has not granted a power of attorney
with respect to any matter relating to Taxes, whether
of DMR, DMRFS or itself; (vii) has not participated
in an international boycott under Code Section 999;
(ix) is not a party to any safe harbor lease within
the meaning of Code Section 168(f)(8) as in effect
prior to amendment by the Tax Equity and
Responsibility Act of 1982; (x) has not had any
permanent establishments in any foreign country as
defined in any applicable treaty or convention
between the United States and such foreign countries;
(xi) is not a party to any joint venture, partnership
or other arrangement or contract that could be
treated as a partnership for federal income tax
purposes; (xii) has not made and is not bound by any
election under Code Section 197; (xiii) has no debt
the interest on which is tax
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<PAGE> 11
exempt under existing or prior law; (xiv) has no
property that is tax exempt use property within the
meaning of Code Section 168(h); (xv) is not bound by
any closing agreement within the meaning of Code
Section 7121; and (xvi) has not agreed to and is not
required to make any adjustments under Code Section
481(a) or any similar provision of state, locate or
foreign law.
For all purposes relevant to determining whether or not there
has been any breach of any of the foregoing representations and
warranties for which any of the Bingham Parties (defined in
Section 15.1 below) are entitled to indemnification pursuant to
Section 15.1 below, and the amount of the Bingham Parties'
damages caused by such breach, all occurrences of the phrase
"except as disclosed on the attached Schedule 8.6" in this
Section 8.6 shall be ignored.
8.7. Insurance. The attached Schedule 8.7 contains an accurate and
complete list of all policies of fire and other casualty,
general liability, theft, life, workers' compensation, health,
directors' and officers' liability, business interruption and
other forms of insurance owned or held by H&W, DMRFS or DMR in
respect of the H&W Business, specifying the insurer, the policy
number, the term of the coverage and, in the case of any
"occurrence" coverage, the same information as to predecessor
policies for the previous five (5) years. All premiums that are
due as of the Closing Date with respect thereto have been paid
and no notice has been received by DMR, DMRFS or H&W that the
present policies are not in full force and effect. Neither H&W,
DMRFS nor DMR, in respect of the H&W Business, have been denied
any form of insurance, and no policy of insurance has been
revoked or rescinded during the past three (3) years, except as
described under the attached Schedule 8.7.
8.8. Benefit Plans. Except as disclosed on the attached Schedule 8.8,
H&W does not maintain and is not party to, bound by or a
contributor to, or required to contribute to, (a) any employee
pension benefit plans whether or not qualified under Section
401(a) of the Code, (b) any employee welfare benefit plans, or
(c) any other compensation, fringe or welfare plan or program,
policy, understanding or arrangement providing plan benefits or
welfare, with respect to its employees or employees of others
(collectively, the "H&W Employee Plans"). As used in this
Section 8.8, the terms "employee pension benefit plan" and
"employee welfare benefit plan" have the respective meanings
assigned to such terms in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). No H&W
Employee Plan is (and H&W has no liability with respect to any
plan that is) (i) subject to the minimum funding requirements of
ERISA or the Code, (ii) a "multiemployer plan" (as defined in
Section 3(37) of ERISA), (iii) a multiple-employer plan within
the meaning of Section 413 of the Code, or (iv) an employee
welfare benefit plan or plan providing welfare-type benefits to
current or future retirees or current or future former employees
(or their spouses or dependents) other than as required by COBRA
or any other state continuation coverage law. Each H&W Employee
Plan that is an employee pension benefit plan, to DMR's, DMRFS's
and H&W's knowledge, now meets, and since its inception has met,
in form and operation, the requirements of a tax-qualified plan
under Section 401(a) of the Code, and the Internal Revenue
Service has issued a favorable determination letter with respect
to the tax-qualified status of such plan. To DMR's, DMRFS's and
H&W's knowledge, each H&W Employee Plan has been maintained,
administered and funded in material compliance with all
applicable laws and regulations, including, without limitation,
the Code and ERISA. There are no actions, suits, or claims
(other than routine undisputed
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<PAGE> 12
claims for benefits) pending or, to DMR's, DMRFS's and H&W's
knowledge, threatened against or with respect to any H&W
Employee Plan. To DMR's, DMRFS's and H&W's knowledge, with
respect to the H&W Employee Plans, all required government
filings and disclosures have been timely made and are true,
correct and complete in all material respects, and no prohibited
transaction or other act or omission has occurred which has
resulted in, or could reasonably be expected to result in, the
imposition of an excise tax or other penalty, including, without
limitation, any penalties under ERISA or the Code. Except as
disclosed in the attached Schedule 8.8, H&W is not now and has
not been a member of: (i) a controlled group of corporations as
defined in Section 414(b) of the Code; (ii) a group of trades or
businesses under common control as defined in Section 414(c) of
the Code; (iii) an affiliated service group as defined in
Section 414(m) of the Code; (iv) a group of businesses referred
to in Section 414(o) of the Code; (v) a group of trades or
businesses under common control as defined in Section 4001(b) of
ERISA; or (vi) any other group under the law, rules or
regulations of a foreign country similar to (i) through (v).
DMR, DMRFS and H&W have provided to Bingham true and correct
copies of all current and prior material documents relating to
the H&W Employee Plans listed in the attached Schedule 8.8,
including, but not limited to: (i) plan documents; (ii) trust
documents; (iii) plan and trust amendments; (iv) summary plan
descriptions, amendments thereto, and all other communication
material provided to employees; (v) summaries of material
modifications; (vi) insurance (including reinsurance),
administrative services or annuity contracts; (vii) collective
bargaining agreements or contracts and all amendments thereto;
(viii) the most recent financial statements; (ix) with regard to
self-funded welfare plans, experience and enrollment data for
the prior three (3) plan years as well as documentation and
calculations demonstrating the present value of accrued
obligations under such plans as of the Closing Date; (x) if H&W
provides, or has any commitment or obligation to provide, any
H&W Employee Plan benefits to its retirees, copies of all
documentation and calculations demonstrating the present value
of such obligation or commitment as of the Closing Date; (xi) if
H&W or any controlled group member maintains a defined benefit
pension plan, as defined in Section 3(35) of ERISA with respect
to former or current H&W employees, the most recent actuarial
valuation for each such plan and copies of any funding waivers
and applications therefor, and all related correspondence and
documentation; (xii) the three (3) most recent annual reports;
(xiii) agreements with respect to leased or temporary employees;
(xiv) all Internal Revenue Service rulings, if any; and (xv) the
most recent Internal Revenue Service determination letters.
8.9. Contracts and Commitments; No Default. The attached Schedule 8.9
sets forth a complete and accurate list of all written or oral
agreements or other binding commitments or proposals (i)
involving the provision of goods or services to or by H&W
involving an aggregate sale price or consideration of more than
$25,000 (exclusive of mortgage loans made in the ordinary course
of business), (ii) pursuant to which H&W is obligated to make
periodic payments totaling, on an annualized basis, more than
$60,000, or (iii) which are not terminable without penalty at
the option of H&W upon no more than 30 days notice (the "H&W
Contracts"). DMR, DMRFS and H&W have made available to Bingham
true and accurate copies of the H&W Contracts. To DMR's, DMRFS's
and H&W's knowledge, all of the H&W Contracts are valid, binding
and in full force and effect, and are enforceable in accordance
with their respective terms (subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and similar
laws relating to or affecting the enforcement of creditors'
rights generally, or general principles of equity, whether at
law or in equity). Except as set forth on
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<PAGE> 13
the attached Schedule 8.9, H&W is not in default under any of
the H&W Contracts, nor has any notice of default been received
by DMR, DMRFS or H&W. To DMR's, DMRFS's and H&W's knowledge, all
other parties to the H&W Contracts have performed or are
performing all material obligations required to be performed by
them and are not in default thereunder.
8.10. Labor Matters. The attached Schedule 8.10 sets forth, as of a
date not more than twenty (20) days prior to the date this
representation and warranty is given, a list of all employees of
H&W and includes their position, current salary, and 1998 wage
information for each person. Except as set forth on the attached
Schedule 8.10 and except as are not material to the H&W
Business; (i) to DMR's, DMRFS's and H&W's knowledge, H&W is and
has at all times been in compliance with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, including without
limitation any such laws respecting employment discrimination
and occupational safety and health requirements, and has not and
is not engaged in any unfair labor practice; (ii) there is no
unfair labor practice complaint against H&W pending or, to
DMR's, DMRFS's or H&W's knowledge, threatened before the
National Labor Relations Board or any other comparable
Governmental Authority; (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to DMR's, DMRFS's or
H&W's knowledge, threatened against or directly affecting H&W;
(iv) no collective bargaining agreement is binding and in force
against H&W or is currently being negotiated by H&W; (v) H&W is
not delinquent in payments to any person for any wages,
salaries, commissions, bonuses or other direct or indirect
compensation for any services performed by them or amounts
required to be reimbursed to such persons, including without
limitation any amounts due under any pension plan, welfare plan
or compensation plan; and (vi) no current officer or key
employee of H&W has expressed, either verbally or in writing, to
H&W that he or she desires to terminate his or her employment
with the company, other than such expressions which have since
been retracted or resolved in light of a mutually agreeable
resolution of the matter by H&W and such employee.
8.11. Intellectual Property Rights. Except as disclosed on the
attached Schedule 8.11, H&W does not own or use any patents,
trade names, service names, trademarks, service marks,
copyrights, or any other intellectual or intangible property or
applications therefor nor has H&W conducted business under any
corporate, trade or fictitious name other than its current
corporate name. There are no pending or, to DMR's, DMRFS's or
H&W's knowledge, threatened claims of infringement upon the
rights to any intellectual or intangible property of others or,
except as set forth on the attached Schedule 8.11, any
agreements or undertakings with respect to any such rights.
8.12. Hazardous Substances and Hazardous Wastes. Except as set forth
on the attached Schedule 8.12:
(a) To DMR, DMRFS and H&W's knowledge, there is not now,
nor has there ever been, any disposal, release or
threatened release of Hazardous Materials (as defined
below) on, from or under properties now or ever
owned, leased or operated by or to H&W (the "H&W
Properties"). There has not been generated by or on
behalf of H&W any Hazardous Material, other than in
compliance with applicable law. No Hazardous Material
has been disposed of or allowed to be disposed of,
from, on or off any of the H&W Properties during the
period that H&W owned, leased or operated
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<PAGE> 14
the H&W Properties which may, to DMR's, DMRFS's or
H&W's knowledge, give rise to a clean-up
responsibility, personal injury liability or property
damage claim against H&W or either being named a
potentially responsible party for any such clean-up
costs, personal injuries or property damage or create
any cause of action by any third party against H&W.
For purposes of this subsection, the terms
"disposal," "release," and "threatened release" shall
have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the term
"Hazardous Material" means any hazardous or toxic
substance, material or waste or pollutants,
contaminants, gasoline, oil, diesel fuel, petroleum
products or fractions thereof, or asbestos containing
material which is or becomes regulated by any
Governmental Authority in any jurisdiction in which
any of the H&W Properties are located. The term
"Hazardous Material" also includes without limitation
any material or substance which is (i) defined as a
"hazardous waste" or a "hazardous substance" under
applicable law; (ii) designated as a "hazardous
substance" pursuant to Section 311 of the Federal
Water Pollution Control Act, (iii) defined as a
"hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, or
(iv) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, all
as amended.
(b) To DMR's, DMRFS's and H&W's knowledge, none of the
H&W Properties is (or with respect to previously
owned H&W Properties was at the time of disposition)
in violation of any law (or with respect to
previously owned H&W Properties, laws in effect at
the time of disposition) relating to the
environmental conditions on, under or about such H&W
Properties, including without limitation soil and
ground water condition, and there are (or at the time
of disposition were) no underground tanks or relating
piping, conduits or related structures. During the
period that H&W owned, leased or operated the H&W
Properties, to DMR's, DMRFS's and H&W's knowledge,
neither H&W nor any third party used, generated,
manufactured or stored on, under or about such H&W
Properties or transported to or from such H&W
Properties any Hazardous Materials except in
compliance with applicable law, and there has been no
litigation brought or to DMR's, DMRFS's or H&W's
knowledge, threatened against H&W or any settlement
reached by H&W with any third party or third parties
alleging the presence, disposal, release or
threatened release of any Hazardous Materials on,
from or under any of such H&W Properties.
(c) DMR, DMRFS and H&W have provided Bingham with true,
correct and complete copies of all environmental
review and assessment reports which DMR, DMRFS or H&W
has in its possession with respect to the H&W
Properties or any other parcel or real property ever
owned, leased or operated by H&W or any subsidiary,
affiliate or predecessor in interest of H&W.
8.13. Permits and Licenses. The attached Schedule 8.13 lists all
material governmental franchises, permits, licenses or other
authorizations held by H&W in connection with the H&W Business
or H&W's properties (the "H&W Licenses"), true and complete
copies of all of which have been made available to Bingham.
Except as set forth on the attached Schedule 8.13, all of the
H&W Licenses are in full force
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<PAGE> 15
and effect and will not be affected in any material way by, and
will continue to be in full force and effect after, the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents. Except as set forth on the attached
Schedule 8.13, H&W has obtained all permits, licenses,
franchises and other authorizations necessary or reasonably
desirable with respect to, and has complied with all laws
applicable to, the operation of the H&W Business and the
ownership, lease or use of H&W's properties, and H&W has not
engaged in any activity which would cause revocation or
suspension of any of the H&W Licenses. Except as set forth on
the attached Schedule 8.13, to DMR, DMRFS and H&W's knowledge,
no action or proceeding looking to or contemplating the
revocation or suspension of any of the H&W Licenses is pending
or threatened.
8.14. Compliance with Applicable Laws and Regulations. Except as set
forth on the attached Schedule 8.14, to the knowledge of DMR,
DMRFS and H&W, H&W has complied in all material respects with
all laws, regulations, rules, orders, judgments, decrees and
other requirements imposed by any Governmental Authority
applicable to it in connection with the operation of the H&W
Business or the ownership or use of H&W's properties.
8.15. Financial Information. Set forth on the attached Schedule 8.15
are: (i) the audited balance sheet of H&W as of December 31,
1998 (the "Most Recent Balance Sheet of H&W") and the related
statements of income and expenses, retained earnings and cash
flow, and notes thereto, for the year then ended, certified by
DMR's regularly engaged certified public accountants
(collectively, the "1998 H&W Financial Statements"); and (ii)
the unaudited balance sheets of H&W as of March 31, 1999, April
30, 1999 and May 31, 1999 and the related statements of income
and expenses, retained earnings and cash flow for the months
then ended (collectively, the "Subsequent Monthly H&W Financial
Statements", and together with the 1998 H&W Financial
Statements, the "H&W Financial Statements"). All of the H&W
Financial Statements (i) are true, correct and complete in all
material respects; (ii) have been prepared in accordance with
generally accepted accounting principles applied consistently
with all corresponding prior fiscal periods of H&W; and (iii)
fairly present the financial condition, results of operation and
cash flows of H&W as of the dates and for the periods indicated;
subject, in the case of the Subsequent Monthly H&W Financial
Statements only, to normal year-end adjustments consistent with
past practices and the absence of footnotes (the "Missing H&W
Adjustments/Footnotes"). Except to the extent disclosed on the
attached Schedule 8.15, the Missing H&W Adjustments/Footnotes,
if presented in the Subsequent Monthly H&W Financial Statements,
would not differ materially from those included in the 1998 H&W
Financial Statements. The H&W Financial Statements make
substantially full and adequate provision for all obligations,
liabilities or commitments, whether fixed or contingent, and
doubtful accounts receivable of H&W. Bingham acknowledges that
H&W prepares cash flow statements on a quarterly basis only, any
other provision of this Agreement to the contrary
notwithstanding.
8.16. No Undisclosed Liabilities. Except as and to the extent set
forth on the attached Schedule 8.16 or reflected in the H&W
Financial Statements, and except for liabilities incurred by H&W
in connection with or with respect to the H&W Business in the
ordinary course since the date of the Most Recent Balance Sheet
of H&W, H&W has no debts, liabilities or obligations of any
nature or kind (whether absolute, accrued, contingent,
unliquidated or otherwise, whether due or to become due and
regardless of when asserted) arising out of transactions entered
into, at or prior to the Closing, or any action or inaction at
or prior to the Closing
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<PAGE> 16
or any state of facts existing at or prior to the Closing, which
could, individually or in the aggregate, have a Material Adverse
Effect on H&W. Except as set forth on the attached Schedule
8.16, and except for changes in the prospects of the H&W
Business or H&W caused by events (i) which concern, as a whole,
either the economy of the United States or the economy of the
industry in which H&W does business, and (ii) which are not
particular to H&W, neither DMR, DMRFS nor H&W know of any
existing, proposed or threatened change which could have a
Material Adverse Effect on H&W.
Except as and to the extent set forth on the attached Schedule
8.16 or reflected in the pro forma July 2, 1999 balance sheet of
H&W included as part of the attached Schedule 8.16, and except
for commissions to be paid to H&W employees in the ordinary
course of business consistent with past practice, H&W has no
debts, liabilities or obligations of any nature or kind (whether
absolute, accrued, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when asserted)
arising out of transactions entered into, at or prior to the
Closing, or any action or inaction at or prior to the Closing or
any state of facts existing at or prior to the Closing, which
could, individually or in the aggregate, have a Material Adverse
Effect on H&W.
8.17. Millennium Compliance.
(a) H&W has (i) conducted a comprehensive review and
assessment of all areas of the H&W Business that
could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer
applications may not be able to properly perform
date-sensitive functions after December 31, 1999),
(ii) developed a detailed plan for addressing the
Year 2000 Problem, and (iii) implemented that plan.
All computer applications that are material to the
H&W Business are able properly to perform
date-sensitive functions for all dates before and
after January 1, 2000 (i.e., are "Year 2000
Compliant").
(b) H&W has made inquiry of each of its key suppliers and
vendors with respect to the Year 2000 Problem and,
based on that inquiry, believes that each of them
will on a timely basis be Year 2000 Compliant, except
to the extent that their failure, individually or in
the aggregate, to be Year 2000 Compliant would not
have a Material Adverse Effect on H&W or the H&W
Business.
8.18. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which H&W is or
will be a party nor the consummation of the transactions
contemplated in this Agreement and the Attendant Documents will
conflict with, result in the breach or violation of or
constitute a default under the terms, conditions or provisions
of H&W's Articles of Incorporation or Bylaws, both as amended,
or any other agreement or instrument to which H&W is a party, or
by which H&W may be bound or to which H&W may be subject.
8.19. Brokerage or Finder's Fee. Neither H&W, DMRFS nor DMR has
engaged any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with
the transactions contemplated in this Agreement.
8.20. Disclosure. No representation or warranty by DMR, DMRFS or H&W
contained in this Agreement and no statement contained in any of
the Attendant Documents
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<PAGE> 17
to which DMR, DMRFS or H&W is or will be a party or any other
certificate or instrument furnished or to be furnished pursuant
to this Agreement or in connection with the transactions
contemplated in this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to
state a material fact, necessary in order to make any of the
statements not misleading.
8.21. Capitalization; Ownership of Shares. The attached Schedule 8.21
sets forth the number of authorized and the number of issued and
outstanding shares of H&W Stock. DMRFS owns all of the H&W
Shares free and clear of all Liens. All such issued shares have
been duly authorized and validly issued, are fully paid and
non-assessable and were issued by H&W without violating any
applicable laws, rules, orders, judgments, decrees or other
requirements imposed by any governmental authority. All holders
of shares of H&W Stock have equal rights. Except as set forth on
the attached Schedule 8.21, there are no preemptive or first
refusal rights to purchase or otherwise acquire shares of H&W
Stock pursuant to H&W's governing documents or agreement or
otherwise. Except as set forth on the attached Schedule 8.21,
there are no outstanding agreements, commitments, rights,
options, warrants or claims of any nature whatsoever for the
issuance, sale, purchase or redemption of any shares of H&W
Stock or any other securities convertible into or exchangeable
for such shares. On consummation of the transactions
contemplated in this Agreement, Bingham will be the sole
shareholder of H&W, and will acquire valid and marketable title
to all issued and outstanding shares of H&W Stock, free and
clear of all Liens, and no other person or entity will have any
rights to purchase or otherwise acquire shares of H&W Stock.
8.22. Hart-Scott-Rodino Compliance. Pursuant to 16 CFR ss.802.20, no
notification filing is required pursuant to the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976 in
connection with the transactions contemplated in this Agreement.
8.23. [intentionally omitted]
8.24. Recent Conduct of H&W Business; Interim Operations. Except as
set forth on the attached Schedule 8.24, since the date of the
Most Recent Balance Sheet of H&W, there has not been any
Material Adverse Effect with respect to H&W. Except as set forth
on the attached Schedule 8.24, since the date of the Most Recent
Balance Sheet of H&W, DMR, DMRFS and H&W have caused the H&W
Business to be conducted only in the ordinary course. Except as
set forth on the attached Schedule 8.24, since the date of the
Most Recent Balance Sheet of H&W, H&W has not, without the prior
written consent of Bingham, which may be granted or withheld in
Bingham's sole discretion:
(a) made or incurred any capital expenditures with
respect to the H&W Business in excess of Ten Thousand
Dollars ($10,000.00) in any one transaction or Fifty
Thousand Dollars ($50,000.00) in a series of similar
transactions;
(b) except in accordance with consistent prior practice
and in the ordinary course, made any change in the
rate of compensation, commission, bonus or other
direct or indirect remuneration payable or to become
payable to any current or former employee of H&W or
agent of H&W, or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay to
any H&W employee, former employee of H&W or agent of
H&W;
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<PAGE> 18
(c) sold or transferred any of the assets of the H&W
Business, other than inventories in the ordinary
course of business;
(d) terminated or materially amended any material
contract;
(e) subjected any of H&W's properties to, or permitted
any of H&W's properties to become subject to, any
Lien other than in the ordinary course of the H&W
Business;
(f) split, combined or reclassified its outstanding
capital stock, declared, set aside or paid any
dividend or distribution payable in cash, stock,
property or otherwise, or repurchased any shares of
its outstanding capital stock;
(g) issued, sold, pledged or disposed of any additional
shares of, or any options, warrants or rights of any
kind to acquire any shares of, its capital stock or
any debt or equity securities convertible into or
exchangeable for such capital stock;
(h) redeemed, purchased, acquired or offered to purchase
or acquire any shares of its capital stock or any
options, warrants or rights to acquire any of its
capital stock or any security convertible into or
exchangeable for its capital stock;
(i) assumed, incurred or become contingently liable with
respect to any indebtedness for borrowed money other
than borrowings in the ordinary course of business
(other than pursuant to credit facilities) or
borrowings under credit facilities existing as of the
date of this Agreement up to the existing borrowing
limit on the date of this Agreement; or
(j) entered into any agreement or commitment (other than
this Agreement or any arrangement provided for or
contemplated in this Agreement) to take any of the
types of action described in subsection (a) through
(i) of this Section 8.24.
8.25. Reorganization. H&W has not willfully taken or agreed to take
any action, and neither H&W, DMRFS nor DMR have knowledge of any
fact or circumstance, that would prevent the transactions
contemplated in this Agreement from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Except as set forth on the attached Schedule 8.25, other than
the directors and officers of DMR, DMRFS and H&W, there are no
"affiliates" of H&W, as that term is defined in Rule 144(a)
promulgated under the '33 Act.
8.26. Knowledge. One or more of the persons listed on the attached
Schedule 17.11(a) could reasonably be expected to have
sufficient knowledge regarding the facts, matters and
circumstances underlying each of the representations and
warranties set forth in this Section 8 so as to be capable of
ascertaining whether or not they are completely accurate. DMR,
DMRFS and H&W have had access to, and have had sufficient time
to review and consider, the Bingham Reports and all due
diligence materials provided or otherwise made available to DMR
or its representatives by or on behalf of Bingham. DMR, DMRFS
and H&W have been afforded an opportunity to ask questions of
and receive answers from representatives of Bingham concerning
the terms and conditions of the transactions and matters
described in the Bingham Reports or such due diligence
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<PAGE> 19
materials and to obtain any additional information as DMR, DMRFS
or H&W have identified in such documents that DMR, DMRFS or H&W
have requested.
8.27. Certificate of Deposit. H&W is the sole and exclusive owner of a
Certificate of Deposit issued by the Bank of Ann Arbor in the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00). H&W
owns such Certificate of Deposit free and clear of any and all
Liens.
9. REPRESENTATIONS AND WARRANTIES CONCERNING DMR. DMR hereby represents,
warrants and covenants the following to Bingham and H&W:
9.1. Good Standing and Authority. DMR is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Michigan. DMR is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified, except
where the failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect on DMR,
DMRFS or H&W. All such jurisdictions are listed on the attached
Schedule 9.1. DMR has the corporate power and authority to enter
into this Agreement and the Attendant Documents to which it is
or will be a party and to consummate the transactions
contemplated in this Agreement and the Attendant Documents. This
Agreement and all of the Attendant Documents to which DMR is or
will be a party, and the consummation of the transactions
contemplated in this Agreement, have been duly authorized and
approved by all necessary and proper corporate action on the
part of DMR. This Agreement, and all of the Attendant Documents
to which DMR is or will be a party, when executed and delivered,
will constitute legal, valid and binding obligations of DMR,
enforceable against DMR in accordance with their respective
terms. DMR is the sole shareholder of DMRFS and, indirectly, of
H&W.
9.2. Consents, Approvals and Authorizations. Except for (i)
[intentionally omitted], (ii) [intentionally omitted], (iii)
[intentionally omitted], (iv) [intentionally omitted], and (v)
the obtainment of those Consents listed on the attached Schedule
9.2, no Consent is required on the part of DMR in connection
with the valid execution and delivery of this Agreement and the
Attendant Documents to which DMR is or will be a party or the
consummation of the transactions contemplated in this Agreement
and the Attendant Documents which, if not obtained or made, will
result in a breach or violation of an agreement, lease,
indenture or other instrument, or a judgment, decree, order,
award, law, rule or regulation applicable to or affecting DMR,
DMR's business or DMR's properties, except where the failure to
obtain the same, individually or in the aggregate, would not
have a Material Adverse Effect on DMR, DMRFS or H&W. All
Consents listed on the attached Schedule 8.2 have been obtained
and remain in full force and effect and all statutory waiting
periods in respect thereof have expired.
9.3. Financial Information. Set forth on the attached Schedule 9.3
are: (i) the audited, consolidated balance sheet of DMR as of
December 31, 1998 and the related, consolidated statements of
income and expenses, retained earnings and cash flow, and notes
thereto, for the year then ended, certified by DMR's regularly
engaged certified public accountants (collectively, the "1998
DMR Financial Statements"); and (ii) the unaudited balance
sheets of DMR as of March 31, 1999, April 30, 1999 and May 31,
1999 and the related statements of income and expenses, retained
earnings and cash flow for the months then ended (collectively,
the "Subsequent Monthly DMR Financial Statements", and together
with the 1998 DMR Financial Statements, the "DMR Financial
Statements"). All of the DMR
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<PAGE> 20
Financial Statements (i) are true, correct and complete in all
material respects; (ii) have been prepared in accordance with
generally accepted accounting principles applied consistently
with all corresponding prior fiscal periods of DMR; and (iii)
fairly present the financial condition, results of operation and
cash flows of DMR as of the dates and for the periods indicated;
subject, in the case of the Subsequent Monthly DMR Financial
Statements only, to normal year-end adjustments consistent with
past practices and the absence of footnotes (the "Missing DMR
Adjustments/Footnotes"). Except to the extent disclosed on the
attached Schedule 9.3, the Missing DMR Adjustments/Footnotes, if
presented in the Subsequent Monthly DMR Financial Statements,
would not differ materially from those included in the 1998 DMR
Financial Statements. The DMR Financial Statements make
substantially full and adequate provision for all obligations,
liabilities or commitments, whether fixed or contingent, and
doubtful accounts receivable of DMR. Bingham acknowledges that
DMR prepares cash flow statements on a quarterly basis only, any
other provision of this Agreement to the contrary
notwithstanding.
9.4. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which DMR is or
will be a party nor the consummation of the transactions
contemplated in this Agreement and the Attendant Documents will
conflict with, result in the breach or violation of or
constitute a default under the terms, conditions or provisions
of DMR's Articles of Incorporation or Bylaws, both as amended,
or any other agreement or instrument to which DMR is a party, or
by which DMR may be bound or to which DMR may be subject.
9.5. Brokerage or Finder's Fee. DMR has not engaged any broker or
finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions
contemplated in this Agreement.
9.6. Disclosure. No representation or warranty by DMR contained in
this Agreement and no statement contained in any of the
Attendant Documents to which DMR is or will be a party or any
other certificate or instrument furnished or to be furnished
pursuant to this Agreement or in connection with the
transactions contemplated in this Agreement contains or will
contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary in order to make
any of the statements not misleading.
9.7. Hart-Scott-Rodino Compliance. Pursuant to 16 CFR ss.802.20, no
notification filing is required pursuant to the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976 in
connection with the transactions contemplated in this Agreement.
9.8. Knowledge. One or more of the persons listed on the attached
Schedule 17.11(a) could reasonably be expected to have
sufficient knowledge regarding the facts, matters and
circumstances underlying each of the representations and
warranties set forth in this Section 9 so as to be capable of
ascertaining whether or not they are completely accurate. DMR
has had access to, and have had sufficient time to review and
consider, the Bingham Reports and all due diligence materials
provided or otherwise made available to DMR or its
representatives by or on behalf of Bingham. DMR has been
afforded an opportunity to ask questions of and receive answers
from representatives of Bingham concerning the terms and
conditions of the transactions and matters described in the
Bingham Reports or such due diligence materials and to obtain
any additional information as DMR has identified in such
documents that DMR has requested.
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<PAGE> 21
10. REPRESENTATIONS AND WARRANTIES OF BINGHAM. Bingham hereby
represents, warrants and covenants the following to DMR (for the
purposes of the remainder of this Section 10 only, "Bingham"
refers to Bingham and each of its subsidiaries, collectively,
and "BFSC" refers to Bingham Financial Services Corporation,
alone):
10.1. Good Standing and Authority. BFSC is a corporation
duly organized, validly existing and in good standing
under the laws of the State of Michigan. BFSC is duly
qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which it
is required to be so qualified, except where the
failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect
on Bingham. All such jurisdictions are listed on the
attached Schedule 10.1. BFSC has the corporate power
and authority to enter into this Agreement and the
Attendant Documents to which it is or will be a party
and to consummate the transactions contemplated in
this Agreement and the Attendant Documents. This
Agreement and all of the Attendant Documents to which
BFSC is or will be a party, and the consummation of
the transactions contemplated in this Agreement, have
been duly authorized and approved by all necessary
and proper corporate action on the part of BFSC. This
Agreement, and all of the Attendant Documents to
which BFSC is or will be a party, when executed and
delivered, will constitute legal, valid and binding
obligations of BFSC, enforceable against BFSC in
accordance with their respective terms, subject to
BFSC's Board of Directors approving this Agreement in
accordance with applicable law.
10.2. Consents, Approvals and Authorizations. Except for
(i) [intentionally omitted], (ii) [intentionally
omitted], (iii) [intentionally omitted], (iv)
[intentionally omitted], and (v) the obtainment of
those Consents listed on the attached Schedule 10.2,
no Consent is required on the part of Bingham in
connection with the valid execution and delivery of
this Agreement and the Attendant Documents to which
BFSC is or will be a party or the consummation of the
transactions contemplated in this Agreement and the
Attendant Documents which, if not obtained or made,
will result in a breach or violation of an agreement,
lease, indenture or other instrument, or a judgment,
decree, order, award, law, rule or regulation
applicable to or affecting Bingham, the Bingham
Business or Bingham's properties, except where the
failure to obtain the same, individually or in the
aggregate, would not have a Material Adverse Effect
on Bingham. All Consents listed on the attached
Schedule 10.2 have been obtained and remain in full
force and effect and all statutory waiting periods in
respect thereof have expired.
10.3. [intentionally omitted]
10.4. [intentionally omitted]
10.5. [intentionally omitted]
10.6. [intentionally omitted]
10.7. [intentionally omitted]
10.8. [intentionally omitted]
10.9. [intentionally omitted]
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<PAGE> 22
10.10. [intentionally omitted]
10.11. [intentionally omitted]
10.12. [intentionally omitted]
10.13. [intentionally omitted]
10.14. [intentionally omitted]
10.15. Financial Information. Set forth on the attached
Schedule 10.15 are: (i) the audited consolidated
balance sheet of BFSC and its subsidiaries as of
September 30, 1998 and the related statements of
income and expenses, retained earnings and cash flow,
and notes thereto, for the year then ended, certified
by BFSC's regularly engaged certified public
accountants (collectively, the "1998 Bingham
Financial Statements"); and (ii) the unaudited,
consolidated balance sheets of BFSC and its
subsidiaries as of October 31, 1998, November 30,
1998, December 31, 1998, January 31, 1999, February
28, 1999, March 31, 1999, April 30, 1999, and May 31,
1999 and the related statements of income and
expenses, retained earnings and cash flow for the
months then ended (collectively, the "Subsequent
Monthly Bingham Financial Statements", and together
with the 1998 Bingham Financial Statements, the
"Bingham Financial Statements"). All of the Bingham
Financial Statements (i) are true, correct and
complete in all material respects; (ii) have been
prepared in accordance with generally accepted
accounting principles applied consistently with all
corresponding prior fiscal periods of BFSC and its
subsidiaries; and (iii) fairly present the financial
condition, results of operation and cash flows of
BFSC and its subsidiaries as of the dates and for the
periods indicated; subject, in the case of the
Subsequent Monthly Bingham Financial Statements only,
to normal year-end adjustments consistent with past
practices and the absence of footnotes (the "Missing
Bingham Adjustments/Footnotes"). Except to the extent
disclosed on the attached Schedule 10.15, the Missing
Bingham Adjustments/Footnotes, if presented in the
Subsequent Monthly Bingham Financial Statements,
would not differ materially from those included in
the 1998 Bingham Financial Statements. The Bingham
Financial Statements make substantially full and
adequate provision for all obligations, liabilities
or commitments, whether fixed or contingent, and
doubtful accounts receivable of BFSC and its
subsidiaries. DMR, DMRFS and H&W acknowledge that
BFSC prepares cash flow statements on a quarterly
basis only, any other provision of this Agreement to
the contrary notwithstanding.
10.16. [intentionally omitted]
10.17. [intentionally omitted]
10.18. Non-Violative Agreement. Neither the execution and
delivery of this Agreement or the Attendant Documents
to which BFSC is or will be a party nor the
consummation of the transactions contemplated in this
Agreement and the Attendant Documents will conflict
with, result in the breach or violation of or
constitute a default under the terms, conditions or
provisions of BFSC's Articles of Incorporation or
Bylaws, both as amended, or any other agreement or
instrument to which Bingham is a party, or by which
Bingham may be bound or to which Bingham may be
subject.
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<PAGE> 23
10.19. Brokerage or Finder's Fee. Bingham has not engaged
any broker or finder or incurred any liability for
any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated in this
Agreement.
10.20. Disclosure. No representation or warranty by Bingham
contained in this Agreement and no statement
contained in any of the Attendant Documents to which
BFSC is or will be a party or any other certificate
or instrument furnished or to be furnished pursuant
to this Agreement or in connection with the
transactions contemplated in this Agreement contains
or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact,
necessary in order to make any of the statements not
misleading.
10.21. [intentionally omitted]
10.22. [intentionally omitted]
10.23. [intentionally omitted]
10.24. [intentionally omitted]
10.25. [intentionally omitted]
10.26. Knowledge. One or more of the persons listed on the
attached Schedule 17.11(b) could reasonably be
expected to have sufficient knowledge regarding the
facts, matters and circumstances underlying each of
the representations and warranties set forth in this
Section 10 so as to be capable of ascertaining
whether or not they are completely accurate. Bingham
has had access to, and has had sufficient time to
review and consider, all due diligence materials
provided or otherwise made available to Bingham or
its representatives by or on behalf of DMR. Bingham
has been afforded an opportunity to ask questions of
and receive answers from representatives of DMR
concerning the terms and conditions of the
transactions and matters described in such due
diligence materials and to obtain any additional
information as DMR or Bingham have identified in such
documents that DMR or Bingham have requested.
10.27. Consideration Shares. Subject to obtaining the
Consents referenced in Section 10.2 above, and
assuming performance by DMR, DMRFS and H&W of their
obligations under this Agreement, as of the date of
issuance, all of the shares of Bingham Common Stock
to be issued pursuant to this Agreement will have
been duly authorized, will be validly issued, will be
fully paid and non-assessable, and will have been
issued by BFSC without violating any applicable laws,
rules, orders, judgments, decrees or other
requirements imposed by any governmental authority.
10.28. Reports and Financial Statements. Since November,
1997, BFSC has filed with the SEC all forms,
statements, reports and documents (including all
exhibits, post effective amendments and supplements
thereto) required to be filed by it under each of the
'33 Act, the '34 Act and the respective rules and
regulations thereunder, all of which, as amended if
applicable, complied when filed in all material
respects with all applicable requirements o the
appropriate act and the rules and regulations
thereunder. No subsidiary of BFSC is required to file
any form, report or other document with the SEC. BFSC
has previously made available to DMR, DMRFS and H&W,
via its EDGAR filings where available, copies
(including all exhibits, post effective amendments
and supplements
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<PAGE> 24
thereto) of its (a) Annual Reports on Form 10K for
the year ended September 30, 1998, as filed with the
SEC, and (b) all other reports, including quarterly
reports, and registration statements filed by BFSC
with the SEC since November, 1997 (the documents
referred to in clauses (a) and (b) are collectively
referred to as the Bingham SEC Reports"). As of the
date of this Agreement, the Bingham SEC Reports taken
as a whole do not contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading.
11. ADDITIONAL AGREEMENTS.
11.1. Regulatory and Other Matters.
(a) [intentionally omitted]
(b) The Parties shall cooperate with each other
and use commercially reasonable efforts to
prepare and file promptly all necessary
documentation to effect or obtain as
promptly as practicable all Consents
described, in the case of DMR, DMRFS and
H&W, in Sections 7.2, 8.2 and 9.2 above, and
in the case of Bingham, in Section 10.2
above, and the Parties shall keep each other
apprised of the status of matters relating
to completion of the transactions
contemplated herein.
(c) If and to the extent required by applicable
law, at any time after the Closing Date,
DMRFS and DMR (and each Recipient (defined
in Section 15.7(a) below)) shall, on
Bingham's request, reasonably cooperate with
the Regulator (defined below) and Bingham,
and cause their respective affiliates to
reasonably cooperate with the Regulator and
Bingham, in connection with Bingham's
efforts to establish a thrift, bank or other
regulated financial institution, and shall
promptly prepare and file, and shall cause
their respective affiliates to promptly
prepare and file, any and all information
filings with the Regulator (i) which (A) are
required as a result of or in connection
with the transactions contemplated in this
Agreement, or (B) are required on the part
of DMR, DMRFS, any Recipient, or any of
their affiliates in connection with
Bingham's efforts to establish a thrift,
bank or other regulated financial
institution, and (ii) which are specifically
requested by Bingham. If and to the extent
required by applicable law, after the
Closing Date, Bingham shall use commercially
reasonable efforts to cause its affiliates
(other than DMR, DMRFS and the Recipients)
to reasonably cooperate with the Regulator
with respect to, and to prepare and file any
and all information filings with the
Regulator which are required as a result of
or in connection with, the transactions
contemplated in this Agreement or Bingham's
efforts to establish a thrift, bank or other
regulated financial institution; provided,
however, that nothing in this Section
11.1(c) shall in any way obligate Bingham to
proceed with the establishment of a thrift,
bank or other regulated financial
institution. For purposes of this Agreement,
the term "Regulator" means the Office of
Thrift Supervision or other applicable
governmental agency or other body having
regulatory authority over thrifts, banks or
other regulated financial institutions.
11.2. [intentionally omitted]
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<PAGE> 25
11.3. [intentionally omitted]
11.4. [intentionally omitted]
11.5. [intentionally omitted]
11.6. Tax Matters. Bingham shall use commercially
reasonable efforts to cause the historic business of
H&W to be continued or a significant portion of the
historic business assets of H&W to be used in a trade
or business, in a manner sufficient to comply with
the continuity of business enterprise requirements
set forth in Treasury Regulation 1.368-1(d) under
Section 368 of the Code.
11.7. Employee Benefits, Insurance and Related Matters.
Effective as of the Closing Date, DMR shall cause all
employees of H&W to be fully vested in their total
account balance under the Detroit Mortgage and Realty
Company and Subsidiaries' Employees' Profit Sharing
Plan (the "401(k) Plan"). Each employee of H&W
("Employee") who has one or more loans outstanding
from the 401(k) Plan shall be permitted to continue
repayment of such loans in accordance with the loan
terms until the earliest of the date such Employee
fails to make any loan repayment properly and timely,
the date such Employee's employment with H&W or
Bingham (or any successor thereto) terminates, the
date as of which there is otherwise a default with
respect to such loan or the date as of which the
401(k) Plan terminates. DMR shall cause to be
prepared and executed any plan amendments and shall
take all other actions necessary to provide for the
foregoing vesting and loan repayment. DMR shall
retain, bear and discharge all liabilities, and
purchaser shall not assume any liability whatsoever,
with respect to DMR's and DMRFS's employee benefit
plans. DMR and its and DMRFS's employee benefit plans
that are welfare plans shall retain, bear and
discharge all liabilities with respect to (i) the
provision of retiree and all other post employment
benefits (including COBRA) and (ii) all incurred but
not reported claims under the employee benefit plans
provided to DMR's and DMRFS's employees prior to the
Closing Date.
12. SURVIVAL. The representations and warranties set forth in the
following Sections shall survive for the time periods indicated:
Section Time Period
7.1 (first, fourth, indefinitely
fifth and sixth sentences
only), 7.19, 7.22, 7.26
7.15, 7.18, 7.20, 7.25 through the Second
Quarter Filing Date
(defined below)
7.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 7.2
8.1 (first, fourth, fifth indefinitely
and sixth sentences only),
8.5, 8.19, 8.21, 8.22, 8.26
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<PAGE> 26
8.3, 8.4, 8.7, 8.9, 8.11, through the Second
8.13. 8.15, 8.16, 8.18, Quarter Filing Date
8.20, 8.24, 8.25
8.6, 8.8, 8.10, 8.14 the applicable
statute of
limitations period,
or, if there is no
such applicable
period, three (3)
years after the
Closing Date
8.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 8.2, 8.12, 8.17
9.1 (first, fourth, fifth indefinitely
and sixth sentences only),
9.5, 9.7, 9.8
9.3, 9.4, 9.6 through the Second
Quarter Filing Date
(defined below)
9.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 9.2
10.1 (first, fourth, fifth indefinitely
and sixth sentences only),
10.19, 10.26, 10.27
10.15, 10.18, 10.20 through the Second
Quarter Filing Date
10.1 (except for the first, one (1) year after
fourth, fifth and sixth the Closing Date
sentences), 10.2
For the purposes of this Agreement, the term "Second Quarter
Filing Date" means the date on which Bingham files a 10-Q or a
10-K, as is appropriate pursuant to the '34 Act, for its
second (2nd) complete fiscal quarter following the Closing
Date. By way of example only, and assuming that the Closing
Date is July 31, 1999, the Second Quarter Filing Date would be
the date on which Bingham files a 10-Q for its fiscal quarter
ending March 31, 2000.
13. CONDITIONS TO CLOSING
13.1. [intentionally omitted]
13.2. [intentionally omitted]
13.3. [intentionally omitted]
14. CLOSING
14.1. Closing. The date on which the Closing the closing
(the "Closing") of the transactions contemplated in
this Agreement occurs is referred to in this
Agreement as the "Closing Date."
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<PAGE> 27
14.2. Documents to Be Delivered at Closing by DMR. In connection with
the Closing, DMR, DMRFS and H&W have properly executed (if
necessary) and delivered to Bingham, or cause to be executed and
delivered to Bingham, the following:
(a) Covenants Not to Compete (the "Covenants"), executed
by each of DMR, DMRFS and Daniel D. Armistead in
favor of Bingham and H&W, the terms of which shall be
mutually acceptable to the parties involved.
(b) [intentionally omitted]
(c) [intentionally omitted]
(d) A Shareholders Agreement (the "Shareholders
Agreement"), the form of which is attached to this
Agreement as Exhibit "D".
(e) An opinion of Timmis & Inman, L.L.P., counsel to DMR,
DMRFS and H&W, addressed to Bingham and H&W, the form
of which shall be reasonably acceptable to DMR's
counsel, Bingham and Bingham's counsel.
(f) Copies of DMR's, DMRFS's and H&W's Articles of
Incorporation, certified by the Michigan Department
of Consumer and Industry Services, and Certificates
of Good Standing (or analogous documents) for DMR,
DMRFS and H&W issued by the Michigan Department of
Consumer and Industry Services and each and every
other state in which H&W is authorized to do
business. All such documents shall be dated not
earlier then ten (10) days prior to the Closing Date.
(g) A copy of DMR's, DMRFS's and H&W's respective bylaws
and a copy of the resolutions of DMR's and DMRFS's
respective Boards of Directors approving the
transactions contemplated in this Agreement, and a
certificate, executed by an officer of DMR and of
DMRFS, to the effect that, as of the Closing Date,
such bylaws and minutes or resolutions are true,
complete and correct, have not be altered or repealed
and are in full force and effect.
(h) One or more properly completed assignments separate
from certificate in respect of all of the H&W Shares,
in form and content reasonably acceptable to Bingham
(collectively, the "Assignments"), a fully completed
and executed Lockup Agreement (the "Lockup
Agreement"), the form of which is attached to this
Agreement as Exhibit "A" and all of the H&W Shares;
provided, however, that the H&W Shares shall be
deemed to be transferred as of July 2, 1999.
(i) Verification, reasonably acceptable to Bingham, that
the licenses (or re-licenses) and Consents described
in Section 11.1(b) above have been obtained.
(j) [intentionally omitted]
14.3. Documents to be Delivered at Closing by Bingham. At the Closing,
Bingham shall properly execute (if necessary) and deliver to
DMRFS or other indicated person or entity, as the case may be,
or cause to be executed and delivered to DMRFS or other
indicated person or entity, as the case may be, the following:
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<PAGE> 28
(a) The shares of Bingham Common Stock
contemplated in Section 6.1 above.
(b) The Covenants.
(c) [intentionally omitted]
(d) The Shareholders Agreement.
(e) An opinion of Jaffe, Raitt, Heuer & Weiss,
Professional Corporation, counsel to
Bingham, addressed to DMR, the form of
which shall be reasonably acceptable to
Bingham's counsel, DMR and DMR's counsel.
(f) Copies of Bingham's Articles of
Incorporation, certified by the Michigan
Department of Consumer and Industry
Services, and Certificates of Good
Standing for Bingham issued by the
Michigan Department of Consumer and
Industry Services. All such documents
shall be dated not earlier then ten (10)
days prior to the Closing Date.
(g) A copy of Bingham's bylaws and a copy of
the resolutions of its Board of Directors
approving the transactions contemplated in
this Agreement, and a certificate,
executed by an officer of Bingham, to the
effect that, as of the Closing Date, such
bylaws and minutes or resolutions are
true, complete and correct, have not be
altered or repealed and are in full force
and effect.
(h) [intentionally omitted]
(i) [intentionally omitted]
15. INDEMNIFICATION
15.1. Indemnification of Bingham. DMR and DMRFS hereby
agree to jointly and severally indemnify, defend and
hold harmless Bingham, H&W, and their respective
officers, directors, shareholders, employees,
independent contractors, agents, successors and
assigns (collectively, the "Bingham Parties") from
and against any and all liabilities, losses, costs or
expenses which any of the Bingham Parties may suffer
or for which any of the Bingham Parties may become
liable and which are based on, are the result of,
arise out of or are otherwise related to any of the
following:
(a) any inaccuracy or misrepresentation, or
breach of any representation or warranty of
DMR, DMRFS or H&W contained in this
Agreement, any of the Attendant Documents or
any certificate, schedule, list or other
instrument to be furnished by DMR, DMRFS or
H&W to, or which DMR, DMRFS or H&W cause to
be furnished to, Bingham pursuant to this
Agreement or any of the Attendant Documents;
provided, however, that no Bingham Party
shall be entitled to claim indemnification
under this Section 15.1(a) based on a breach
of any representation or warranty in Section
8.16 above if the basis of such breach is
the express subject matter of another
representation or warranty set forth
elsewhere in Sections 7 or 8 above,
respectively, and the basis for the breach
of Section 8.16 above does not also
constitute a breach of such other
representation or warranty;
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<PAGE> 29
(b) any breach or failure of DMR, DMRFS or H&W
to perform any covenant or agreement
required to be performed by any of them
pursuant to this Agreement or any of the
Attendant Documents;
(c) the assertion of any claim, cause of action
or similar right by any actual or alleged
shareholder of H&W, or any person holding or
allegedly holding an option or otherwise
having a right to purchase or acquire shares
of the capital stock of H&W, against any of
the Bingham Parties, asserting that he, she
or it has an actual or contingent equity
interest in H&W;
(d) the assertion of any claim, cause of action
or similar right that Bingham is liable for
the debts, liabilities and obligations of
H&W on a "piercing the corporate veil"
theory, in light of DMR's and DMRFS's
failure to follow corporate formalities with
respect to such subsidiaries prior to the
Closing Date;
(e) any delinquencies prior to the Closing Date
with respect to H&W's loan servicing
portfolio, other than loss of servicing
income resulting from any such
delinquencies;
(f) any and all Taxes for which DMR, DMRFS or
H&W is liable in respect of any period of
time prior to the Closing Date and which
were to have been paid prior to the Closing
Date (other than those which have been
accrued as liabilities on the H&W Financial
Statements), and any and all interest, fines
or other charges or amounts assessed in
connection with any failure to pay any Taxes
for which DMR, DMRFS or H&W is or is
potentially responsible in respect of any
period of time prior to the Closing Date and
which were to have been paid prior to the
Closing Date;
(g) [intentionally omitted]; or
(h) any and all actions, suits, proceedings,
demands, assessments, judgments, costs and
expenses, including reasonable attorneys'
and consultants' fees (collectively,
"Related Expenses"), incident to any of the
foregoing.
15.2. Indemnification of DMR. Bingham hereby agrees to
indemnify, defend and hold harmless DMR and its
successors and assigns (collectively, the "DMR
Parties") from and against any and all liabilities,
losses, costs or expenses which any of the DMR
Parties may suffer or for which any of the DMR
Parties may become liable and which are based on, the
result of, arise out of or are otherwise related to
any of the following:
(a) any inaccuracy or misrepresentation in, or
breach of any representation or warranty of
Bingham contained in this Agreement, any of
the Attendant Documents or any certificate,
schedule, list or other instrument to be
furnished by Bingham to DMR pursuant to this
Agreement or any of the Attendant Documents;
provided, however, that no DMR Party shall
be entitled to claim indemnification under
this Section 15.2(a) based on a breach of
any representation or warranty in Section
10.16 above if the basis of such breach is
the express subject matter of another
representation or warranty set forth
elsewhere in Section 10 above, and the basis
for the breach of Section 10.16 above does
not also constitute a breach of such other
representation or warranty;
-28-
<PAGE> 30
(b) any breach or failure of Bingham to perform
any covenant or agreement required to be
performed by Bingham pursuant to this
Agreement or any of the Attendant Documents;
and
(c) any and all Related Expenses incident to any
of the foregoing.
15.3. Assignment of Claims. Each Party agrees that on
satisfaction of the obligation to indemnify under
this Section 15, and in consideration of such
obligation, it will assign to the Party or Parties
making such payment or giving such credit any and all
claims, causes of action and demands of whatever kind
and nature which such indemnified Party may have
against any person, firm or other entity giving rise
to such indemnified loss, and to reasonably cooperate
in any efforts to recover therefrom.
15.4. [intentionally omitted]
15.5. Remedies Exclusive. Except for specific performance,
injunctive relief, recoveries for claims of fraud
and/or claims under federal or state securities laws,
indemnification pursuant to this Section 15 shall be
the sole remedy available to the Parties for the
indemnifiable subject matters. No provision of this
Agreement shall constitute a waiver by any Party of
any claims under the federal or state securities laws
which he, she or it may have in respect of the
transactions contemplated in this Agreement.
15.6. [intentionally omitted]
15.7. No Distribution of Shares and Related Matters.
(a) Any provision of this Agreement to the
contrary notwithstanding, in no event shall
DMR or DMRFS distribute (whether in
liquidation and dissolution or otherwise),
assign, convey or otherwise transfer, in any
manner whatsoever, to any or all of its
shareholders, all of any portion of the
shares of Bingham Common Stock issued or to
be issued to DMRFS pursuant to this
Agreement, unless (i) each shareholder
actually receiving any such shares (each, a
"Recipient") agrees, in a writing reasonably
acceptable to Bingham, to be bound by and
subject to the terms of this Agreement, the
Shareholders Agreement and the Lockup
Agreement (collectively, the "Material
Agreements"), as and to the same extent as
DMRFS (provided, however, that each
Recipient other than DMR shall be liable
under this Agreement only in respect of
Section 11.1(c) above); (ii) DMR and DMRFS
shall remain liable under and subject to the
Material Agreements; and (iii) each
Recipient other than DMR executes and
delivers to Bingham and H&W a limited,
durable power of attorney, which shall be
reasonably acceptable to Bingham in form and
content, appointing one of the shareholders
of DMR (who shall be reasonably acceptable
to Bingham, except that in the case of the
liquidation and dissolution of DMR, the
trustee of the liquidating trust may be
named instead) as his, her or its
attorney-in-fact (which attorney-in-fact
shall be the same for all Recipients) (the
"Shareholder Representative"), to take any
and all actions, to make any and all
decisions, and to execute and any all
documents, required under, contemplated in,
or which are or become necessary, proper,
convenient or desirable in connection with,
the Material Agreements, for and on behalf
of such Recipient. In that event:
-29-
<PAGE> 31
(i) For all purposes relevant to the
Material Agreements, Bingham, H&W, and
all other parties to any of the
Material Agreements may deal
exclusively with the Shareholder
Representative, and shall have no
obligation whatsoever to deal with any
Recipient, with respect to all matters
in respect of any of the Material
Agreements;
(ii) Any and all rights which a Recipient
may be entitled to exercise under or
in connection with any of the Material
Agreements must be exercised by the
Shareholder Representative, on behalf
of all of the Recipients, acting as a
collective group; and
(iii) [intentionally omitted]
Except to the extent expressly contemplated
in the Shareholders Agreement and the Lockup
Agreement, the interests, rights and
obligations of the Recipients under the
Material Agreements may not be transferred
except by will, the laws of descent and
distribution or by other operation of law,
any other provision of this Agreement to the
contrary notwithstanding.
(b) Notwithstanding Section 15.7(a) above,
Bingham will not require shareholders of DMR
other than those identified on the attached
Schedule 15.7(b)-1 to agree to be bound by
and subject to the Shareholders Agreement
(but any shareholder may do so, if he, she
or it so desires), but all shareholders must
agree to be bound by and subject to this
Agreement and the Lockup Agreement, as
provided in Section 15.7(a) above. As a
condition precedent to the distribution of
any of the shares of Bingham Common Stock
issued or to be issued to DMRFS pursuant to
this Agreement, each of the shareholders
identified on the attached Schedule
15.7(b)-1 shall have executed the
Shareholders Agreement. DMR hereby covenants
and agrees that if any of the shares of
Bingham Common Stock issued or to be issued
to DMRFS pursuant to this Agreement are
distributed to its shareholders as provided
above, each of the shareholders identified
on the attached Schedule 15.7(b)-2 will
receive the number of shares of Bingham
Common Stock identified opposite his, her or
its name on the attached Schedule 15.7(b)-2.
15.8. No Right of Contribution. DMR and DMRFS shall not
have, and they hereby waive, any right of
contribution or similar right against H&W in respect
of this Agreement or any of the Attendant Documents.
16. [intentionally omitted]
17. MISCELLANEOUS
17.1. [intentionally omitted]
17.2. Expenses; Broker Fees.
(a) Expenses. Except to the extent expressly as
provided elsewhere in this Agreement,
Bingham shall be responsible for and shall
pay all legal fees, accounting fees, due
diligence costs and other expenses incurred
by it in connection with the negotiation and
preparation of this Agreement, and the
consummation of the transactions
contemplated in this Agreement and the
-30-
<PAGE> 32
Attendant Documents. Except to the extent
expressly provided elsewhere in this
Agreement, DMR shall be responsible for and
shall pay all legal fees, accounting fees,
due diligence costs and other expenses
incurred by DMRFS, H&W or it, or for which
DMRFS, H&W or it is responsible, in
connection with the negotiation and
preparation of this Agreement, the
preparation and filing of any and all
information filings with the Regulator which
are required of it as a result of or in
connection with the transactions
contemplated in this Agreement, or the
consummation of the transactions
contemplated in this Agreement and the
Attendant Documents, and DMR shall reimburse
H&W for all such fees, costs and expenses.
(b) Exceptions. Notwithstanding Section 17.2(a)
above:
(i) DMR shall be responsible for and shall
pay the first Twenty Five Thousand
Dollars ($25,000) in legal fees
Bingham incurs in connection with (A)
the negotiation and the preparation of
this Agreement and the Attendant
Documents, (B) the negotiation and the
preparation of the loan documents
being prepared in connection with the
financing of the transactions
contemplated in this Agreement (the
"Loan Documents"), and (C) the
consummation of the transactions
contemplated in this Agreement, the
Attendant Documents and the Loan
Documents.
(ii) DMR shall be responsible for and shall
pay (and to the extent paid by H&W,
shall reimburse H&W for) all fees and
other amounts due McDonald Investments
Inc. in connection with the
transactions contemplated in this
Agreement.
(iii) [intentionally omitted]
17.3. Notices. Any notice, election, demand, request,
consent, approval, concurrence or other communication
(collectively, a "notice") given or made under any
provision of this Agreement shall be deemed to have
been sufficiently given or made for all purposes only
if it is in writing and it is: (a) delivered
personally to the party to whom it is directed; (b)
sent by first class mail or overnight express mail,
postage and charges prepaid, addressed to the party
to whom it is directed, at his, her or its address
set forth below; or (c) telecopied to the party to
whom it is directed, at his, her or its address set
forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
If to DMR or DMRFS: With a required copy to:
Detroit Mortgage and Realty Company Timmis & Inman, L.L.P.
33045 Hamilton Court West 300 Talon Centre
Farmington Hills, Michigan 48334 Detroit, Michigan 48207
Attn: Daniel D. Armistead Attn: Henry J. Brennan III
FAX (248) 488-1510 FAX (313) 396-4228
</TABLE>
-31-
<PAGE> 33
<TABLE>
<CAPTION>
<S> <C> <C>
If to Bingham or H&W: With a required copy to:
Bingham Financial Services Jaffe, Raitt, Heuer & Weiss,
Corporation Professional Corporation
260 East Brown Street, Suite 200 One Woodward Avenue, Suite 2400
Birmingham, Michigan 48009 Detroit, MI 48226
Attention: Gary A. Shiffman Attention: Peter Sugar
FAX (248) 932-3072 FAX (313) 961-8358
</TABLE>
Unless any other provision of this Agreement
expressly provides to the contrary, any notice:
(i) given or made in the manner indicated
in Section 17.3(a) above shall be
deemed to have been given or made on
the day on which such notice was
actually delivered to an adult
residing or employed at the address of
the intended recipient, but if such
day was not a business day, such
notice shall be deemed to have been
given or made on the first business
day following such day;
(ii) given or made in the manner indicated
in this Section 17.3(b) shall be
deemed to have been given or made on
the third (3rd) business day after the
day on which it was deposited in a
regularly maintained receptacle for
the deposit of the United States'
mail, or in the case of overnight
express mail, on the business day
immediately following the day on which
it was deposited in a regularly
maintained receptacle for the deposit
of overnight express mail, provided
that the notice is subsequently
delivered by the U.S. Post Office or
the courier service to the designated
address in the ordinary course of
business; and
(iii) given or made in the manner indicated
in this Section 17.3(c) above shall be
deemed to have been given or made on
receipt by the transmitting party of
printed confirmation that the
transmission was received, provided
that if the transmission occurs after
4:30 p.m. EST or EDT (as appropriate)
or on a non-business day, the notice
shall be deemed to have been given or
made on the first business day to
follow such transmission.
Notwithstanding the immediately preceding sentence,
if the intended recipient actually receives a notice
before the date on which such notice is deemed to
have been given or made, as specified above, the date
of actual receipt shall be the date on which such
notice is deemed to have been given or made for the
purposes of this Agreement.
17.4. Change of Address. Any Party may change his, her or
its address for purposes of this Agreement by giving
all of the Parties notice of such change in the
manner provided in Section 17.3 above.
17.5. Headings. The headings contained in this Agreement
are for reference purposes only and shall not in any
way affect the meaning or interpretation of this
Agreement.
-32-
<PAGE> 34
17.6. Construction. This Agreement has been executed in,
and shall be construed and enforced in accordance
with the laws of, the State of Michigan, without
regard to its conflicts of law principles.
17.7. No Assignment; Benefit. Subject to Section 15.7
above, no Party may assign its rights and obligations
under this Agreement without the prior written
consent of the other Parties. Subject to the
foregoing, this Agreement shall be binding on and
inure to the benefit of the Parties and their
respective successors and assigns.
17.8. Entire Agreement. This Agreement, including the
Exhibits and the Schedules attached or to be attached
to it, is and shall be deemed to be the complete and
final expression of the agreement between the Parties
as to the matters contained in and related to this
Agreement and supersedes any previous agreements
between the Parties pertaining to such matters,
except to the extent expressly provided in Section
17.1 above.
17.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an
original and all of which together shall be
considered one and the same agreement. Photostatic or
facsimile reproductions of this Agreement may be made
and relied upon to the same extent as originals.
17.10. Waiver. The waiver by any Party of any provision of
this Agreement or any breach of any such provision
shall not operate or be construed as a waiver of any
subsequent or similar breach. Any waiver of any such
provision or any such breach must be in writing.
17.11. Knowledge or Awareness.
(a) For purposes of this Agreement, to the
extent any of the representations or
warranties of DMR or DMRFS in this Agreement
are expressed in terms of its or their
"knowledge" or "awareness" (or other terms
of similar meaning), such qualifications
shall refer to those facts of which any of
the persons identified on the attached
Schedule 17.11(a) have actual knowledge, and
to those facts which any of such persons
reasonably should be expected to know, had
any of them conducted a reasonable
investigation into the matter. To the extent
Bingham has actual knowledge of a fact
(other than facts relative to those matters
disclosed on the attached Schedule 17.11(a))
that would constitute a breach by DMR or
DMRFS under this Agreement and it closes
under this Agreement, the Bingham Parties
shall be precluded from making any claim
based on such fact.
(b) For purposes of this Agreement, to the
extent any of the representations of Bingham
(or any of its subsidiaries) in this
Agreement are expressed in terms of its
"knowledge" or "awareness" (or other terms
of similar meaning), such qualifications
shall refer to those facts of which any of
the persons identified on the attached
Schedule 17.11(b) have actual knowledge, and
to those facts which any of such persons
reasonably should be expected to know, had
any of them conducted a reasonable
investigation in the matter. To the extent
DMR, DMRFS or H&W has actual knowledge of a
fact (other than facts relative to those
matters disclosed on the attached Schedule
17.11(b)) that would constitute a breach by
Bingham (or any of its subsidiaries) under
this Agreement and
-33-
<PAGE> 35
DMR closes under this Agreement, the DMR
Parties shall be precluded from making any
claim based on such fact.
17.12. Amendment. This Agreement may only be amended by
written agreement executed by all of the Parties.
17.13. Further Assurances. From time to time after the
Closing Date, at Bingham's or H&W's request and
without further consideration, DMR shall execute and
deliver or cause to be executed and delivered such
further instruments of conveyance, assignment and
transfer and shall take such other action as Bingham
or H&W may reasonably request in order more
effectively to convey, transfer, reduce to possession
or record title to any of the assets of H&W or the
H&W Shares acquired pursuant to this Agreement. On
Bingham's or H&W's request, DMR shall cooperate and
use its best efforts to have DMR's, DMRFS's and H&W's
current and former, officers, directors,
shareholders, employees and agents cooperate with
Bingham and H&W on or after the Closing Date by
furnishing information, evidence, testimony and other
assistance in connection with any actions,
proceedings, arrangements or disputes involving
Bingham or H&W and which are based on contracts,
leases, arrangements or acts of DMR, DMRFS or H&W
which were in effect or occurred on or prior to the
Closing Date.
17.14. Schedules and Exhibits.
(a) [intentionally omitted]
(b) Any provision of this Agreement to the
contrary notwithstanding, and despite any
"as of" date or similar qualifier set forth
on any Schedule to this Agreement, the
information set forth in such Schedule, when
finalized in accordance with Section
17.14(a) above, shall be as of the date of
this Agreement, unless an alternative date
is expressly set forth in this Agreement.
17.15. [intentionally omitted]
[the remainder of this page intentionally left blank]
-34-
<PAGE> 36
IN WITNESS WHEREOF, the undersigned have caused this Reorganization
Agreement to be executed as of June 30, 1999.
BINGHAM FINANCIAL SERVICES
CORPORATION, a Michigan corporation
By: /s/ Ronald A. Klein
-----------------------------------------
Its: Chief Executive Officer
-----------------------------------------
DETROIT MORTGAGE AND REALTY
COMPANY, a Michigan corporation
By: /s/ Daniel D. Armistead
-----------------------------------------
Its: Chairman
-----------------------------------------
DMR FINANCIAL SERVICES, INC.,
a Michigan corporation
By: /s/ Mark C. Stevens
-----------------------------------------
Its: President and CEO
-----------------------------------------
HARTGER & WILLARD MORTGAGE ASSOCIATES, INC.,
a Michigan corporation
By: /s/ Mark C. Stevens
-----------------------------------------
Its: Vice President
-----------------------------------------
-35-
<PAGE> 1
Exhibit 2.2
LOCKUP AGREEMENT
THIS LOCKUP AGREEMENT (this "Agreement") is executed effective as of
July 2, 1999 by DMR Financial Services, Inc., a Michigan corporation
("Securityholder"), in favor of Bingham Financial Services Corporation, a
Michigan corporation ("Bingham"). All capitalized terms used, but not defined,
in this Agreement have the same meanings as in the Reorganization Agreement
(defined below).
WHEREAS, Bingham, Security holder, Detroit Mortgage and Realty Company,
a Michigan corporation ("DMR"), and Hartger & Willard Mortgage Associates, Inc.,
a Michigan corporation, are parties to a Reorganization Agreement, dated June
30, 1999 (as the same may have been or may be amended or supplemented, the
"Reorganization Agreement"); and
WHEREAS, pursuant to the Reorganization Agreement, Bingham will issue
to Securityholder, as the consideration to be paid under the Reorganization
Agreement, shares of Bingham's common stock, without par value (the "Shares");
and
WHEREAS, Bingham has required that Securityholder enter into this
Agreement as a condition to the issuances of shares of Bingham's common stock to
Securityholder.
NOW, THEREFORE, in consideration of the foregoing and the consideration
to be given to Securityholder under the Reorganization Agreement, Securityholder
hereby agrees as follows, for the benefit of Bingham and its successors and
assigns:
1. Agreement Not to Sell. Except in connection with transfers pursuant
to Sections 2 or 3 of the Shareholders Agreement dated as of July 2, 1999 by and
among Bingham, Securityholder, DMR and the persons identified as
"Shareholders/Directors" on Schedule I thereto (the "Shareholders Agreement"),
Securityholder shall not, directly or indirectly, sell, offer to sell, solicit
an offer to buy, contract to sell (including, without limitation, any short
sale), grant any option to purchase or right to acquire, acquire any option to
dispose, or otherwise transfer or dispose of, or pledge, grant a lien on or
otherwise encumber (all together, a "Transfer"), all or any part of the Shares
for a period beginning on the Closing Date and ending four (4) years and one (1)
day after the Closing Date, if an Affiliate (defined in paragraph 5 below), or
ending eighteen (18) months and one (1) day after the Closing Date, if not an
Affiliate, subject to the provisions set forth in paragraphs 2, 3 and 4 below.
2. Staggered Release of Shares from Lockup Provisions. Notwithstanding
paragraph 1 above, Securityholder, if an Affiliate, shall be permitted to
Transfer the Shares in the following amounts and on the following dates, subject
to the provisions of the Shareholders Agreement:
Beginning two (2) years and one (1) day up to 25% of the Shares then
after the Closing Date owned, beneficially or of
record, by Securityholder
<PAGE> 2
Beginning three (3) years and one up to 50% of the Shares then
(1) day after the Closing Date owned, beneficially or of
record, by Securityholder
Beginning four (4) years and up to 100% of the Shares then
one (1) day after the Closing Date owned, beneficially or of
record, by Securityholder
3. Release of Shares from Lockup Provisions on the Occurrence of
Certain Events.
(a) Notwithstanding paragraph 1 above, Securityholder shall no
longer be subject to the provisions of paragraph 1 above on the
occurrence of a Change In Control (defined below). For purposes of this
Agreement, the term "Change In Control" means that there has been a
change, in any single transaction, in the beneficial ownership of more
than fifty percent (50%) of the voting securities of Bingham, whether
by purchase and sale, exchange, conversion, merger or other transfer;
provided, however, that for the purpose of determining whether, with
respect to any single transaction, a Change In Control has occurred,
the beneficial ownership of any Shares which are subject to this Lockup
Agreement shall be deemed not to have changed by virtue of such
transaction.
(b) Notwithstanding paragraph 1 above, if, at any time, the
number of shares of Bingham's common stock then owned, beneficially or
of record, by those persons who were members of the Board of Directors
of Bingham on January 8, 1999 (the "Obligated Persons"), collectively,
is equal to or less than eighty percent (80%) of the number of shares
of Bingham's common stock owned, beneficially or of record, by them,
collectively, as of the Closing Date, then Securityholder shall be
permitted to Transfer up to ten percent (10%) of the number of the
Shares then owned, beneficially or of record, by Securityholder;
provided, however, that Shares previously Transferred in accordance
with paragraph 2 above shall be counted toward such ten percent (10%)
limit. Thereafter, for each additional ten percent (10%) of the number
of shares of Bingham's common stock which, at any time, the Obligated
Persons, collectively, cease to own, beneficially or of record, as
compared to the number of shares of Bingham's common stock owned,
beneficially or of record, by them, collectively, as of the Closing
Date, Securityholder shall be permitted to Transfer up to an additional
ten percent (10%) of the Shares then owned, beneficially or of record,
by Securityholder; provided, however, that Shares previously
Transferred in accordance with paragraph 2 above shall be counted
toward such additional ten percent (10%). For example, if, at some
future time, the Obligated Persons own, collectively, fifty-nine
percent (59%) of the number of shares of Bingham's common stock owned
by them, collectively, as of the Closing Date, Securityholder shall be
permitted to Transfer up to a total of thirty percent (30%) of the
number of the Shares then owned by Securityholder, including all
Transfers previously made pursuant to paragraph 1 above or either of
the first two sentences of this paragraph 3(b). All Transfers pursuant
to this paragraph 3(b) shall be subject to the provisions of the
Shareholders Agreement.
2
<PAGE> 3
4. Exempt Transfers. Notwithstanding paragraph 1 above,
Securityholder may Transfer all or any part of the Shares, so long as such
Transfer is an Exempt Transfer (defined below). For purposes of this Agreement,
an "Exempt Transfer" is: (a) a Transfer to Bingham, DMR or the shareholders of
DMR pursuant to and in accordance with Section 15.7 of the Reorganization
Agreement; (b) a Transfer entirely between or among any of the Shareholders (as
defined in the Shareholders Agreement), provided, however, that any such
Transfer shall be subject to, and must be effected in accordance with, the terms
and conditions of Section 15.7 of the Reorganization Agreement; (c) assuming
that the Transfer to the shareholders of DMR contemplated in Section 15.7 of the
Reorganization Agreement has been effected, a Transfer by will or intestate
succession to a Shareholder's executors, administrators, testamentary trustees,
legatees or beneficiaries; (d) assuming that the Transfer to the shareholders of
DMR contemplated in Section 15.7 of the Reorganization Agreement has been
effected, a Transfer to a Shareholder's immediate family members or to a
Michigan revocable inter-vivos trust, of which a Shareholder is the grantor, or
another entity controlled by such Shareholder formed primarily for estate
planning purposes for the benefit of said Shareholder; (e) a Transfer to an
organization exempt from taxation under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), so long as the transferor is not
a "disqualified person" (as defined in Section 4946(a) of the Code, assuming
that all references to "private foundation" or "foundation" in such Section
4846(a) are interpreted to mean the organization in question) with respect to
such organization (and/or his spouse, children, grandchildren, parents and/or
siblings) (the parties identified in (b), (c), (d) and (e), or any one of them
are hereinafter collectively referred to as "Permitted Transferees"); or (f) a
Transfer in a public offering by Bingham pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), or in a
transaction not involving a public offering pursuant to Rule 144 promulgated
thereunder. The transferee in any Exempt Transfer shall take the Shares in
question subject to the terms of this Agreement. Finally, notwithstanding
paragraph 1 above, Securityholder shall be entitled to pledge the Shares to a
secured creditor pursuant to a bona fide loan transaction (but not in connection
with any short sale, hedge, collar or other transaction which is not a bona fide
loan), provided that the pledgee agrees, in writing, to be bound by the
restrictions and obligations set forth in this Agreement.
5. Definition of Affiliate. Detroit Mortgage and Realty Company
and DMR Financial Services, Inc. shall each be considered an "Affiliate" for
purposes of this Agreement. In addition, and assuming Detroit Mortgage and
Realty Company distributes the Shares to its shareholders pursuant to and in
accordance with the terms and conditions of the Reorganization Agreement, each
of the following persons shall be considered an "Affiliate" for purposes of this
Agreement: Daniel D. Armistead, Mark C. Stevens, Joseph L. Loving, William Clark
Durant and those other persons listed on Schedule 15.7(b)-1 to the
Reorganization Agreement.
6. Compliance With Securities Laws. Any other provision of his
Agreement to the contrary notwithstanding, Securityholder shall not, directly or
indirectly, sell, offer to sell, solicit an offer to buy, contract to sell
(including without limitation, any short sale), grant any option to purchase or
right to acquire, acquire any option to dispose, or otherwise transfer or
dispose of, or pledge, grant a lien on or otherwise encumber, all or any portion
of the Shares, unless such Shares are registered pursuant to an effective
registration statement under, or except in accordance with an exemption from,
all applicable federal and state securities laws. In addition, Securityholder
acknowledges that the Shares may be subject to Rule 145 promulgated under the
Act.
3
<PAGE> 4
7. Interpretation and Governing Laws. Paragraph headings are for
convenience only and are not to be deemed to be part of this instrument. Any
reference herein to a person in the singular or the plural or as him, her, it or
other like reference, shall also, where the context so requires, be deemed to
include the singular or the plural reference, or the masculine, feminine or
neuter reference, as the case may be. The laws of the State of Michigan (being
the state in which the closing of the transactions contemplated in the
Reorganization Agreement is to take place, and the state the laws of which have
been selected to govern the Reorganization Agreement) shall govern all questions
as to the validity of this power and the construction of its provisions, without
regard to its conflict of laws provisions. Photographic or other facsimile
reproductions of this executed document may be relied on by any person to the
same extent as though the copy were an original. This Agreement may not be
amended unless such amendment is in writing and acknowledged in writing by
Bingham. Any waiver of any provision of this Agreement must be in writing, and
any such waiver in any one circumstance shall not operate as a waiver in any
subsequent or similar circumstance.
IN WITNESS WHEREOF, Securityholder has executed this Lockup Agreement
effective as of July 2, 1999.
"SECURITYHOLDER":
DMR FINANCIAL SERVICES, INC.
By: /s/ Mark C. Stevens
-----------------------------------------
Its: President and CEO
-----------------------------------------
STATE OF )
------------
) ss
COUNTY OF )
------------
On this ______ day of ___________, 1999, before me, a Notary Public,
personally appeared _____________, the _____________ of the "Securityholder"
identified above, who executed the above Lockup Agreement for and on behalf of
such corporation.
-----------------------------
Notary Public,
County,
--------- -------------
My commission expires:
-------
4
<PAGE> 1
Exhibit 2.3
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of July 2,
1999, is made and entered into by and among BINGHAM FINANCIAL SERVICES
CORPORATION, a Michigan corporation (the "Company"), the persons identified as
"Shareholder/Directors" on Schedule 1 attached hereto, DMR FINANCIAL SERVICES,
INC., a Michigan corporation ("DMRFS"), and DETROIT MORTGAGE AND REALTY COMPANY,
a Michigan corporation ("DMR"). For purposes of this Agreement, the term "DMR
Shareholders" means the shareholders of DMR, as identified on Schedule 2
attached hereto. For purposes of this Agreement, the term "Shareholders" means
(i) each of the Shareholder/Directors and DMRFS, until such time, if ever, as
DMRFS distributes to DMR the shares of Common Stock (defined in Recital B below)
issued to DMRFS pursuant to the Reorganization Agreement (defined in Recital A
below); (ii) each of the Shareholder/Directors and DMR, after DMRFS so
distributes such shares to DMR, and until such time, if ever, as DMR distributes
such shares to the DMR Shareholders pursuant to the Reorganization Agreement;
and (iii) each of the Shareholder/Directors and each of the Bound DMR
Shareholders (defined below), thereafter. For purposes of this Agreement, the
term "Bound DMR Shareholders" means those DMR Shareholders who agree, in
writing, and in a form reasonably acceptable to Bingham, to be bound by and
subject to the terms of this Agreement, as and to the same extent as DMR, and
jointly and severally with DMR and any and all other DMR Shareholders who have
agreed to be identically bound by and subject to the terms of this Agreement.
RECITALS
A. The Company, DMRFS, DMR and Hartger & Willard Mortgage Associates,
Inc. ("H&W") have entered into that certain Reorganization Agreement dated June
30, 1999 (as the same may have been or may be amended or supplemented, the
"Reorganization Agreement").
B. The Company's authorized capital stock consists of 10,000,000 shares
of common stock (the "Common Stock") and 10,000,000 shares of preferred stock,
of which there were 2,422,484 shares of common stock, without par value, issued
and outstanding as of June 30, 1999. The shares of the Common Stock have all of
the rights, preferences and limitations of shares of common stock stated in the
Michigan Business Corporation Act, as amended (the "Act").
C. Pursuant to the Reorganization Agreement, the Company shall acquire
all of the issued and outstanding shares of the capital stock of H&W from DMR.
D. In connection with that transaction, DMRFS shall become a
shareholder of the Company. Current directors and key shareholders of the
Company (i.e. the Shareholder/Directors) have executed and joined this Agreement
as Shareholders and, as of the date of this Agreement, are the beneficial owners
of shares of Common Stock in the amounts set forth on Schedule 1 hereto.
<PAGE> 2
NOW THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and agreements contained in this Agreement and other good and
valuable consideration, the receipt and adequacy of which is acknowledged, the
undersigned agree as follows:
SECTION 1. CERTAIN GOVERNANCE MATTERS.
1.1 [intentionally omitted]
1.2 Board Elections. In connection with any election of directors,
DMRFS and the Bound DMR Shareholders shall vote all of their respective shares
of Common Stock in accordance with the recommendations of the Board.
1.3 Standstill. DMRFS and DMR agree that, until this Agreement is
terminated in accordance with its terms, unless specifically requested by the
Company in writing, neither DMR, DMRFS nor any of its affiliates (as such term
is defined in the Securities Exchange Act of 1934, as amended (the "1934 Act"))
or any of their respective directors, officers, employees, agents, advisors or
representatives will in any manner, directly or indirectly, or in conjunction
with any other person or entity: (a) effect or seek, offer or propose (whether
publicly or otherwise) to effect, or cause or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or assets of the
Company or any plan or proposal which would require the filing of a Schedule 13D
or an amendment to a schedule 13D to report a plan or purpose which would relate
to or would result in any of the events discussed in Items (a) through (j) of
the instructions to Item 4 of the Schedule 13D, other than for investment
purposes; (ii) any tender or exchange offer, merger or other business
combination involving the Company; (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company; or (iv) any "solicitation" of "proxies" (as such terms are defined in
Rule 14a-1 under the 1934 Act) or consents to vote any securities of the
Company; (b) form, join or in any way participate in a "group" (as defined in
the 1934 Act) or otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or policies of the
Company, other than in their roles in management and as members of the Board of
Directors; (c) take any action which would result in or reasonably be expected
to result in the Company making a public announcement regarding any of the
foregoing; or (d) enter into any discussions or arrangements with any third
party with respect to any of the foregoing.
SECTION 2. TAG-ALONG RIGHTS.
2.1 Proposed Transfer. If one or more of the Shareholders proposes
(the person or group making such proposal being the "Selling Group" and the
remaining Shareholders being the "Tag-Along Group") a Transfer (defined in
Section 2.4 below) of five percent (5%) or more of the Common Stock, and
provided that the Transfer is not an Exempt Transfer (defined in Section 2.5
below), then each of the Shareholders comprising the Tag-Along Group (each a
"Tag-Along Shareholder") shall have the right ("Tag-Along Right") to require the
proposed purchaser(s) to purchase from such Tag-Along Shareholder up to the
number of whole shares of Common Stock not to exceed the number derived by
multiplying the total number of shares of Common Stock to be
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<PAGE> 3
purchased by the proposed purchaser(s) by a fraction, the numerator of which is
the total number of shares of Common Stock owned by such Tag-Along Shareholder,
and the denominator of which is the total number of shares of Common Stock owned
by (i) the members of the Seller Group, (ii) the members of the Tag-Along Group,
and (iii) any other shareholders of the Company who are entitled to analogous
tag-along rights in connection with the transaction in question, collectively.
Any shares purchased from Tag-Along Shareholders pursuant to this Section 2
shall be paid for at the same price per share and upon the same terms of payment
and conditions, including price per share and the total number of shares
proposed to be transferred, as such proposed Transfer by the Selling Group (the
"Transfer Terms").
2.2 Tag-Along Notice. The Selling Group shall promptly notify the
Company and the Tag-Along Group in the event they propose to make a Transfer
giving rise to Tag-Along Rights, and shall furnish the Tag-Along Group with the
Transfer Terms and a copy of any written offer or agreement pertaining thereto.
The Tag-Along Right may be exercised by any Tag-Along Shareholder by delivery of
a written notice to the Selling Group (the "Tag-Along Notice") within twenty
(20) days following such Tag-Along Shareholder's receipt of such notice from the
Selling Group. The Tag-Along Notice shall state the number of shares of Common
Stock that such Tag-Along Shareholder proposes to include in the Transfer to the
proposed purchaser (not to exceed the number determined in accordance with
Section 2.1 above). In the event that the proposed purchaser does not purchase
the specified number of shares from the Tag-Along Shareholders on the Transfer
Terms, then the Selling Group shall only be permitted to sell any other number
of shares of Common Stock to the proposed purchaser (an "Alternate Transfer")
if: (a) the number of shares to be sold in the Alternate Transfer is less than
five percent (5%) of the then-issued and outstanding Common Stock of the
Company; or (b) the Tag-Along Shareholders are given five (5) days written
notice of the proposed Alternate Transfer and the right to participate pro rata
in the Alternate Transfer (calculated using the formula set forth in Section
2.1) under the same terms and conditions as the Selling Group.
2.3 Closing. At the closing of any Transfer pursuant to this
Section 2, the proposed purchaser shall remit to each selling Shareholder the
consideration for the total sales price of the Common Stock of such Shareholder
sold pursuant hereto, upon delivery by such Shareholder of certificate(s) for
such shares duly endorsed in blank for transfer or accompanied by stock power(s)
duly executed in blank and such other transfer documentation, including but not
limited to representations and warranties of title, as shall be reasonably
required by the purchaser or its counsel.
2.4 Transfer. A "Transfer" of stock under this Section 2 shall
mean a sale, exchange, or other transfer to be consummated in a single transfer
or a series of related transfers, to a single purchaser or a group of
purchasers, as part of a single transaction or group of related transactions.
For purposes of this Section 2, transactions which occur or are proposed to
occur more than six (6) months apart shall not be considered to be a group of
related transactions, so long as those transactions are not part of an expressly
related group of transactions.
2.5 Exempt Transfer. The following transactions shall constitute
"Exempt Transfers" as that term is used in this Section 2: (a) a Transfer to the
Company, DMR or the shareholders of DMR
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<PAGE> 4
pursuant to and in accordance with Section 15.7 of the Reorganization
Agreement; (b) a Transfer entirely between or among any of the Shareholders
executing this Agreement; (c) a Transfer by will or intestate succession to a
Shareholder's executors, administrators, testamentary trustees, legatees or
beneficiaries; (d) a Transfer to a Shareholder's immediate family members or to
a Michigan revocable inter-vivos trust, of which a Shareholder is the grantor,
or another entity controlled by such Shareholder formed primarily for estate
planning purposes for the benefit of said Shareholder (and/or his spouse,
children, grandchildren, parents and/or siblings); (e) a Transfer to an
organization exempt from taxation under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), so long as the transferor is not
a "disqualified person" (as defined in Section 4946(a) of the Code, assuming
that all references to "private foundation" or "foundation" in such Section
4846(a) are interpreted to mean the organization in question) with respect to
such organization (the parties identified in (b), (c), (d) and (e), or any one
of them are hereinafter collectively referred to as "Permitted Transferees"); or
(f) a Transfer in a public offering by the Company pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
or in a transaction not involving a public offering pursuant to Rule 144
promulgated thereunder. The transferee in any Exempt Transfer shall take the
shares in Common Stock in question subject to the terms of this Agreement.
2.6 [Intentionally Omitted]
SECTION 3. REGISTRATION RIGHTS.
The Company covenants and agrees as follows, for the benefit of all of
the DMR Shareholders (provided, however, that with respect to any given DMR
Shareholder, the Company's willingness to make the following covenants and
agreements is conditioned on such DMR Shareholder being subject to the
provisions of this Section 3):
3.l Definitions. For purposes of this Section 3:
(a) The terms "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document pursuant to the Securities Act of 1933,
as amended (the "1933 Act"), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means Common Stock of
the Company issued pursuant to the Reorganization Agreement
("Consideration Stock") and any Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of Consideration Stock, held by
the Holders (as defined below), excluding shares sold or otherwise
transferred pursuant to Rule 144 under the Securities Act, and also
excluding, for the purposes of Section 3.2 below only, (i) shares that
are held by Holders who are not affiliates of the Company that are
eligible for sale pursuant to Rule 144 under the Securities Act, and
(ii) shares held by each Holder who is an affiliate of the company if
all of such shares are eligible for sale pursuant to Rule 144 under the
Securities Act and could be sold in one transaction in accordance with
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<PAGE> 5
the volume limitations contained in Rule 144(e)(1)(i) under the
Securities Act; provided, however, that Common Stock or other
securities shall only be treated as Registrable Securities if and so
long as (1) they have not been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities
transaction, and (2) they have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the 1933
Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the
consummation of such sale;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which
are, Registrable Securities;
(d) The term "Holder" means DMR and/or any DMR Shareholder who
is the record owner of Registrable Securities and who, at the request
of Bingham, agrees in writing to be bound by and subject to the terms
of Section 3.9 below, or any assignee thereof in accordance with
Section 3.11 hereof; and
(e) The term "SEC" means the Securities and Exchange
Commission or any other federal agency at the time administering the
1933 Act.
3.2 Company Registration. If at any time, the Company (without any
obligation to do so) proposes to register any of its stock or other securities
under the 1933 Act in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a SEC Rule 145 transaction (or any transaction under
any successor provision)), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within thirty (30) days after mailing of such notice by the Company
in accordance with Section 5.6, the Company shall, subject to the provisions of
Sections 3.5, 3.6, 3.7 and 3.8, cause to be registered under the 1933 Act all of
the Registrable Securities that each such Holder has requested to be registered.
If the number of Registrable Securities which a Holder desires to be registered,
together with the number of shares of stock or other securities of the Company
with respect to which other persons or entities have registration rights and
which such persons and entities desire to be registered, exceed the number of
shares of stock or other securities which the Company intends to register, then
each Holder and each such other person or entity shall be entitled to have
registered a pro-rata share of his, her or its shares of stock or other
securities, based on the number of shares of stock or other securities which all
such Holders and other persons and entities desired to be registered.
Notwithstanding the foregoing, the Company will not be required to give notice
to the Holders of Registrable Securities if the underwriters managing the
proposed offering have advised the Company in writing that in their judgment
market conditions will not allow the inclusion of any secondary shares in such
offering. In the event the managing underwriters and the Company subsequently
determine to add any secondary
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<PAGE> 6
shares in the offering, such notice shall be provided, and each Holder shall
have the registration rights provided in this Section 3. Notwithstanding the
foregoing, no Holder shall have any rights under this Section 3.2 in connection
with any "demand registration" initiated or requested by any person or entity
(other than a Holder) who or which has registration rights with respect to
shares of stock or other securities of the Company, unless the number of
Registrable Securities which the Holders desire to be registered will not limit
in any way the number of shares of stock or other securities of the Company
which such other person or entity desires to register.
3.3 Demand Registration.
(a) Subject to the terms of this Agreement, in the event that
the Company shall, not sooner than the second (2nd) anniversary of the
date of this Agreement, and not later than the fifth (5th) anniversary
of the date of this Agreement, receive from the Holders, or any subset
of them, a written notice that it or they intend to offer or cause to
be offered for public sale Registrable Securities at an aggregate
offering price to the public of not less than Five Million Dollars
($5,000,000.00), the Company will so notify DMRFS, DMR or the
Shareholder Representative (as defined in the Reorganization
Agreement), and DMRFS, DMR or the Shareholder Representative, as the
case may be, shall so notify all Holders.
(b) Subject to the terms of this Agreement, in the event that
the Company shall, not sooner than the fifty (5th) anniversary of the
date of this Agreement, and not later than the seventh (7th)
anniversary of the date of this Agreement, receive from the Holders, or
any subset of them, a written notice that it or they intend to offer or
cause to be offered for public sale Registrable Securities at an
aggregate offering price to the public of not less than Five Million
Dollars ($5,000,000.00), the Company will so notify DMRFS, DMR or the
Shareholder Representative (as defined in the Reorganization
Agreement), and DMRFS, DMR or the Shareholder Representative, as the
case may be, shall so notify all Holders.
(c) Upon written request of any Holder given within eighteen
(18) days after the receipt by DMRFS, DMR or the Shareholder
Representative, as is appropriate, from the Company, of a notification
pursuant to Section 3.3(a) or 3.3(b) above, the Company will use
commercially reasonable efforts to cause such of the Registrable
Securities as may be requested by any Holder (including the Holder
giving the initial notice of intent to offer) to be registered under
the Act as expeditiously as possible (a "Demand Registration"). The
Company shall not be required to effect more than one (1) Demand
Registration pursuant to Section 3.3(a) above, and the Company shall
not be required to effect more than one (1) Demand Registration
pursuant to Section 3.3(b) above.
(d) If (i) in the good faith judgment of the Board, a Demand
Registration would be materially detrimental to the Company and the
Board concludes, as a result, that it is essential to defer the filing
of such registration statement at such time, and (ii) the Company shall
furnish to DMRFS, DMR or the Shareholder Representative, as is
appropriate, a certificate signed by the President of the Company
stating that, in the good
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<PAGE> 7
faith judgment of the Board, it would be materially detrimental to the
Company for such registration statement to be filed in the near future,
then the Company shall have the right to defer such filing for the
period during which such Demand Registration would be materially
detrimental, provided that the Company may not defer the filing for a
period of more than ninety (90) days after receipt of the request for a
Demand Registration, and more than once in any 12-month period.
(e) In the case of any registration, filing or qualification
of Registrable Securities pursuant to this Section 3.3, DMRFS or the
Shareholder Representative, as the case may be, shall be responsible
for sending all notifications to the Holders, and for obtaining the
signatures of the Holders to all documents required to be delivered by
the Holders pursuant to this Agreement in connection with such
registration, filing or qualification, and all costs and expenses
associated with sending such notices or obtaining such signatures, any
provision of this Agreement to the contrary notwithstanding.
3.4 Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities pursuant to Sections 3.2 or 3.3 above, or a
combination thereof, including (without limitation) all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses and fees and reimbursements the
counsel, independent certified public accountants, underwriters and other
persons retained by the Company, the expense of reporting or disclosing this
Agreement or its attendant rights and obligations (including filings required
under Section 13(d) of the 1934 Act), the expense of any annual audit, the
expense of any liability insurance and the expense and fees for listing the
securities, but excluding underwriting discounts and commissions and stock
transfer taxes relating to Registrable Securities, and also excluding costs
incurred under Section 3.3 in connection with notifying the Holders.
3.5 Obligations of the Company. Whenever registering any
Registrable Securities pursuant to Sections 3.2 or 3.3 above, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use commercially
reasonable efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration
statement effective for up to ninety (90) days (or longer if otherwise
provided in this Section 3) or until all of the securities registered
thereunder are sold, whichever occurs sooner.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement.
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<PAGE> 8
(c) Furnish to the Holders, in the case of a registration
pursuant to Section 3.2 above, or to DMR or the Shareholder
Representative, as is appropriate, in the case of a registration
pursuant to Section 3.3 above, such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the 1933 Act, and such other documents as they or it may reasonably
request in order to facilitate the disposition of Registrable
Securities owned by the Holders.
(d) On request, furnish to the counsel of any Holder, in the
case of a registration pursuant to Section 3.2 above, or to DMRFS, DMR
or the Shareholder Representative, as is appropriate, in the case of a
registration pursuant to Section 3.3 above, a copy of the registration
statement five (5) days prior to the filing of such registration
statement.
(e) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement for
listing on a national securities exchange, the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") or such other
similar exchange.
(f) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to
(i) qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction, (iii) consent to
general service of process in any such jurisdiction, or (iv) qualify
such Registrable Securities in a given jurisdiction where expressions
of investment interest are not sufficient in such jurisdiction to
reasonably justify the expense of qualifying in the jurisdiction.
(g) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
(h) Notify each Holder of Registrable Securities covered by
such registration statement, in the case of a registration pursuant to
Section 3.2 above, or DMR or the Shareholder Representative, as is
appropriate, in the case of a registration pursuant to Section 3.3
above, at any time when a prospectus relating thereto is required to be
delivered under the 1933 Act of the happening of any event as a result
of which the prospectus included in such registration statement, as
then in effect, includes an untrue
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<PAGE> 9
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
3.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
3.7 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Sections 3.2 or 3.3 above to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the persons entitled to select the underwriters, and then only in such quantity
as the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by Holders and other persons or
entities having analogous registration rights to be included in such offering
exceeds the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with the success
of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among all
selling stockholders according to the total amount of securities owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder" and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares owned by all
entities and individuals included in such "selling stockholder," as defined in
this sentence.
3.8 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 3.
3.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the 1933
Act) for such Holder and each person, if any, who controls such Holder
or underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages, or liabilities (joint or
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<PAGE> 10
several) to which they may become subject under the 1933 Act, or the
1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the 1933 Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder,
underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by one law firm retained by them (or such
additional law firms retained by a Holder or Holders if such Holder or
Holders reasonably believe there exists a conflict of interest among
them) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 3.9(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by any such Holder, underwriter or controlling
person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the 1933 Act, any
underwriter, any other Holder or other person or entity selling
securities in such registration statement and any controlling person of
any such underwriter or other Holder or other person or entity, against
any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the 1933 Act, or
the 1934 Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this Subsection
3.9(b), in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Subsection 3.9(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld;
provided, that, the obligation to indemnify will be in several, not
joint and
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several, among such sellers of Registrable Securities, and in no event
shall any indemnity under this Subsection 3.9(b) exceed the net
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 3.9, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 3.9, but the
failure to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 3.9.
(d) The obligations of the Company and Holders under this
Section 3.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 3, and shall
survive the termination of the Agreement.
3.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
1933 Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration,
the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of
SEC Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information
as
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<PAGE> 12
may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
3.11 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 3 may only
be assigned to a Permitted Transferee of the underlying Registrable Securities
who has executed and delivered to the Company a counterpart of this Agreement,
binding such Permitted Transferee to all of the restrictions and obligations
contained herein. Such rights also may be assigned to a third party to which the
Registrable Securities have been pledged pursuant to a bona fide loan
transaction, provided that pledgee executes and delivers to the Company a
counterpart of this Agreement, binding such pledgee to all of the restrictions
and obligations contained herein. No Holder shall be entitled to assign such
rights in connection with any short sale, hedge, collar or other transaction
which is not a bona fide loan.
3.12 "Market Stand-Off" Agreement. Each Holder hereby agrees that
for a period of ninety (90) days following the effective date of any
registration effected pursuant to Sections 3.2 or 3.3 (provided the Holders are
given written notice of the offering at least fifteen (15) days prior to the
Company's filing with the SEC of a registration statement relating thereto), it
shall not, unless otherwise agreed by the Company and the managing underwriters,
if any, directly or indirectly sell, offer to sell, contract to sell (including,
without limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company held by it at any time during such period except
Common Stock included in such registration. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.
3.13 Termination. The rights and obligations provided in this
Section 3 (other than those provided under Section 3.9 above) shall terminate
upon the termination of this Agreement, and also shall terminate as provided in
Section 5.2 below.
SECTION 4. STOCK CERTIFICATE LEGEND.
4.1 Required Legend - Shareholders Agreement. Simultaneously with
the execution of this Agreement, each Shareholder shall surrender all
certificates of stock, except those certificates representing shares which are
or were acquired through ordinary brokerage transactions and not pursuant to the
Reorganization Agreement or as part of the Company's initial public offering, to
the Company for endorsement with the following legend, which shall be
conspicuously placed on such certificates:
"The holder of the shares represented by this certificate is
subject to the provisions of the Shareholders Agreement, dated as of
___________, 1999 (as it may be amended from time to time), to which
the company and the holder of this certificate, among others,
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<PAGE> 13
are parties, a copy of which may be inspected at the principal office
of the company. The provisions of such agreement is incorporated herein
by reference."
All certificates of stock issued to or acquired by any such Shareholder after
the date of this Agreement, except certificates representing shares which are or
were acquired through ordinary brokerage transactions and not pursuant to this
Agreement or as part of the Company's initial public offering, shall also bear
the foregoing legend; provided, however, that the Company shall remove the
required legend from any shares transferred to a third party (other than a Bound
DMR Shareholder) pursuant to a sale (other than a sale to a Permitted
Transferee) which is not subject to, or which has been subject to, and has
complied with, the tag-along rights as set forth in Section 2 above (to the
extent of the shares of Common Stock included in such sale), or pursuant to a
registered offering under Sections 3.2 or 3.3 above, so that such transferee
shall not be subject to the requirements contained in this Agreement.
4.2 Required Legend - Lockup Agreement. Simultaneously with the
execution of this Agreement, DMRFS shall surrender all certificates of stock,
except those certificates representing shares which are or were acquired through
ordinary brokerage transactions and not pursuant to this Agreement or as part of
the Company's initial public offering, to the Company for endorsement with the
following legend, which shall be conspicuously placed on such certificates:
"The holder of the shares represented by this certificate is
subject to the provisions of a Lockup Agreement executed by the holder
of this certificate in favor of the company, a copy of which may be
inspected at the principal office of the company. The provisions of
such agreement is incorporated herein by reference."
All certificates of stock issued to or acquired by any DMRFS, DMR or any Bound
DMR Shareholder after the date of this Agreement, except certificates
representing shares which are or were acquired through ordinary brokerage
transactions and not pursuant to this Agreement or as part of the Company's
initial public offering, shall also bear the foregoing legend; provided,
however, that the Company shall remove the required legend from any shares which
are no longer subject to the Lockup Agreement, as provided therein.
4.3 Effect of Missing Legend. Sections 4.1 and 4.2 above
notwithstanding, the fact that such legends have not been placed on a given
certificate of stock held by DMRFS, DMR, any Bound DMR Shareholder or any other
party hereunder shall not affect the rights of the parties to this Agreement in
any way, and all certificates of stock on which such legends have not been
placed, except those certificates representing shares which are or were acquired
through ordinary brokerage transactions and not pursuant to this Agreement or as
part of the Company's initial public offering, shall be deemed to have had those
legends placed on them for the purposes of this Agreement.
4.4 Availability of Agreement. The Company shall maintain a copy
of this Agreement at its principal place of business and shall make such copies
available for review to any person who shall inquire about the Agreement.
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<PAGE> 14
SECTION 5. MISCELLANEOUS.
5.1 Waivers and Amendments. With the written consent of DMR, the
obligations of the Company and the rights of the holders of Common Stock under
this Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of time
or indefinitely), and with the same consent, the Company, when authorized by
resolution of its Board, may enter into a supplementary agreement for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement. Any provisions of this Agreement to the
contrary, the consent of the DMR Shareholders shall not be required to amend
this Agreement or waive any of its provisions. Upon the effectuation of each
such waiver, consent, agreement of amendment or modification, the Company
promptly shall give written notice thereof to the record holders of the then
outstanding Common Stock. This Agreement or any provision hereof may not be
changed, waived, discharged or terminated orally, but only by a statement in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, except to the extent provided in this
Section 5.1.
5.2 Termination. All of the rights and obligations in this
Agreement (other than those under Section 3.9 above) shall terminate ten (10)
years from the date of this Agreement (except that the Company's obligations
under Sections 3.3(a) and 3.3(b) above shall terminate five (5) and seven (7)
years after the date of this Agreement, respectively), or upon the consummation
of a sale which has been subject to, and has complied with, the tag-along rights
as set forth in Section 2 above (to the extent of the shares of Common Stock
included in such sale), or upon the dissolution or liquidation of the Company,
whichever occurs sooner. If not sooner terminated, all tag-along rights (under
Section 2) and registration rights (under Section 3) shall be permanently
terminated when the Shareholders, as a group, hold less than ten percent (10%)
of the issued and outstanding Common Stock of the Company. Sections 1 and 2 of
this Agreement are also subject to termination as and to the extent provided in
Section 2.4 of the Reorganization Agreement.
5.3 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Michigan as such laws are applied to
agreements between Michigan residents entered into and to be performed entirely
within Michigan, without regard to the State of Michigan's conflict of laws
provisions.
5.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
5.5 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
5.6 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or
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<PAGE> 15
upon the seventh day following mailing by registered air mail, postage prepaid,
addressed (a) if to the Shareholders, DMR, DMRFS or the Shareholder
Representative, as indicated on Schedule 1 or Schedule 2 attached hereto, as the
case may be or at such other address as they shall have furnished to the
Company, (b) if to the Company, to Bingham Financial Services Corporation, 31700
Middlebelt Road, Suite 125, Farmington Hills, Michigan 48334, and addressed to
the attention of the corporate secretary, or at such other address as the
Company shall have furnished to the Shareholders, or (c) if to any other holder
of Common Stock at such address as such holder shall have furnished to the
Company in writing, or, until such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Common Stock, who
so furnished an address to the Company.
5.7 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any securities issued or sold
or to be issued or sold hereunder, upon any breach or default of the Company
under this Agreement shall impair any such right, power or remedy of such holder
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or in any similar breach or default thereafter occurring,
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
5.8 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall be modified in such manner as to be
valid, legal, and enforceable but so as to most nearly retain the intent of the
parties, and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
5.9 Titles and Subtitles. The titles and subtitles of this
Agreement are intended for reference and shall not by themselves determine the
construction or interpretation of this Agreement.
5.10 Counterparts; Copies. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Copies
(photostatic, facsimile or otherwise) of signatures to this Agreement shall be
deemed to be originals and may be relied on to the same extent as the originals.
5.11 Expenses. The Company and each Shareholder shall pay his, her
or its own costs and expenses in connection with the negotiation, execution,
delivery and performance of this Agreement.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement, dated as of July 2, 1999, to be executed by themselves or by their
respective representatives thereunto duly authorized as of the day and year
first above written. DMR, DMRFS shall be subject to this Agreement with respect
to all shares of capital stock of the Company currently owned and hereafter
acquired, to the extent provided herein.
"The Company"
BINGHAM FINANCIAL SERVICES
CORPORATION, a Michigan corporation
By: /s/ Ronald A. Klein
---------------------------------
Its: Chief Executive Officer
---------------------------------
"DMR"
DETROIT MORTGAGE AND REALTY COMPANY,
a Michigan corporation
By: /s/ Daniel D. Armistead
---------------------------------
Its: Chairman
---------------------------------
"DMRFS"
DMR FINANCIAL SERVICES, INC.,
a Michigan corporation
By: /s/ Mark C. Stevens
---------------------------------
Its: President and CEO
---------------------------------
16
<PAGE> 17
Shareholders Agreement, dated ___________, 1999
Bingham Financial Services Corporation
signatures, continued
"Shareholder/Directors"
------------------------------
GARY A. SHIFFMAN
------------------------------
ROBERT H. ORLEY
------------------------------
BRIAN M. HERMELIN
------------------------------
DANIEL E. BOBER
------------------------------
CREIGHTON J. WEBER
------------------------------
ARTHUR A. WEISS
------------------------------
RONALD A. KLEIN
------------------------------
JAMES RAISKIN
17
<PAGE> 18
SCHEDULE 1 TO SHAREHOLDERS AGREEMENT
BINGHAM FINANCIAL SERVICES CORPORATION
<TABLE>
<CAPTION>
Shareholder Number of Shares
- --------------- ----------------
<S> <C>
"Shareholder/Directors"
Gary A. Shiffman 78,666
Robert H. Orley 20,000
Brian M. Hermelin 42,000
Daniel E. Bober 97,939
Creighton J. Weber 97,939
Arthur A. Weiss 3,000
Ronald A. Klein 16,000
James Raiskin 1,000
</TABLE>
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<PAGE> 19
SCHEDULE 2 TO SHAREHOLDERS AGREEMENT
BINGHAM FINANCIAL SERVICES CORPORATION
Shareholder
DMR Financial Services, Inc.
Detroit Mortgage and Realty Company
"DMR Shareholders"
[TO BE COMPLETED]
19
