<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1998
REGISTRATION NO. 333-39949
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MPEL HOLDINGS CORP.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEW YORK 6162 22-1842747
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION OR NUMBER)
ORGANIZATION) 6851 JERICHO TURNPIKE
SUITE 246
SYOSSET, NEW YORK 11791
(516) 364-2700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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STEVEN M. LATESSA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
6851 JERICHO TURNPIKE
SUITE 246
SYOSSET, NEW YORK 11791
(516) 364-2700
(516) 364-2876 (FAX)
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
NORMAN M. FRIEDLAND, ESQ.
SCOTT W. GOODMAN, ESQ.
RUSKIN, MOSCOU, EVANS
& FALTISCHEK, P.C.
170 OLD COUNTRY ROAD
MINEOLA, NEW YORK 11501
(516) 663-6600
(516) 663-6642 (FAX)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF NUMBER OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE SHARES TO OFFERING PRICE PER AGGREGATE OFFERING PRICE REGISTRATION
REGISTERED BE REGISTERED SHARE (1) (2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value................... 2,400,000(1) $5.00 $12,000,000 $3,540.00
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</TABLE>
<TABLE>
<S> <C>
Total Fee...................................................... $3,540.00(3)*
</TABLE>
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(1) Includes 1,100,000 shares being sold for the account of Selling
Stockholders.
(2) Estimated solely for purposes of calculating the registration fee.
*(3) On November 12, 1997, the Registrant filed its initial Registration
Statement (for a total of 1,265,000 shares) and paid a filing fee of
$2,116.69. An additional registration fee of $1,423.31 was paid in
connection with a total of 1,100,000 new shares of Common Stock that was
registered in the Pre-Effective Amendment No. 1 filed on March 17, 1998.
At this time no fee is due.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 721 through 726 of the New York Business Corporation Law ("NYBCL")
provide that a corporation may indemnify any person, including officers and
directors, who are (or who are threatened to be made) parties to any action or
proceeding (except a derivative action), whether civil or criminal, by reason
of their being officers or directors or serving at the request of the
corporation as a director or officer of any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees; provided that the officer or director acted in good
faith, for a purpose that such officer or director reasonably believed to be
in or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed
to the best interests of the Corporation. In the case of criminal actions or
proceedings, indemnification is allowed if the officer or director had not
reasonable cause to believe that his conduct was unlawful. An officer or
director who is successful in defense of such civil or criminal action or
proceeding is entitled to indemnification.
A corporation may indemnify any person made (or threatened to be made) a
party to a derivative action by reason of the fact that such person is or was
a director or officer of the corporation or was serving at the request of the
corporation as a director or officer of the corporation of any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, against amounts paid in settlement and reasonable expenses,
including attorneys' fees, provided that such director or officer acted in
good faith, for a purpose which he reasonably believed to be in (or, in the
case of service for another corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to) the best
interests of the corporation, except that no indemnification is permitted in
respect of a threatened action or pending action which is settled or otherwise
disposed of, or in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation, except to the
extent that court may otherwise determine.
The Company's Certificate of Incorporation eliminates personal liability of
the fullest extent permitted by NYBCL.
A person who has been successful in the defense of a civil or criminal
action or proceeding of the character described above is entitled to
indemnification to the extent described above. Otherwise, absent court
approval, indemnification in the specific case would have to be authorized
either (i) by the board of directors acting as a quorum consisting of
directors who are not parties to the action or (ii) by the board upon the
opinion of independent legal counsel that indemnification is proper in the
circumstances or (iii) by the shareholders.
A New York corporation may generally purchase insurance, consistent with the
limitations of New York insurance law and regulatory supervision, to
indemnify, in certain circumstances, directors and officers whether or not
they could by statute be indemnified by the corporation, so long as no final
adjudication has established that the directors' or officers' acts of active
and deliberate dishonesty were material to the cause of action so adjudicated
or that the directors or officers personally gained in fact a financial profit
or other advantage.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such
persons in their official capacities if such person acted in good faith and in
a manner that he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonably cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the applicable provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities
being registered, other than underwriting discounts and commissions and the
Representative's non-accountable expense allowance. All of the amounts shown
are estimated except the Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
TOTAL
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<S> <C>
SEC registration fee............................................... $3,540.00
NASDAQ listing fee................................................. 7,400.00
Blue Sky fees and expenses (including legal fees).................. 58,000.00
Printing and engraving expenses.................................... 55,000.00
Legal fees and expenses............................................ 150,000.00
Accounting fees and expenses....................................... 50,000.00
Transfer agent and registrar fee................................... 7,500.00
Miscellaneous...................................................... 5,000.00
Total............................................................. $336,440.00
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In December 1996, the Company sold an aggregate of 1,000,000 shares of its
Common Stock at $1.00 per share, of which 900,000 shares were sold to Melville
Ventures & Associates, L.P., an investment committee partnership, 50,000
shares were sold to New Millenium, LP, an investment partnership and 50,000
shares were sold to Timothy Mayette, an accredited investor. The Company's
sale of shares of Common Stock to Melville Ventures & Associates, L.P., an
investment committee partnership, to New Millenium, LP, an investment
partnership and to Timothy Mayette was exempt from registration requirements
pursuant to Section 4(2) of the Securities Act, since these shares were sold
to sophisticated and accredited investors who had done business with the
Company on prior occasions.
In December 1997, the Company issued warrants to purchase 888,888 shares of
Common Stock to FC Capital Corporation. These warrants are exercisable the
earlier of August 1998 or the effective date of a public offering, and expire
three (3) years later. The exercise price is 85% of the public offering price,
provided, however, that if the Company has not accomplished a public offering
by August, 1998, the option price drops to $1.00 per share.
In March 1997, the Company borrowed $778,000 ($313,000 from affiliates of
certain of the Company's principal stockholders). These borrowings, due April
1998, are not collateralized and are subordinated to the notes payable and the
warehouse line. Interest on these notes is 14% per annum. In July 1997, the
Company issued 56,000 shares of its common stock to a note holder in
satisfaction of the interest due at maturity on $400,000 of this debt. The
shares were valued at $56,000, representing the interest due on this
obligation based upon its stated maturity date. In December 31, 1997, the
obligation was repaid with a portion of the proceeds of the $1,500,000 note
payable. In October 1997, the Company borrowed $500,000 from an affiliate.
This borrowing due April 1998, is collateralized by the officer's life
insurance claim receivable and is subordinated to all the notes payable and
warehouse line. Interest is 9% per annum. The Company's issuance of these
shares to the note holder is exempt from registration requirements pursuant to
Section 4(2) of the Securities Act, since the Company issued the shares to a
single, accredited, sophisticated investor who had done business with the
Company on prior occasions.
On February 15, 1997, the principal stockholders of the Company granted an
officer an option to acquire up to 378,414 shares of the Company's common
stock owned by the stockholders at exercise prices not less than the estimated
fair value of the Company's common stock at the grant date. The Company's
grant of these options to the officer is exempt from registration requirements
pursuant to Section 4(2) of the Securities Act, since the Company issued the
shares to an officer of the Company, who was single, sophisticated investor.
II-2
<PAGE>
ITEM 27. EXHIBITS
<TABLE>
<C> <S>
**1.1 Form of Underwriting Agreement
**1.2 Form of Representative's Warrant Agreement
3.1 Certificate of Amendment to Certificate of Incorporation of Computer
Transceiver Systems, Inc. changing the name to "MPEL Holdings Corp."
3.2 By-Laws
4.1 Form of Common Stock Certificate
**4.2 Form of Representative's Warrant
5.1 Opinion and Consent of Ruskin, Moscou, Evans & Faltischek, P.C.
10.1 1995 Stock Option Plan
10.2 Employment Agreement between the Company and Steven Latessa
10.3 Employment Agreement between the Company and Cary Wolen
10.5 Intentionally Omitted
10.6 Mortgage Loan Warehousing Agreement by and between Mortgage Plus
Equity and Loan Corporation and Summit Bank
10.7 Employment Agreement between the Company and Jon P. Blasi
***10.8 Restated Shareholders Agreement
***10.9 Working Capital Financing Agreement between FC Capital Corporation
and Mortgage Plus Equity and Loan Corporation
***10.10 Term Loan and Security Agreement between FC Capital Corporation and
Mortgage Plus
***10.11 Warrant Agreement between FC Capital Corporation and Mortgage Plus
Equity and Loan Corporation
10.12 Mortgage Warehouse Loan and Security Agreement between Contimortgage
Corporation and Mortgage Plus Equity and Loan Corp.
***10.13 Escrow Agreement
***10.14 Melville Ventures & Associates, LP Limited Partnership Agreement
+10.15 Merger and Reorganization Agreement by and among Mortgage Plus Equity
and Loan Corporation, Vertex Industries, Inc. and Computer
Transceiver Systems, Inc., dated March 3, 1998
***10.16 Settlement Agreement, dated May 1, 1998
***21.1 Subsidiaries of Registrant
23.1 Consent of Richard A. Eisner & Company, LLP
Consent of Ruskin, Moscou, Evans & Faltischek, P.C. (included in
23.3 Exhibit 5.1)
***23.4 Consent of Daniel Intemann
***24.1 Power of Attorney (included on signature page)
***27.1 Financial Statement Schedule
</TABLE>
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* To be filed by amendment
** Previously filed, but not applicable.
*** Previously filed.
+ Incorporated by reference from Exhibit No. 1 to the Form 8-K filed by
Computer Transceiver Systems, Inc. with the Securities and Exchange
Commission on March 10, 1998.
Schedules other than the ones listed above are omitted for the reason that
they are not required or are not applicable, or the required information is
shown in the financial statements or notes thereto.
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public
II-3
<PAGE>
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issues.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
i. To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and
iii. To include any additional or changed material information
with respect to the plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at
the termination of the offering.
(4) To provide to the underwriter at the closing specified in the
underwriting agreements certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(5) i. That, for the purpose of determining liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
ii. That, for the purpose of determining liability under the
Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or
otherwise, the registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in Syosset, New York, on May 13, 1998.
MPEL Holdings Corp.
/s/ Steven Latessa
By: ______________________________________
Steven Latessa, President
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby authorizes each of
Steven M. Latessa, Cary Wolen and Jon P. Blasi with full power of substitution
to execute in the name of such person and to file any Amendment or Post-
Effective Amendment to this Registration Statement making such changes in this
Registration Statement as the Registrant deems appropriate and appoints each
of Steven M. Latessa, Cary Wolen and Jon P. Blasi with full power of
substitution, attorney-in-fact to sign and to file any amendment and Post-
Effective Amendment to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Steven M. Latessa President, Chief Executive May 13, 1998
____________________________________ Officer, Chairman of the
Board, Director
/s/ Cary Wolen Chief Operating Officer, May 13, 1998
____________________________________ Chief Executive Officer,
Chief Financial Officer,
Secretary, Director
/s/ Jon P. Blasi Chief Operating Officer, B/C May 13, 1998
____________________________________ Lending Division, Director
</TABLE>
II-5
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
COMPUTER TRANSCEIVER SYSTEMS, INC.
-----------------------------------
Under Section 805 of the
Business Corporation Law
-----------------------------------
The undersigned, Steven Latessa, and Cary Wolen, being duly elected
President and Secretary, respectively, of Computer Transceiver Systems, Inc.
(the "Corporation"), acting pursuant to Section 805 of the Business Corporation
Law a hereby certify as follows:
1. The name of the corporation is COMPUTER TRANSCEIVER SYSTEMS, INC. Its
Certificate of Incorporation was filed with the Secretary of State on March 13,
1968 under the original name of Portronic Terminals, Inc. and subsequently was
amended by certificates of amendment filed July 5, 1968, July 31, 1968 and July
14, 1987.
2. The Certificate of Incorporation is amended to change the name of the
Corporation.
3. The Certificate of Incorporation is hereby amended by striking out the
whole of Article FIRST as it now exists and inserting in lieu and instead
thereof, a new Article FIRST reading as follows:
FIRST: The name of the Corporation is MPEL HOLDINGS CORP.
4. This amendment was authorized by the unanimous written consent of the
Board of Directors followed by the consent of the majority of the Shareholders
of the Corporation on March 5, 1998.
<PAGE>
IN WITNESS WHEREOF, this Certificate has been signed this 5th day of March,
1998, and it is affirmed that the statements made herein are true under the
penalties of perjury.
/s/ Steven Latessa
-------------------------
STEVEN LATESSA, President
/s/ Cary Wolen
-------------------------
CARY WOLEN, Secretary
<PAGE>
MPEL HOLDINGS CORP.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The office of the Corporation shall be located in the County of
Nassau, State of New York.
Section 2. The Corporation may also have offices at such other places both
within and without the State of New York as the Board of Directors may from time
to time determine or the business of the Corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held in the city of Syosset, State of New York, at such place as may be
fixed from time to time by the Board of Directors.
Section 2. Annual meetings of shareholders, commencing with the year 1998,
shall be held at a time to be designated by the Board of Directors not less than
ninety (90) days nor more than one hundred and eighty (180) days following the
end of each fiscal year of the Corporation, or at such other date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, at which they shall elect by a plurality vote, a
Board of Directors, and transact such other business as may properly be brought
before the meeting.
<PAGE>
Section 3. Written or printed notice of the annual meeting stating the
place, date and hour of the meeting shall be delivered not less than ten nor
more than sixty days before date of the meeting, either personally or by mail,
by or at direction of the President, the Secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders may be held at such time and
place within or without the State of New York as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law or by Certificate of Incorporation,
may be called by the President, Board of Directors, or the holders of not less
than twenty-five (25%) percent of the votes of all the shares entitled to vote
at the meeting.
Section 3. Written or printed notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by, or at the
direction of, the President, the Secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled vote at such meeting. The
notice should also indicate that being issued by, or at the direction of, the
person calling meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
2
<PAGE>
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of the majority of the votes of shares of stock
issued and outstanding and entitled to vote, represented in person or by proxy,
shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the votes cast in favor of or against an action shall be the act of the
shareholders, unless the vote of a greater or lesser number of shares of stock
is required by law or the Certificate of Incorporation. Except as otherwise
provided in the Certificate of Incorporation or the specific provision of a by-
law adopted by the shareholders, an abstention shall not constitute a vote cast.
Section 3. Each outstanding share of stock having voting power shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy authorized in
accordance with law.
Section 4. The Board of Directors in advance of any shareholders' meeting
may appoint one or more inspectors to act at the meeting or any adjournment
thereof. If inspectors are not so appointed, the person presiding at a
shareholders' meeting may, and, on the request of any shareholder entitled to
vote thereat, shall appoint one or more inspectors. If the Corporation has a
3
<PAGE>
class of voting stock that is listed on a national securities exchange or
authorized for quotation on an interdealer quotation system of a registered
national securities association, one or more inspectors shall be appointed as
provided herein. In case any person appointed as inspector fails to appear or
act, the vacancy may be filled by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability.
Section 5. Whenever shareholders are required or permitted to take any
action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all outstanding
shares entitled to vote thereon or, if the Certificate of Incorporation so
permits, signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those shareholders who
have not consented in writing.
4
<PAGE>
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be seven (7) or such greater or
lesser number as from time to time may be determined by the Board of Directors
or shareholders. Directors shall be at least eighteen years of age and need not
be residents of the State of New York nor shareholders of the Corporation. The
directors, other than the first Board of Directors, shall be elected at the
annual meeting of the shareholders, except as hereinafter provided, and each
director elected shall serve until the next succeeding annual meeting and until
his successor shall have been elected and qualified.
Section 2. Any or all of the directors may be removed, with or without
cause, at any time by the vote of the shareholders at a special meeting called
for that purpose.
Any director may be removed for cause by the action of the directors at a
special meeting called for that purpose.
Section 3. Unless otherwise provided in the Certificate of Incorporation,
newly created directorships resulting from an increase in the Board of Directors
and all vacancies occurring in the Board of Directors, including vacancies
caused by removal without cause, may be filled by the affirmative vote of a
majority of the Board of Directors. However, if the number of directors then in
office is less than a quorum, such newly created directorships and vacancies may
be filled by a vote of a majority of the directors then in office. A director
elected to fill a vacancy shall hold office until the next meeting of
shareholders at which election of directors is the regular order of business,
and until his successor shall have been elected and qualified. A director
elected to fill a newly created directorship shall serve until the next
succeeding annual meeting of shareholders and until his successor shall have
been elected and qualified.
5
<PAGE>
Section 4. The business affairs of the Corporation shall be managed by its
Board of Directors which may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 5. The directors may keep the books of the Corporation, except such
as are required by law to be kept within the state, outside the State of New
York, at such place or places as they may from time to time determine.
Section 6. The Board of Directors, by the affirmative vote of a majority of
the directors then in office, and irrespective of any personal interest of any
of its members shall have authority to establish reasonable compensation of all
directors for services to the Corporation as directors, officers or otherwise.
6
<PAGE>
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the Board of Directors, regular or special, may be
held either within or without the State of New York.
Section 2. The first meeting of each newly elected Board of Directors shall
be held at such time and place as shall be fixed by the vote of the shareholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, or it may convene at such place and time as shall be
fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the Board of Directors may be held upon such
notice, or without notice, and at such time and at such place as shall from time
to time be determined by the Board.
Section 4. Special meetings of the Board of Directors may be called by the
President on ~ days' notice to each director, either personally or by mail or by
facsimile telecommunication; special meetings shall be called by the President
or Secretary in like manner and on like notice on the written request of two
directors.
Section 5. Notice of a meeting need not be given to any director who
submits a signed waiver of notice whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
Section 6. The majority of the directors shall constitute a quorum for the
transaction of business unless a greater or lesser number is required by law or
by the Certificate of Incorporation.
7
<PAGE>
The vote of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors, unless the vote of a
greater number is required by law or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of directors, the directors present
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the Certificate of Incorporation
or these by-laws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 8. Unless the Certificate of Incorporation provides otherwise, any
action required or permitted to be taken at a meeting of the directors or a
committee thereof may be taken without a meeting if a consent in writing to the
adoption of a resolution authorizing the action so taken, shall be signed by all
of the directors entitled to vote with respect to the subject matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The Board of Directors, by resolution adopted by a majority of
the entire Board, may designate, from among its members, an executive committee
and other committees, each consisting of one or more directors, and each of
which, to the extent provided in the resolution or in the Certificate of
Incorporation or these by-laws, shall have all the authority of the Board,
except as otherwise required by law. Vacancies in the membership of the
committee shall be filled by the Board of Directors at a regular or special
meeting of the Board of Directors. The executive
8
<PAGE>
committee shall keep regular minutes of its proceedings and report the same to
the Board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these by-laws, notice is required to be given
to any director or shareholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or shareholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile telecommunication.
Section 2. Whenever any notice of a meeting is required to be given under
the provisions of the statutes or under the provisions of the Certificate of
Incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the Corporation shall be chosen by the Board of
Directors and shall be a President, a Vice-President, a Secretary and a
Treasurer. The Board of Directors may also choose additional Vice-Presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The Board of Directors at its first meeting after each annual
meeting of shareholders shall choose a president from among the directors, and
shall choose one or more Vice-Presidents, a Secretary and a Treasurer, none of
whom need be a member of the Board.
9
<PAGE>
Any two or more offices may be held by the same person. When all the issued
and outstanding stock of the Corporation is owned by one person, such person may
hold all or any combination of offices.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 4. The salaries of all officers and agents of the Corporation shall
be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors.
Any vacancy occurring in any office of the Corporation shall be filled by
the Board of Directors.
THE PRESIDENT
Section 6. The President shall be the chief executive officer of the
Corporation, shall preside at all meetings of the shareholders and the Board of
Directors, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal under the seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
10
<PAGE>
THE VICE-PRESIDENTS
Section 8. The Vice-President or, if there shall be more than one, the
Vice-Presidents in the order determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. He shall have custody of the
corporate seal of the Corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and, when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary or, if there be more than one, the
assistant secretaries in the order determined by the Board of Directors, shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
11
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.
Section 12. He shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation.
Section 13. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
12
<PAGE>
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the Corporation shall be represented by
certificates or shall be uncertificated. Certificates shall be signed by the
chairman or vice-chairman of the Board or the President or a Vice-President and
the Secretary or an assistant secretary or the Treasurer or an assistant
treasurer of the Corporation and may be sealed with the seal of the Corporation
or a facsimile thereof.
When the Corporation is authorized to issue shares of more than one class,
there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the Corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designation, relative rights, preferences, and limitations of the shares of each
class authorized to be issued and, if the Corporation is authorized to issue any
class of preferred shares in series, the designation, relative rights,
preferences and limitations of each such series so far as the same have been
fixed and the authority of the Board of Directors to designate and fix the
relative rights, preferences and limitations of other series.
Within a reasonable time after the issuance or transfer of any
uncertificated shares there shall be sent to the registered owner thereof a
written notice containing the information required to be set forth or stated on
certificates pursuant to paragraphs (b) and (c) of Section 508 of the New York
Business Corporation Law.
Section 2. The signatures of the officers of the Corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or an
employee of the Corporation, or if the shares are listed on a national security
exchange. In case any officer who has signed or whose facsimile signature has
13
<PAGE>
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate to be issued
in place of any certificate theretofore issued by the Corporation alleged to
have been lost or destroyed. When authorizing such issue of a new certificate,
the Board of Directors in its discretion and as a condition precedent to the
issuance thereof, may prescribe such terms and conditions as it deems expedient,
and may require such indemnities as it deems adequate, to protect the
Corporation from any claim that may be made against it with respect to any such
certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
Corporation.
FIXING RECORD DATE
Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any dividend
or the allotment of any rights, or for the purpose of any other action, the
Board of Directors may fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than sixty nor less
than ten days before the date of any
14
<PAGE>
meeting nor more than sixty days prior to any other action. When a determination
of shareholders of record entitled to notice of or to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the Board fixes a new record date for
the adjourned meeting.
REGISTERED SHAREHOLDERS
Section 6. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of New
York.
LIST OF SHAREHOLDERS
Section 7. A list of shareholders as of the record date, certified by the
corporate officer responsible for its preparation or by a transfer agent, shall
be produced at any meeting upon the request thereat or prior thereto of any
shareholder. If the right to vote at any meeting is challenged, the inspectors
of election, or person presiding thereat, shall require such list of
shareholders to. be produced as evidence of the right of the persons challenged
to vote at such meeting and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
15
<PAGE>
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the Certificate of Incorporation
relating thereto, if any, dividends may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in shares of the capital stock or in the Corporation's bonds or its property,
including the shares or bonds of other corporations subject to any provisions of
law and of the Certificate of Incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be fixed by resolution
of the Board of Directors.
16
<PAGE>
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal, New
York". The seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be amended or repealed or new by-laws may be
adopted at any regular or special meeting of shareholders at which a quorum is
present or represented, by the vote of the holders of shares entitled to vote in
the election of any directors, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting. These by-laws
may also be amended or repealed or new by-laws may be adopted by the affirmative
vote of a majority of the Board of Directors at any regular or special meeting
of the Board. By-laws adopted by the Board of Directors may be amended or
repealed by the shareholders.
17
<PAGE>
EX-4.1
CERTIFICATE
MPEL HOLDINGS CORP.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK
COMMON STOCK
TRANSFER SUBJECT TO
LEGEND ON REVERSE SIDE
SEE REVERSE
NUMBER FOR CERTAIN
CTS2105 DEFINITIONS
SHARES
This
certifies
that
_________________________________________________________________________
Is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK $.01 PAR VALUE, OF
MPEL HOLDINGS CORP.,
(hereinafter called the "Corporation"), transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney, upon
surrender of the Certificate properly endorsed. This certificate and the shares
represented hereby are issued to all the provisions of the Certificate of
Incorporation, as amended, and the Bylaws of the Corporation, as amended (copies
of which are on file at the offices of the Transfer Agent), to all of which the
holder of this Certificate by acceptance hereof assents. This Certificate is not
valid unless countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its daily authorized officers.
DATE: MARCH 31ST, 1998
/s/ ILLEGIBLE
- -----------------------------
PRESIDENT
/s/ ILLEGIBLE
- -----------------------------
SECRETARY
MPEL HOLDINGS CORPORATION
CORPORATE SEAL
NEW YORK
Countersigned:
SECURITIES TRANSFER CORPORATION
P.O. Box 701629
Dallas, TX. 75170
By: /s/ JEAN HOFFER
--------------------------------
TRANSFER AGENT - AUTHORIZED SIGNATURE
<PAGE>
LOGO RUSKIN, MOSCOU, EVANS & FALTISCHEK, P.C.
- --------------------------------------------------------------------------------
COUNSELORS AT LAW
[LETTERHEAD]
Writer's direct dial: (516) 663-6510
Writer's direct fax: (516) 663-6641
May 12, 1998
MPEL Holdings Corp.
6851 Jericho Turnpike Suite 246
Syosset, New York 11791
Re: MPEL Holdings Corp.
-------------------
Gentlemen:
We have acted as counsel to MPEL Holdings Corp., a New York corporation
(the "Company"), in connection with its filing of a Registration Statement
(Registration No. 333-39949) (the "Registration Statement") on Form SB-2 with
respect to the public offering of a minimum of 800,000 shares and a maximum of
1,300,000 shares of the Company's $0.01 per share par value common stock (the
"Common Stock").
Unless otherwise defined herein, all capitalized terms used herein and not
expressly defined shall have the meaning given to them in the Registration
Statement.
As counsel to the Company, we have examined the Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws and other
corporate records of the Company and have made such other investigations as we
have deemed necessary in connection with the opinion hereinafter set forth.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us.
<PAGE>
RUSKIN, MOSCOU, EVANS & FALTISCHEK, P.C.
- --------------------------------------------------------------------------------
May 12, 1998
Page 2
Based solely upon and subject to the foregoing, we are of the opinion that
the Company's Common Stock has been duly and validly authorized and, when issued
and paid for, will be duly and validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
aforesaid Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the Prospectus constituting a part of said
Registration Statement.
Very truly yours,
/s/ Ruskin Moscou Evans & Faltischek, P.C.
RUSKIN, MOSCOU, EVANS
& FALTISCHEK, P.C.
<PAGE>
MORTGAGE PLUS EQUITY AND LOAN CORP.
1995 STOCK OPTION PLAN
1. Plan; Purpose; General. The purpose of this Stock Option Plan (the
----------------------
"Plan") is to advance the interests of MORTGAGE PLUS EQUITY AND LOAN CORP. and
any present and future subsidiaries (as defined below) of MORTGAGE PLUS EQUITY
AND LOAN CORP. (hereinafter inclusively referred to as the "Company") by
enhancing the ability of the Company to attract and retain selected employees,
consultants, advisors and directors (collectively the "Participants") by
creating for such Participants incentives and rewards for their contributions to
the success of the Company, and by encouraging such Participants to become
owners of shares of the Company's Common Stock, par value $.001 per share, as
the title or par value may be amended (the "Shares").
2. Effective Date of Plan. The Plan will become effective upon approval by
----------------------
the Board of Directors of the Company (the "Board"), and shall be subject to the
approval by the shareholders of the Company as provided under the Securities Act
of 1933, as amended (the "Act").
3. Administration of the Plan.
--------------------------
(a) The Plan will be administered by the Board, subject to Paragraph 3(b).
The Board will have authority, not inconsistent with the express provisions of
the Plan, to take all action necessary or appropriate thereunder, to interpret
its provisions, and to decide all questions and resolve all disputes which may
arise in connection therewith. Such determinations of the Board shall be
conclusive and shall bind all parties.
(b) The Board may, in its discretion, delegate its powers with respect to
the Plan to an employee benefit plan committee or any other committee (the
"Committee"), in which event all references to "the Board" hereunder, including
without limitation the references in Section 9, but
<PAGE>
excluding the references in Section 2, shall be deemed to refer to the
Committee. The Committee shall consist of not fewer than two (2) members of the
Board; provided, however, that if, at any time the awards under the Plan are
granted, the Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each of the members of
the Committee must be a "non-employee director" as that term is defined in Rule
16b-3 as promulgated and amended from time to time by the Securities and
Exchange Commission under the Exchange Act, or any successor thereto ("Rule 16b-
3"). In addition, at any time the Company is subject to Section 162(m) of the
Code, each member of the Committee shall be an "outside director" within the
meaning of such Section. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee (including
determinations of eligibility, the number of Options granted to a Participant
and the exercise price of Options) shall be made by the majority of its members
present at a meeting. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by all of
the Committee members.
4. Eligibility. The Participants in the Plan shall be all employees,
-----------
consultants, advisors and directors of the Company who are selected by the Board
whether or not they are also officers of the Company.
5. Grant of Options.
----------------
(a) The Board shall grant Options to Participants that it, in its sole
discretion, selects. Options shall be granted in accordance with the terms and
conditions set forth in Section 6 hereof and on such other terms and conditions
as the Board shall determine. Such terms and conditions may include a
requirement that a Participant sell to the Company any Shares acquired upon
exercise of Options upon the Participant's termination of employment upon such
terms and
2
<PAGE>
conditions as the Board may determine. Incentive Options shall be granted on
terms that comply with the Code and Regulations thereunder.
(b) Options granted pursuant to the Plan (the "Options") may be (i)
incentive stock options ("Incentive Options") that are intended to qualify under
the Internal Revenue Code of 1986, as amended (the "Code"), or, (ii) options
that are not intended to so qualify, or, (iii) both. The proceeds received from
the sale of Shares pursuant to the Plan shall be used for general corporate
purposes.
(c) No Options shall be granted after December 31, 2007 but Options
previously granted may be exercised after that date until the expiration of the
Option.
6. Terms and Conditions of Options
-------------------------------
(a) Exercise Price. The purchase price per share for Shares issuable
--------------
upon exercise of Options shall be a minimum of one hundred (100%) percent of
fair market value on the date of grant as determined by the Board. For this
purpose, "fair market value" will be determined as set forth in Section 8
hereof. Notwithstanding the foregoing, if any person to whom an Option is to be
granted owns in excess of ten (10%) percent of the combined voting power of all
classes of outstanding capital stock of the Company (a "Principal Shareholder"),
then no Option may be granted to such person for less than one hundred ten
(110%) percent of the fair market value on the date of grant as determined by
the Board.
(b) Period of Options. The expiration of each Option shall be fixed by
-----------------
the Board, in its discretion, at the time such Option is granted. No Option
shall be exercisable after the expiration of five (5) years from the date of its
grant and each Option shall be subject to earlier termination as expressly
provided in this Section 6 hereof or as determined by the Board, in its
discretion, on the date such Option is granted.
3
<PAGE>
(c) Payment for Delivery of Shares. Shares which are subject to Options
------------------------------
shall be issued only upon receipt by the Company of full payment of the purchase
price for the Shares as to which the Option is exercised. Payment for Shares may
be made (as determined by the Board at the time the Option is granted) (i) in
cash; (ii) by certified or bank check payable to the order of the Company in the
amount of the purchase price; (iii) by delivery of Shares owned by the
Participant having a fair market value equal to the purchase price; or (iv) by
any combination of the methods of payment described in (i) through (iii) above,
as determined by the Board at the time the Option is granted.
In addition, any grant of a nonqualified Option may provide that payment
of the purchase price for the Option may also be made in whole or in part in the
form of Shares that are subject to risk of forfeiture or restrictions of
transfer. Unless otherwise determined by the Board on or after the date of
grant, whenever any purchase price for an Option is paid in whole or in part by
means of any of the forms of consideration specified in this Section 6(c), the
Shares received by the Participant upon the exercise of the nonqualified Option
shall be subject to the same risk of forfeiture or restrictions on transfer as
those that applied to the consideration surrendered by the Participant;
provided, however, that such risks of forfeiture and restrictions on transfer
- -------- -------
shall apply only to the same number of Shares received by the Participant as
applied to the forfeitable or restricted Shares surrendered by the Participant.
Any grant may, if there is then a public market for the Shares, provide
for deferred payment of the purchase price for the Option from the proceeds of
sale through a broker of some or all of the Shares to which the exercise
relates.
The Company shall not be obligated to deliver any Shares unless and until,
in the opinion of the Company's counsel, all applicable federal and state laws
and regulations have been
4
<PAGE>
complied with and until all other legal matters in connection with the issuance
and delivery of Shares have been approved by the Company's counsel. Without
limiting the generality of the foregoing, the Company may require from the
person exercising an Option such investment representation or such agreement, if
any, as counsel for the Company may consider necessary in order to comply with
the Act and applicable state securities laws.
(d) Legend on Certificates. The stock certificates representing the
----------------------
Shares shall carry such appropriate legends, and such written instructions shall
be given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements of
the Act or any state securities laws.
(e) Rights as Shareholder. A Participant or a transferee of an Option
---------------------
shall have no rights as a Shareholder with respect to any Shares covered by the
Option until the date of the issuance of a stock certificate to him for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 7 hereof. Each grant of Options shall be evidenced
by an agreement, which shall be executed on behalf of the Company and delivered
to and accepted by the Participant and shall contain such terms and provisions
as the Board may determine consistent with the Plan.
(f) Vesting. Options granted shall vest in the Participant and become
-------
immediately exercisable by the Participant on the fourth (4th) anniversary of
the date of grant or such earlier date as the Board of Directors, at its sole
discretion, may determine, provided, however, for every option granted
-------- -------
for more than 50,000 Shares, no more than one-third (1/3) of such shares shall
become vested and exercisable earlier than twelve (12) months following the date
5
<PAGE>
of the grant, and no more than a total of two-thirds (2/3) of such Shares shall
become vested and exercisable earlier than thirty (30) months following the date
of the grant.
(g) Non-Transferability of Options. Except as provided in Sections
------------------------------
6(h)(ii) and (iii), Options granted under this Plan may not be exercised during
a Participant's lifetime except by the Participant, other than by will or the
laws of descent and distribution. Options may not be sold, assigned or otherwise
transferred or disposed of in any manner whatsoever except as provided in
Section 6(h) hereof. Notwithstanding the foregoing, the Board, in its sole
discretion, may provide for the transferability of particular awards under this
Plan so long as such provisions would not disqualify the exemption for other
awards under Rule 16b-3, if then applicable to awards under the Plan. Moreover,
any grand made under this Plan may provide that all or any part of the Shares
issued or transferred by the Company upon exercise of Options shall be subject
to further restrictions on transfer.
(h) Termination of Relationship. Except as otherwise provided in an
---------------------------
Option or other agreement between the Company and a Participant, upon the
termination of a Participant's status as an employee, consultant, advisor or
director, for any reason other than as set forth in subsections (ii) and (iii)
below, at a time when the Shares are then Publicly Traded (as defined below),
then the following provisions shall apply:
(i) Such Participant may exercise Options to the extent exercisable on
the date of termination not later than three (3) months (or such shorter time as
may be specified in the grant), after the date of such termination. To the
extent that the Participant was not entitled to exercise the Option at the date
of such termination, or does not exercise such Option within the time specified
herein, such Option shall expire and terminate. Notwithstanding anything else
herein, if the employment or other relationship of any Participant shall be
terminated voluntarily by the
6
<PAGE>
Participant and without the consent of the Company, or for "Cause" (as
hereinafter defined), then any Option granted to such Participant (whether or
not then vested in the Participant) to the extent not previously exercised shall
expire immediately on the date of termination. For purposes of the Plan, "Cause"
shall mean "Cause" as defined in any employment agreement between any employee
Participant and the Company ("Employment Agreement"), and in the absence of an
Employment Agreement or in the absence of a definition of "Cause" in such
Employment Agreement, "Cause" shall mean: (i) any continued failure by the
employee Participant to obey the reasonable instructions of the president or any
member of the Board; (ii) continued neglect by the Participant of his duties and
obligations as an employee of the Company or a failure to perform such duties
and obligations to the reasonable satisfaction of the president or the Board;
(iii) willful misconduct of the Participant or other actions in bad faith by the
Participant which are to the detriment of the Company, including, without
limitation, commission of a felony, embezzlement or misappropriation of funds or
of confidential information or commission of any act of fraud; or (iv) a breach
of any material provision of any Employment Agreement not cured within ten (10)
days after written notice thereof.
(ii) Notwithstanding the provisions of subsection (i) above, in
the event of termination of a Participant's status as an employee as a result of
"permanent disability" (as such term is defined in any contract of employment
between the Company and the Participant or, if not defined, then such term shall
mean the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of twelve (12) months), the Participant (or, in the case of
the Participant's legal incapacity, such Participant's guardian or legal
representative acting in a fiduciary capacity on behalf of the Participant under
state
7
<PAGE>
law and court supervision) may exercise the Option, but only to the extent
such Option was exercisable on the date the Participant ceased working as the
result of the permanent disability. Such exercise must occur within six (6)
months (or such shorter time as is specified in the grant) from the date on
which the Participant ceased working as a result of the permanent disability. To
the extent that the Participant was not entitled to exercise such Option on the
date the Participant ceased working, or does not exercise such Option within the
time specified herein, such Option shall terminate.
(iii) Notwithstanding the provisions of subsection (i) above, in
the event of the death of a Participant, the Option may be exercised, at any
time within six (6) months following the date of death (or such shorter time as
may be specified in the grant), by the Participant's estate or by a person who
acquired the right to exercise the Option by will or the applicable laws of
descent and distribution, but only to the extent such Option was exercisable on
the date of the Participant's death. To the extent that the Participant was not
entitled to exercise such Option on the date of death, or the Option is not
exercised within the time specified herein, such Option shall terminate.
(iv) Notwithstanding subsections (i), (ii), and (iii) above, the
Board shall have the authority to extend the expiration date of any outstanding
Option in circumstances in which it deems such action to be appropriate
(provided that no such extension shall extend the term of an Option beyond the
date on which the Option would have expired if no termination of the
Participant's relationship's with the Company had occurred).
(h) Financial Assistance. The Company is vested with authority under
--------------------
this Plan to assist any employee to whom an Option is granted hereunder
(including, to the extent permitted by law, any director or officer of the
Company who is also an employee of the Company) in the
8
<PAGE>
payment of the purchase price payable on exercise of that Option, by lending the
amount of such purchase price to such employee on such terms and at such rates
of interest and upon such security (or unsecured) as shall have been authorized
by or under authority of the Board.
(i) Withholding Taxes. To the extent required by applicable federal,
-----------------
state, local or foreign law, a Participant shall make arrangements satisfactory
to the Company for the satisfaction of any withholding tax obligations that
arise by reason of an Option exercise or any sale of Shares. The Company shall
not be required to issue Shares until such obligations are satisfied. The Board
may permit these obligations to be satisfied by having the Company withhold a
portion of the Shares that otherwise would be issued to the Participant upon
exercise of the Option, or to the extent permitted, by tendering Shares
previously acquired.
7. Shares Subject to Plan.
----------------------
(a) Number of Shares and Stock to be Delivered. Shares delivered
------------------------------------------
pursuant to this Plan shall in the discretion of the Board be authorized but
unissued Shares or previously issued Shares acquired by the Company. The
unexercised portion of any expired, terminated or cancelled Option shall again
be available for the grant of Options under the Plan. Subject to adjustment as
described below, the aggregate number of Shares which may be delivered under
this Plan shall not exceed seven hundred thousand (700,000) Shares.
(b) Changes in Stock. In the event of a stock dividend, stock split,
----------------
combination of Shares, recapitalization or similar change in the capital
structure of the Company, merger in which the Company is the surviving Company,
consolidation, spin-off, split up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of warrants or other
rights to purchase securities or any other corporate transaction or event having
any effect similar to any of the foregoing, the number and kind of Shares of
stock or securities of the Company to be subject to
9
<PAGE>
the Plan and to Options then outstanding or to be granted thereunder, the
maximum number of Shares or securities which may be delivered under the Plan,
the Option price and other relevant provisions may be appropriately adjusted by
the Board, whose determination shall be binding on all persons. In the event of
a consolidation, merger or tender offer in which the Company is not the
surviving Company or which results in the acquisition of substantially all the
Company's outstanding stock by a single person or entity, or in the event of the
sale or transfer of substantially all the Company's assets, all outstanding
Options, whether or not then exercisable, shall immediately become exercisable.
In such event, the Board shall notify the Participants that all outstanding
Options shall be fully exercisable for a period of fifteen (15) days from the
date of such notice, and the Option will terminate upon the expiration of such
period.
The Board may also adjust the number of Shares subject to outstanding
Options, the exercise price of outstanding Options and the terms of outstanding
Options to take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in the immediately
preceding paragraph), acquisitions or dispositions of stock or property or any
other event if it is determined by the Board that such adjustment is appropriate
to avoid distortion in the operation of the Plan.
8. Certain Definitions.
-------------------
Certain terms used in the Plan have been defined above. In addition, as
used in the Plan, the following terms shall have the following meanings:
(a) A "subsidiary" is any company (i) in which the Company owns, directly
or indirectly, stock possessing fifty (50%) percent or more of the total
combined voting power of all classes of stock or (ii) over which the Company has
effective operating control.
10
<PAGE>
(b) The "fair market value" of the Shares shall mean:
(i) If the Shares are then Publicly Traded: The closing price of
the Shares as of the day in question (or, if such day is not a trading day in
the principal securities market or markets for such Shares, on the nearest
preceding trading day), as reported with respect to the market (or the composite
of markets, if more than one) in which Shares are then traded, or, if no such
closing prices are reported, on the basis of the mean between the high bid and
low asked prices that day on the principal market or quotation system on which
Shares are then quoted, or, if not so quoted, as furnished by a professional
securities dealer making a market in such Shares selected by the Board; or
(ii) If the Shares are then not Publicly Traded: The price at
which one could reasonably expect such Shares to be sold in an arm's length
transaction, for cash, other than on an installment basis, to a person not
employed by, controlled by, in control of or under common control with the
issuer of such Shares. Such fair market value shall be that which has
concurrently or most recently been determined for this purpose by the Board, or
at the discretion of the Board by an independent appraiser or appraisers
selected by the Board, in either case giving due consideration to recent
transactions involving Shares, if any, the issuer's net worth, prospective
earning power and dividend-paying capacity, the goodwill of the issuer's
business, the issuer's industry position and its management, that industry's
economic outlook, the value of securities of issuers whose Shares are Publicly
Traded and which are engaged in similar businesses, the effect of transfer
restrictions to which such Shares may be subject under law and under the
applicable terms of any contract governing such Shares, the absence of a public
market for such Shares and other matters as the Board or its appraiser or
appraisers deem pertinent. The determination by the Board or its appraiser or
appraisers of the fair market value shall, if not unreasonable, be conclusive
and binding
11
<PAGE>
notwithstanding the possibility that other persons might make a different, and
also reasonable, determination. If the fair market value to be used was thus
fixed more than twelve (12) months prior to the day as of which fair market
value is being determined, it shall in any event be no less than the book value
of the Shares being valued at the end of the most recent period for which
financial statements of the Company are available; or
(iii) Shares are "Publicly Traded" if stock of that class is
listed or admitted to unlisted trading privileges on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
("NASD") or if sales or bid and offer quotations are reported for that class of
stock in the automated quotation system ("NASDAQ") operated by the NASD.
9. Indemnification of Board. In addition to and without affecting such other
------------------------
rights of indemnification as they may have as members of the Board or otherwise,
each member of the Board shall be indemnified by the Company to the extent
legally possible against expenses, including reasonable attorney's fees,
actually and reasonably incurred in connection with any appeal therein, to which
he may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any Option granted thereunder, and against all
judgments, fines and amounts paid by him in settlement thereof; provided that
such payment of amounts so indemnified is first approved by a majority of the
members of the Board who are not parties to such action, suit or proceedings, or
by independent legal counsel selected by the Company, in either case on the
basis of a determination that such member acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; and except that no indemnification shall be made in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Board member is liable for a breach of the duty of loyalty, bad faith or
intentional misconduct
12
<PAGE>
in his duties; and provided further, that the Board member shall in writing
offer the Company the opportunity, at its own expense, to handle and defend
same.
10. Amendments. The Board may at any time discontinue granting Options under
----------
the Plan. The Board may at any time or times amend the Plan or amend any
outstanding Option or Options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that (except to the extent explicitly
required or permitted hereinabove) no such amendment will, without the approval
of the shareholders of the Company: (a) increase the maximum number of Shares
available under the Plan; (b) reduce the Option price of outstanding Options or
reduce the price at which Options may be granted; (c) extend the time within
which Options may be granted, however, this period shall not exceed the term
provided in Section 5(c) hereof; (d) amend the provisions of this Section 10 of
the Plan; (e) adversely affect the rights of any Participant (without his
consent) under any Options theretofore granted; (f) cause any award under the
Plan to cease to qualify for any applicable exceptions to Section 162(m) of the
Code, or (g) be effective if shareholder approval is required by applicable
statute, rule or regulation.
11. Miscellaneous Provisions.
------------------------
(a) Rule 16b-3. With respect to Participants subject to Section 16 of
----------
the Exchange Act, transactions under this Plan are intended to comply with all
applicable provisions of Rule 16b-3. To the extent any provision of the Plan or
action by the Plan administrators fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Board.
13
<PAGE>
(b) Underscored References. The underscored references contained in the
----------------------
Plan and in any Option agreement are included only for convenience, and they
shall not be construed as a part of the Plan or Option agreement or in any
respect affecting or modifying its provisions.
(c) Number and Gender. The masculine, feminine and neuter, wherever
-----------------
used in the Plan or in any Option agreement, shall refer to either the
masculine, feminine or neuter and, unless the context otherwise requires, the
singular shall include the plural and the plural the singular.
(d) Governing Law. The place of administration of the Plan and each
-------------
Option agreement shall be in the State of New York. The corporate law of the
Company's state of incorporation shall govern issues related to the validity and
issuance of Shares. Otherwise, this Plan and each Agreement shall be construed
and administered in accordance with the laws of the State of New York, without
giving effect to principles relating to conflict of laws.
(e) No Employment Contract. Neither the adoption of the Plan nor any
----------------------
benefit granted hereunder shall confer upon any Participant any right to
continued employment or other service with the Company, nor shall the Plan or
any benefit interfere in any way with the right of the Company to terminate any
Participant's employment or other service at any time.
14
<PAGE>
MORTGAGE PLUS EQUITY AND LOAN CORP.
AMENDMENT TO 1995 STOCK OPTION PLAN
By virtue of the merger between MORTGAGE PLUS EQUITY AND LOAN CORP.
("Mortgage Plus") and COMPUTER TRANSCEIVER SYSTEMS, INC. ("CTSI"), filed with
the Secretary of State of the State of New York on March 5, 1998 (the "Merger"),
and CTSI's subsequent change of name to MPEL HOLDINGS CORP. ("MPEL"), the 1995
Stock Option Plan (the "Plan") has been adopted by MPEL, shall remain in full
force and effect, and shall continue to be referred to as the "1995 Plan".
The Plan is hereby amended to reflect the change in par value of the shares
of common stock from $.001 per share of Mortgage Plus to $.01 per share of MPEL.
FOR THE BOARD OF DIRECTORS
OF MPEL HOLDINGS CORP.
BY: /s/ Steven M. Latessa
------------------------------
Steven M. Latessa, Chairman of
the Board of Directors
15
<PAGE>
EX-10.2
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made on September 30, 1997 by and between Mortgage Plus Equity
and Loan Corp., a New York corporation, having an address at 6851 Jericho
Turnpike, Syosset, New York 11791 (the Corporation) and Steven Latessa, residing
at 83 Bayberry Lane, Smithtown, New York 11787 (Employee).
I.
RECITAL
A. The Corporation wants to retain Employee as an executive employee of the
Corporation. Employee wants to be retained in that capacity on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties agree to the following terms and
conditions.
II.
TERMS AND CONDITIONS
SECTION 1. EMPLOYMENT
The Corporation employs Employee as its Chief Executive Officer with
primary responsibility for the general management of the Corporation's affairs
and its day-to-day operations. Employee accepts such employment. In this
capacity, Employee shall perform such services for the Corporation as are
customarily performed by
<PAGE>
persons in this position and such other duties and services, commensurate with
this position, as shall be assigned to him by the Corporation's Board of
Directors, provided however, that any material change in Employee's duties or
place of employment shall only be made with the mutual consent of Employee and
the Corporation. Employee shall devote his full and exclusive time, energies and
attention to the performance of his duties and shall not, during the term of
this Agreement, be engaged in any other business activity.
Notwithstanding the foregoing, Employee may undertake passive investments
which do not (a) interfere, in any material aspect, with his obligations under
this Agreement, or (b) compete or conflict with the business of the Corporation.
SECTION 2. TERM.
Except as otherwise provided in this Agreement, the term of the Employee's
employment shall be for a period commencing on the date of this Agreement and
ending on September 30, 2000, unless terminated sooner pursuant to the
provisions of this Agreement. This Agreement shall be automatically renewed for
successive three (3) year periods, unless either party notifies the other in
writing of its intention not to renew this Agreement. This notice must be given
at least sixty (60) days prior to the end of the then current term.
EMPLOYMENT AGREEMENT - PAGE 2
<PAGE>
SECTION 3. COMPENSATION AND BENEFITS.
3.1. Compensation. In consideration of the services to be provided by
Employee, Employee shall receive a base salary of $150,000 per year (with 4%
increases commencing with the 1998 calendar year), payable at the frequency with
which the Corporation pays its executives.
Compensation shall be reviewed annually. Increases in base salary, if any,
shall be within the sole discretion of the Corporation.
3.2 Bonus. In addition to the compensation set forth above, Employee shall
be entitled to an annual bonus, if any, as determined by the Corporation's Board
of Directors.
3.3 Benefits. Employee shall be entitled to sick leave, fringe benefits,
vacation, holidays, health insurance, disability benefits, pension benefits and
other employee plans as are currently provided its other executives, or as
otherwise established from time to time by the Board of Directors. Specifically,
Employee shall be entitled to the Corporation's customary paid holidays and four
(4) consecutive weeks vacation. Vacations shall be taken at such times as are
mutually agreed upon by the Corporation and Employee.
3.4 Automobile Usage. During the term of this Agreement and any renewal
term, Employee shall be entitled to an automobile
EMPLOYMENT AGREEMENT - PAGE 3
<PAGE>
allowance in the amount of $2,000 per month. The Corporation shall be
responsible for title to, and the maintenance and insurance costs for, such
automobile. Employee shall provide substantiation for such allowance by
documentation, the form and content of which shall be the same as required of
the officers of the Corporation.
SECTION 4. DISABILTTY OR DEATH OF EMPLOYEE.
4.1 Disability. If Employee is incapacitated or disabled by accident,
normal and customary sickness or otherwise, prior to attaining the age of
sixty-five (65), and, as a result, is rendered mentally or physically incapable
of performing the services required of him under this Agreement for a period of
ninety (90) consecutive days or longer (the Disability Period), the Corporation
may, upon the occurrence of the event giving rise to such incapacity or
disability, or at any time thereafter, at its option, terminate the employment
of the Employee under this Agreement immediately upon giving him notice of such
termination. Notwithstanding the Corporation's right to terminate Employee's
employment under this Section, Employee shall be entitled to receive his full
compensation for the first six (6) months from the beginning of the Disability
Period. Nothing in this Agreement shall limit the Employee's right to receive
any payments to which he may be entitled under any disability or employee
benefit plan
EMPLOYMENT AGREEMENT - PAGE 4
<PAGE>
of the Corporation, if any, or under any other disability or insurance policy or
plan.
4.2 Death. If Employee should die during the term of this Agreement, this
Agreement shall be deemed to have terminated as of the date of his death
provided, however, that the compensation payable hereunder shall be paid to his
spouse (or in the absence of a spouse, to his estate) for a period of six (6)
months from the date of death.
SECTION 5. RESTRICTIVE COVENANTS.
5.1 Disclosure of Information. At all times during and after the term of
Employee's employment, Employee shall not, except with Corporation's express
prior written consent, or in the proper performance of his duties to the
Corporation, directly or indirectly disclose, communicate, divulge or make
accessible to any person, firm, corporation or other entity, or use for his own
benefit or for the benefit of any other person, any knowledge or information
with respect to the conduct or details of the Corporation'S business. This
knowledge includes, but is not limited to, technical know-how, methods of
operation, books, records, accounts, details of contracts, client lists, fees,
costs, marketing and sales methods, other trade secrets or confidential
information, forms or statistics, except with respect to the information and
know-how the Employee possessed prior to
EMPLOYMENT AGREEMENT - PAGE 5
<PAGE>
the date of his employment with the Corporation or unless such information shall
have become public knowledge other than by breach of this provision.
5.2 Non-competition. Employee shall not, during the term of this Agreement
and for a period of one (1) year after termination of this Agreement, without
the prior written consent of the Corporation, either separately or in
association with others, directly or indirectly:
(i) establish, engage in, promote and assist or become interested in
(whether as an owner, stockholder, partner, lender or other investor, director,
officer, employee, consultant, advisor, agent or otherwise) any business or
enterprise that, competes with or solicits customers, business or patronage in
competition with any substantial part of the business conducted by the
Corporation or any of its subsidiaries or affiliates within 50 miles in any
geographic area in which the Corporation or any of its subsidiaries or
affiliates has an office. Mere passive ownership of not more than five (5%)
percent of the outstanding securities of any class of any corporation that are
listed on a national securities exchange or traded in the over-the-counter
market, shall not be considered a breach of this section;
(ii) participate in the solicitation of any business of any type conducted
by the Corporation, or any subsidiary or affiliate
EMPLOYMENT AGREEMENT - PAGE 6
<PAGE>
of it, from any person or entity which was a client of the Corporation, or any
subsidiary or affiliate of it, on the date of termination of the Employee's
employment with the Corporation; or
(iii) attempt to induce any employee of the Corporation, or any of its
subsidiaries or affiliates, to leave the employment of the Corporation or such
subsidiary or affiliate.
5.3 Records. Employee acknowledges and agrees that all records relating to
the Corporation and its operations are and shall be the sole property of the
Corporation. Upon termination of Employee's employment, Employee will
immediately surrender to the Corporation the books, accounts, records,
memoranda, keys and other property of the Corporation of every nature whatsoever
which are in Employee's possession or under his control, including copies,
whether prepared by Employee or by others.
SECTION 6. TERMINATION.
6.1. Termination for Cause. The employment of Employee under this
Employment Agreement may be terminated by the Corporation for cause at any time.
For purposes hereof, the term "Cause" shall include but shall not be limited to:
A. Employee's fraud, dishonesty, willful misconduct or gross negligence in
the performance of his duties;
B. Employee's material breach of any provision of this Agreement;
EMPLOYMENT AGREEMENT - PAGE 7
<PAGE>
C. Employee's willful and material refusal or failure to (i) carry out
specific directions of his superiors or the President or the Board of Directors,
or (ii) perform a material part of his duties under this Agreement;
D. Employee's commission of larceny, embezzlement, conversion or any act
involving the misappropriation of funds in the course his employment;
E. Employee's commission of any act which is adjudicated to be a fraudulent
act or would create any liability whatsoever under any state or federal
securities law in excess of $5,000;; or
F. Employee's misuse of alcohol, drugs or any controlled substance.
Except as provided to the contrary in this Agreement, any termination for
Cause shall be on notice to Employee giving Employee thirty (30) days to cure
said breach, or, in the event said breach is not capable of being cured within
said thirty (30) day period, giving Employee a reasonable period of time to cure
said breach provided Employee diligently takes action to immediately cure said
breach. Employee shall have no claim for compensation, additional compensation,
or any other benefit from and after such termination date.
6.2 Termination After Sale. This Agreement may be terminated by the
Corporation in the event of (i) any sale of a
EMPLOYMENT AGREEMENT - PAGE 8
<PAGE>
majority of the shares of the Corporation's voting stock or (ii) any sale of
substantially all the assets of the Corporation.
SECTION 7. ASSIGNMENT.
This Agreement may not be assigned by the Employee. The Corporation may
assign or transfer this Agreement to a parent or subsidiary corporation, or to a
successor corporation in the event of a merger, consolidation or transfer or
sale of all, or substantially all, of its assets or a public offering of the
stock of the Corporation. In the case of any assignment or transfer, this
Agreement shall be binding upon and inure to the benefit of such successor
corporation which shall assume performance of all of the obligations of the
Corporation under this Agreement, and the Corporation shall be released from
further liability under this Agreement.
SECTION 8. MISCELLANEOUS.
8.1 Entire Agreement, Modification. This Agreement constitutes the entire
agreement between the parties with respect to the matters set forth in it and
may not be amended nor modified except in writing, signed by the parties.
However, Employee's compensation may be increased at any time by the Corporation
without in any way affecting any of the other terms and conditions of this
Agreement, which in all other respects shall remain in full force and effect.
EMPLOYMENT AGREEMENT - PAGE 9
<PAGE>
8.2 Notice. Any notice required under this Agreement shall be deemed given
when mailed by certified mail, return receipt requested, with a copy sent by
regular first class mail, to the address listed in this Agreement or such other
addresses as the parties may designate in writing. All notices under this
Agreement shall also be sent to Leonard M. Ridini, Jr., Esq. 45 Crossways Park
Drive, Woodbury, New York 11797.
8.3 Construction and Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York. The invalidity
or unenforceability of any provision or provisions of this Agreement shall not
affect the other provisions of it. The remaining provisions of the Agreement
shall be construed in all respects as if such invalid or unenforceable provision
or provisions were omitted.
8.4 Waiver. The waiver by either party of noncompliance by the other party
of any term or provision of this Agreement shall not be construed as a waiver of
any other noncompliance.
8.5 Captions. The captions in this Agreement are for convenience and
reference only and in no way define, limit or describe the scope or intent of
this Agreement, or in any way affect this Agreement.
8.6 Arbitration. In the event a dispute arises under any term or provision
of this Agreement, such dispute shall be settled
EMPLOYMENT AGREEMENT - PAGE 10
<PAGE>
by arbitration in the County of Nassau, State of New York, by and in accordance
with the rules then obtaining of the American Arbitration Association.
8.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, all of which together will constitute
one and the same instrument.
8.8 Cooperation. The Corporation and Employee shall cooperate with each
other to carry out the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and year first above written.
Mortgage Plus Equity and Loan Corp.
By: /s/ ILLEGIBLE
--------------------------------------
/s/ STEVEN LATESSA
--------------------------------------
Steven Latessa
EMPLOYMENT AGREEMENT - PAGE 11
<PAGE>
EX-10.3
EMPLOYMENT AGREEMENT
AGREEMENT, made on September 30, 1997, by and between Mortgage Plus Equity
and Loan Corp., a New York corporation, having an address at 6851 Jericho
Turnpike, Syosset, New York 11791 (the Corporation) and Cary Wolen, residing at
49 Irving Drive, Woodbury, New York 11797 (Employee).
I.
RECITAL
A. The Corporation wants to retain Employee as an executive employee of the
Corporation. Employee wants to be retained in that capacity on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties agree to the following terms and
conditions.
II.
TERMS AND CONDITIONS
SECTION 1. EMPLOYMENT
The Corporation employs Employee as its Chief Operating Officer with
primary responsibility for the general management of the Corporation's affairs
and its day-to-day operations. Employee accepts such employment. In this
capacity, Employee shall perform such services for the Corporation as are
customarily performed by
<PAGE>
persons in this position and such other duties and services, commensurate with
this position, as shall be assigned to him by the Corporations's Board of
Directors, provided however, that any material change in Employee's duties or
place of employment shall only be made with the mutual consent of Employee and
the Corporation. Employee shall devote his full and exclusive time, energies and
attention to the performance of his duties and shall not, during the term of
this Agreement, be engaged in any other business activity.
Notwithstanding the foregoing, Employee may undertake passive investments
which do not (a) interfere, in any material aspect, with his obligations under
this Agreement, or (b) compete or conflict with the business of the Corporation.
SECTION 2. TERM.
Except as otherwise provided in this Agreement, the term of the Employee's
employment shall be for a period commencing on the date of this Agreement and
ending on September 30, 2000, unless terminated sooner pursuant to the
provisions of this Agreement. This Agreement shall be automatically renewed for
successive three (3) year periods, unless either party notifies the other in
writing of its intention not to renew this Agreement. This notice must be given
at least sixty (60) days prior to the end of the then current term.
EMPLOYMENT AGREEMENT - PAGE 2
<PAGE>
SECTION 3. COMPENSATION AND BENEFITS.
3.1 Compensation. In consideration of the services to be provided by
Employee, Employee shall receive a base salary of $150,000 per year (with 4%
increases commencing with the 1998 calendar year), payable at the frequency with
which the Corporation pays its executives.
Compensation shall be reviewed annually. Increases in base salary, if any,
shall be within the sole discretion of the Corporation.
3.2 Bonus. In addition to the compensation set forth above, Employee shall
be entitled to an annual bonus, if any, as determined by the Corporation's Board
of Directors.
3.3 Benefits. Employee shall be entitled to sick leave, fringe benefits,
vacation, holidays, health insurance, disability benefits, pension benefits and
other employee plans as are currently provided its other executives, or as
otherwise established from time to time by the Board of Directors. Specifically,
Employee shall be entitled to the Corporation's customary paid holidays and four
(4) consecutive weeks vacation. Vacations shall be taken at such times as are
mutually agreed upon by the Corporation and Employee.
3.4 Automobile Usage. During the term of this Agreement and any renewal
term, Employee shall be entitled to an automobile
EMPLOYMENT AGREEMENT - PAGE 3
<PAGE>
allowance in the amount of $2,000 per month. The Corporation shall be
responsible for title to, and the maintenance and insurance costs for, such
automobile. Employee shall provide substantiation for such allowance by
documentation, the form and content of which shall be the same as required of
the officers of the Corporation.
SECTION 4. DISABILITY OR DEATH OF EMPLOYEE.
4.1 Disability. If Employee is incapacitated or disabled by accident,
normal and customary sickness or otherwise, prior to attaining the age of
sixty-five (65), and, as a result, is rendered mentally or physically incapable
of performing the services required of him under this Agreement for a period of
ninety (90) consecutive days or longer (the Disability Period), the Corporation
may, upon the occurrence of the event giving rise to such incapacity or
disability, or at any time thereafter, at its option, terminate the employment
of the Employee under this Agreement immediately upon giving him notice of such
termination. Notwithstanding the Corporation's right to terminate Employee's
employment under this Section, Employee shall be entitled to receive his full
compensation for the first six (6) months from the beginning of the Disability
Period. Nothing in this Agreement shall limit the Employee's right to receive
any payments to which he may be entitled under any disability or employee
benefit plan
EMPLOYMENT AGREEMENT - PAGE 4
<PAGE>
of the Corporation, if any, or under any other disability or insurance policy or
plan.
4.2 Death. If Employee should die during the term of this Agreement, this
Agreement shall be deemed to have terminated as of the date of his death
provided, however, that the compensation payable hereunder shall be paid to his
spouse (or in the absence of a spouse, to his estate) for a period of six (6)
months from the date of death.
SECTION 5. RESTRICTIVE COVENANTS.
5.1 Disclosure of Information. At all times during and after the term of
Employee's employment, Employee shall not, except with Corporation's express
prior written consent, or in the proper performance of his duties to the
Corporation, directly or indirectly disclose, communicate, divulge or make
accessible to any person, firm, corporation or other entity, or use for his own
benefit or for the benefit of any other person, any knowledge or information
with respect to the conduct or details of the Corporation's business. This
knowledge includes, but is not limited to, technical know-how, methods of
operation, books, records, accounts, details of contracts, client lists, fees,
costs, marketing and sales methods, other trade secrets or confidential
information, forms or statistics, except with respect to the information and
know-how the Employee possessed prior to
EMPLOYMENT AGREEMENT - PAGE 5
<PAGE>
the date of his employment with the Corporation or unless such information shall
have become public knowledge other than by breach of this provision.
5.2 Non-competition- Employee shall not, during the term of this Agreement
and for a period of one (1) year after termination of this Agreement, without
the prior written consent of the Corporation, either separately or in
association with others, directly or indirectly;
(i) establish, engage in, promote and assist or become interested in
(whether as an owner, stockholder, partner, lender or other investor, director,
officer, employee, consultant, advisor, agent or otherwise) any business or
enterprise that, competes with or solicits customers, business or patronage in
competition with any substantial part of the business conducted by the
Corporation or any of its subsidiaries or affiliates within 50 miles in any
geographic area in which the Corporation or any of its subsidiaries or
affiliates has an office. Mere passive ownership of not more than five (5%)
percent of the outstanding securities of any class of any corporation that are
listed on a national securities exchange or traded in the over-the-counter
market, shall not be considered a breach of this section;
(ii) participate in the solicitation of any business of any type conducted
by the Corporation, or any subsidiary or affiliate
EMPLOYMENT AGREEMENT - PAGE 6
<PAGE>
of it, from any person or entity which was a client of the corporation, or any
subsidiary or affiliate of it, on the date of termination of the Employee's
employment with the Corporation; or
(iii) attempt to induce any employee of the Corporation, or any of its
subsidiaries or affiliates, to leave the employment of the Corporation or such
subsidiary or affiliate.
5.3 Records. Employee acknowledges and agrees that all records relating to
the Corporation and its operations are and shall be the sole property of the
Corporation. Upon termination of Employee's employment, Employee will
immediately surrender to the Corporation the books, accounts, records,
memoranda, keys and other property of the Corporation of every nature whatsoever
which are in Employee's possession or under his control, including copies,
whether prepared by Employee or by others.
SECTION 6. TERMINATION.
6.1 Termination for Cause. The employment of employee under this Employment
Agreement may be terminated by the Corporation for cause at any time. For
purposes hereof, the term "Cause" shall include but shall not be limited to:
A. Employee's fraud, dishonesty, willful misconduct or gross negligence in
the performance of his duties;
B. Employee's material breach of any provision of this Agreement;
EMPLOYMENT AGREEMENT - PAGE 7
<PAGE>
C. Employee's willful and material refusal or failure to (i) carry out
specific directions of his superiors or the President or the Board of Directors,
or (ii) perform a material part of his duties under this Agreement;
D. Employee's commission of larceny, embezzlement, conversion or any act
involving the misappropriation of funds in the course his employment;
E. Employee's commission of any act which is adjudicated to be a fraudulent
act or would create any liability whatsoever under any state or federal
securities law in excess of $5,000;; or
F. Employee's misuse of alcohol, drugs or any controlled substance.
Except as provided to the contrary in this Agreement, any termination for
Cause shall be on notice to Employee giving Employee thirty (30) days to cure
said breach, or, in the event said breach is not capable of being cured within
said thirty (30) day period, giving Employee a reasonable period of time to cure
said breach provided Employee diligently takes action to immediately cure said
breach. Employee shall have no claim for compensation, additional compensation,
or any other benefit from and after such termination date.
6.2 Termination After Sale. This Agreement may be terminated by the
Corporation in the event of (i) any sale of a
EMPLOYMENT AGREEMENT - PAGE 8
<PAGE>
majority of the shares of the Corporation's voting stock or (ii) any sale of
substantially all the assets of the Corporation.
SECTION 7. ASSIGNMENT.
This Agreement may not be assigned by the Employee. The Corporation may
assign or transfer this Agreement to a parent or subsidiary corporation, or to a
successor corporation in the event of a merger, consolidation or transfer or
sale of all, or substantially all, of its assets or a public offering of the
stock of the Corporation. In the case of any assignment or transfer, this
Agreement shall be binding upon and inure to the benefit of such successor
corporation which shall assume performance of all of the obligations of the
Corporation under this Agreement, and the Corporation shall be released from
further liability under this Agreement.
SECTION 8. MISCELLANEOUS.
8.1 Entire Agreement, Modification. This Agreement constitutes the entire
agreement between the parties with respect to the matters set forth in it and
may not be amended nor modified except in writing, signed by the parties.
However, Employee's compensation may be increased at any time by the Corporation
without in any way affecting any of the other terms and conditions of this
Agreement, which in all other respects shall remain in full force and effect.
EMPLOYMENT AGREEMENT - PAGE 9
<PAGE>
8.2 Notice. Any notice required under this Agreement shall be deemed given
when mailed by certified mail, return receipt requested, with a copy sent by
regular first class mail, to the address listed in this Agreement or such other
addresses as the parties may designate in writing. All notices under this
Agreement shall also be sent to Leonard M. Ridini, Jr., Esq. 45 Crossways Park
Drive, Woodbury, New York 11797.
8.3 Construction and Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York. The invalidity
or unenforceability of any provision or provisions of this Agreement shall not
affect the other provisions of it. The remaining provisions of the Agreement
shall be construed in all respects as if such invalid or unenforceable provision
or provisions were omitted.
8.4 waiver. The waiver by either party of noncompliance by the other party
of any term or provision of this Agreement shall not be construed as a waiver of
any other noncompliance.
8.5 Captions. The captions in this Agreement are for convenience and
reference only and in no way define, limit or describe the scope or intent of
this Agreement, or in any way affect this Agreement.
8.6 Arbitration. In the event a dispute arises under any term or provision
of this Agreement, such dispute shall be settled
EMPLOYMENT AGREEMENT - PAGE 10
<PAGE>
by arbitration in the County of Nassau, State of New York, by and in accordance
with the rules then obtaining of the American Arbitration Association.
8.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, all of which together will constitute
one and the same instrument.
8.8 Cooperation. The Corporation and Employee shall cooperate with each
other to carry out the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and year first above written.
Mortgage Plus Equity and Loan Corp.
By: /s/ ILLEGIBLE
--------------------------------------
/s/ CARY WOLEN
--------------------------------------
Cary Wolen
EMPLOYMENT AGREEMENT - PAGE 11
<PAGE>
AMENDED AND RESTATED
MORTGAGE LOAN WAREHOUSING AGREEMENT
THIS AMENDED AND RESTATED MORTGAGE LOAN WAREHOUSING AGREEMENT (the
"Agreement") is made and dated as of November , 1997 by and between SUMMIT
BANK, a New Jersey banking corporation ("Lender"), and MORTGAGE PLUS EQUITY &
LOAN CORPORATION a New York corporation, (the "Company").
RECITALS
--------
A. Company and Lender (formerly known as United Jersey Bank,
successor by merger to Summit Bank) entered into a Mortgage Loan Warehousing
Agreement dated July 15, 1993 (the "1993 Warehousing Agreement") which set forth
the terms and conditions of a mortgage warehousing credit facility by Lender to
Company.
B. Company and Lender have agreed to amend the terms and conditions
of, and to extend the term of, the mortgage warehousing credit facility by
Lender to Company.
C. Company and Lender have agreed to amend, and to restate as so
amended, the 1993 Warehousing Agreement, so as to set forth the terms and
conditions of the amended and extended credit facility.
NOW THEREFORE, in consideration of these premises Company and
Lender adopt the foregoing recitals and amend and restate as amended the 1993
Warehousing Agreement to read in its entirety as follows:
1. Mortgage Warehousing Line of Credit
(a) Credit Limit. On the terms and subject to the conditions set forth
------------
herein, Lender agrees that it shall, from time to time to the Maturity Date (as
that term and capitalized terms not otherwise defined herein are defined in
Paragraph 9 below), make loans (the "Loans" or a "Loan") to the Company in
principal amounts not to exceed, in the aggregate at any time outstanding, the
lesser of:
(i) the Credit Limit; or
(ii) the Collateral Value of the Borrowing Base.
(b) Procedure for Request and Making of Loans. The Company shall, at least
-----------------------------------------
one (1) business day prior to each proposed funding date, deliver a Loan Advance
Request as per Exhibit 1 and accompanying required documents to Lender as per
Exhibit 2. The proceeds of the Loan must be used by the Company to fund the
Mortgage Loan. The proceeds shall be disbursed by Lender by issuing its check,
or by wire transfer as per the Loan Advance Delivery Instructions (Exhibit 3),
for the net amount necessary to close the Mortgage Loan, (to the extent that the
amount of such Loan and available balances in the funding account are sufficient
to at least equal said net amount) made payable to the Closing Representative
and the Obligors. Lender shall forward same directly to the Closing
Representative accompanied by a Closing Representative Instruction and
Certification Letter, in substantially the form of Exhibit 4 annexed hereto. In
the event the Loan proceeds are less than the net amount necessary to close the
Mortgage Loan, the Lender shall debit the difference from available balances in
the Company's funding account.
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<PAGE>
(c) Book Account. The obligation of the Company to repay the Loans
------------
shall be evidenced by an account maintained by Lender on its books. Not more
frequently than once each month, Lender may deliver a statement of account to
the Company setting forth the unpaid balance of Loans outstanding hereunder,
which statement shall be deemed to be an account stated and conclusively correct
and accepted by the Company unless the Company notifies Lender in writing of a
statement of exceptions within ten (10) business days following delivery of such
statement to the Company.
(d) Interest. Interest on the Loans is due and payable on the first
--------
(1st) day of each month hereafter up to and including the Maturity Date. The
Company shall pay to Lender interest on Loans outstanding hereunder from the
date disbursed to but not including the date of payment in the amount billed to
the Company by Lender calculated on the principal amount of Loans outstanding
hereunder during the monthly interest computation period at the Interest Rate.
If payment is not received by Lender on or before the fifteenth (15th) day of
the month (or if the 15th is a Saturday, Sunday or holiday, the next succeeding
business day), a Late Fee equal to a per annum rate of four (4%) percent above
the Prime Rate shall be assessed on the delinquent interest from the sixteenth
(16th) day of the month (or if the 16th is a Saturday, Sunday or holiday, the
next succeeding business day), to but not including the date of payment in the
amount billed to Company by Lender. The foregoing shall not be construed as
allowing any cure or grace period with regard to nonpayment of interest when
due.
(e) Principal. All Loans hereunder, with interest accrued and unpaid
---------
thereon, shall be payable in full on the earlier of:
(i) the Maturity Date,
(ii) the expiration of the permissible warehouse period from
the date of such Loan,
(iii) the date of the sale of any Mortgage Loan under a
Commitment or otherwise,
(iv) the expiration date of the Commitment to which the
subject Mortgage Loan was to be sold under,
(v) the failure of the issuer of the subject Commitment to
purchase the subject Mortgage Loan,
(vi) the subject Mortgage Loan ceases to be an Eligible
Mortgage Loan; or
(vii) as otherwise set forth herein or in any other Loan
Document;
unless otherwise expressly extended or renewed in writing by Lender. Borrower
may at any time prepay outstanding principal under the Loans, in whole or in
part, without payment of any prepayment penalty or premium, and such prepaid
sums shall thereafter be available to be reborrowed by Borrower under the terms
and conditions of this Agreement.
(f) Borrowing Base: Conformity: Mark-to-Market Requirement. In
------------------------------------------------------
support of its obligation to repay Loans hereunder, the Company shall cause to
be maintained with Lender, or with a custodian acceptable to Lender for the
account of Lender under the Security Agreement, a Borrowing Base consisting of
Eligible Collateral with a Collateral Value not less than, at any date, the
aggregate principal amount of Loans outstanding hereunder at such date. In
addition to all other
2
<PAGE>
payment obligations of the Company hereunder, the Company shall pay to Lender:
(i) The amount by which the aggregate principal amount of
Loans outstanding thereunder exceeds the Collateral Value of the Borrowing Base;
and
(ii) The amount by which the aggregate principal amount of
Loans outstanding hereunder exceeds the sum of the Fair Market Value of the
Borrowing Base.
Notwithstanding the foregoing, if, but only if, there shall not have occurred
and be continuing an Event of Default or Potential Default hereunder, the
Company may, in the alternative to making the payments required by subparagraphs
(f)(1) and (f)(2) above and subject to the provisions of the Security Agreement,
deliver to Lender additional Eligible Collateral such that the Borrowing Base,
as so increased, shall be in conformity with the requirements hereof.
(g) Nature and Place of Payments. All payments made on account of
----------------------------
the Obligations shall be made a lawful money of the United States of America in
immediately available funds. If any payments required to be made by Company
hereunder becomes due and payable on a day other than a business day, the due
date thereof shall be extended to the next succeeding business day unless such
next succeeding business day falls in the next succeeding month in which case
such payment shall be made on the next preceding business day and interest
thereon shall be payable at the then applicable rate during such alteration.
Payments required to be made hereunder shall be made to the Contact Office of
Lender or such other office as Lender shall from time to time designate.
(h) Post Maturity Interest. Any Obligations not paid when due
--------------------
(whether at the stated Maturity Date, upon acceleration or otherwise) shall bear
interest from the date due until paid in full at a per annum rate equal to four
percent (4%) above the Interest Rate.
(i) Fees. The Company shall pay promptly to Lender the Required Fees
----
when due.
(j) Computation. All computations of interest and fees payable
-----------
hereunder shall be based upon a year of 360 days for the actual number of days
elaped.
2. Security; Guaranties: Additional Documents.
------------------------------------------
(a) Security Agreement. As collateral security for the
------------------
Obligations, the Company shall execute and deliver the Lender the Security
Agreement, pursuant to which the Company shall pledge, assign, and grant to
Lender a first priority security interest in and lien upon the Collateral.
(b) Guaranties, etc. As additional support for the Obligations, the
---------------
Company agrees to execute and deliver or cause to be executed and delivered to
Lender such guaranties and such additional security agreements as Lender may
request, as set forth more particularly from time to time in the Commitment
Letter the "Additional Collateral Documents").
(c) Further Documents. The Company agrees to execute and deliver or
-----------------
to cause to be executed and delivered to Lender from time to time such
confirmatory or supplementary security agreements, financial statements, or
other documents, instruments or agreements as Lender may, in its sole
discretion, request, which are in Lender's judgment necessary or appropriate to
obtain for Lender the benefit of the Collateral and the Additional Collateral
Documents.
3. Conditions to Making a Loan.
<PAGE>
(a) First Loan. As conditions precedent to Lender's obligation to
----------
make the first Loan hereunder:
(1) The Company shall have delivered or shall have had delivered to Lender, in
form and substance satisfactory to Lender, each of the following:
(i) A duly executed copy of the Commitment Letter:
(ii) A duly executed copy of this Agreement;
(iii) A duly executed copy of the Security Agreement;
(iv) A duly executed master promissory note evidencing the
Loans;
(v) Duly executed copies of the Additional Collateral Documents
and all other security agreements, financial statements, and other documents,
instruments, and agreements, properly executed, deemed necessary or appropriate
by Lender, in its sole discretion, to create on favor of Lender a perfected
first security interest in and lien upon the Collateral; and
(vi) Such credit applications, financial statements, corporate
borrowing resolutions and authorizations and such information concerning the
Company, any Guarantors, of its or their business, operation, and conditions
(financial and otherwise) as Lender may request.
(2) All acts, conditions, and things (including without limitation, the
obtaining of any necessary regulatory approvals and the making of any required
filings, recording or registrations) required to be done and performed and to
have happened precedent to the execution, delivery, and performance of the Loan
Documents and to constitute the same legal, valid and binding obligations
enforceable in accordance with their respective terms shall have been done and
performed and shall have happened in due and strict compliance with all
applicable laws.
(3) All documentation in connection with the transactions contemplated by
the Loan hereunder, including, without limitation, documentation for corporate
and legal proceedings shall be satisfactory in form and substance to Lender and
its counsel.
(b) All Loans. As conditions precedent to Lender's obligation to make
---------
any Loan hereunder, including the first Loan, the Company shall have delivered
a Loan Request and any required documents to Lender, and; at and as of the date
of funding thereof:
(i) The representations and warranties of the Company contained in
the Loan Documents shall be true and complete in all material respects on and as
of the date of such Loan as it is made on such date;
(ii) There shall not have occurred an Event of Default or Potential
Default; and
(iii) Following the funding of the requested Loan, the aggregate
Loans outstanding hereunder shall not exceed the limitation of Paragraph (1)(a)
above.
(iv) Litigation. No suit, action, investigation, inquiry or other
----------
proceeding by any governmental authority or other Person or any other legal or
administrative proceeding shall be pending or threatened which:
(a) questions the validity or legality of the transactions contemplated
by this Agreement, or
4
<PAGE>
(b) seeks damages in connection therewith and which, in the reasonable
judgment of the Lender,
(i) involves a significant risk of a preliminary of permanent injunction
or other order by a state or federal court which would prevent, or require
rescission of, the transactions contemplated by this Agreement, or
(2) in the case of any action or proceeding which seeks monetary damages
involves a significant risk of resulting in substantial financial liability to
the Company, the Guarantor and/or the Lender.
By requesting Lender to make any Loan hereunder, the Company shall be deemed
to have represented and warranted the truthfulness and completeness as of the
date of such request of the statements set forth in subparagraphs (b)(i) through
(b)(iv) above.
4. Representations and Warranties of the Company. As an inducement to Lender to
---------------------------------------------
enter into this Agreement and to make Loans as provided herein, the Company
represents and warrants to Lender that:
(a) Financial Condition. The financial statements of the Company,
-------------------
respectively dated the Statement Date and the Interim Date, copies of which have
heretofore been furnished to Lender, are complete and correct and present fairly
the consolidated and consolidating financial condition of the Company and its
consolidated subsidiaries at such dates and the consolidated and consolidating
results of their operations and changes in financial position for the fiscal
periods then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP and do
not contain any material misstatement of fact or omit to state any facts
necessary to make the statements contained therein not misleading. Neither the
Company nor any of its consolidated Subsidiaries have any material contingent
obligation, contengent liability, or liability for taxes, long-term lease, or
unusual forward or long-term commitment which is material and which is not
reflected in such financial statements, including the notes related thereto.
(b) No Change. Since the Statement Date and the Interim Date, there has
---------
been no material adverse change in the business, operations, assets, or
financial or other condition of the Company or Guarantors or of the Company and
its consolidated Subsidiaries taken as a whole.
(c) Corporate Existence: Compliance With Law. The Company and each
----------------------------------------
Subsidiary:
(i) Is duly organized, valid existing, and in good standing as a
corporation under the laws of the state of its incorporation and each
jurisdiction in which its ownership of property or conduct of business requires
such qualification;
(ii) Has the corporate power and authority and the legal right to own
and operate its property and to conducts its business in the manner in which it
does and proposes so to do; and
(iii) Is in compliance with all Requirements of Law.
(d) Corporate Power: Authorization: Enforceable Obligations. The Company
---------------------------------------------------------
and each corporate Guarantor, if any, has the corporate power and authority and
the legal right to make, deliver, and perform the Loan Documents and to borrow
hereunder and has taken all necessary corporate action to authorize such
borrowing on the terms and conditions of the Agreement and to
<PAGE>
authorize the execution, delivery, and performance of the Loan Documents. The
Loan Documents have each been duly executed and delivered on behalf of the
Company and each corporate Guarantor, if any, and constitute legal, valid, and
binding obligations of the Company and each Guarantor, if any, enforceable
against the Company in accordance with their respective terms.
(e) No Legal Bar. The execution, delivery, and performance of the Loan
Documents, the borrowing hereunder, and the use of the proceeds thereof, will
not violate any Requirement of Law or any Contractual Obligation of the Company
or any Guarantor.
(f) No Material Litigation. Except as disclosed by the Company to Lender
in writing prior to the date of the Commitment Letter, no litigation,
investigation, or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Company, threatened by or
against the Company or any of its Subsidiaries or any Guarantor or against
any of the Company's or any such Subsidiary's or any Guarantor properties or
revenues which, if adversely determined, could have a material adverse effect on
the business, operations, property, or financial or other condition of the
Company or any Subsidiary or any Guarantor.
(g) Taxes. The Company and each Subsidiary and each Guarantor have filed
or caused to be filed all tax returns that are required to be filed and have
paid all taxes shown to be due and payable on said returns or on any
assessments made against them or any of their property.
(h) Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(i) Subsidiaries. The company has delivered to Lender an accurate and
complete list of all existing Subsidiaries of the Company, their respective
jurisdictions of incorporation, the percentage of their capital stock owned by
the Company or other Subsidiaries; all of the issued and outstanding shares of
capital stock of the Subsidiaries have been duly authorized and issued and are
fully paid and nonassessable.
(j) Federal Reserve Board Regulations. Neither the Company nor any of
its Subsidiaries is engaged or will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" or any "margin stock" within the respective meanings
of such terms under Federal Reserve Board Regulation U. No part of the proceeds
of any Loan issued hereunder will be used for "purchasing" or "carrying" "margin
stock" as so defined or for any purpose which violates, or which would be
inconsistent with, the provisions of the regulations of the Board of Governors
of the Federal Reserve System.
(k) ERISA. The Company and each Subsidiary are in compliance in all
material respects with the requirements of ERISA and no Reportable Event has
occurred under any Plan maintained by the Company or any Subsidiary.
5. Affirmative Covenants. The Company hereby covenants and agrees with
Lender that, as long as any Obligations remain unpaid or Lender has any
obligation to make Loans hereunder, the Company shall:
(a) Financial Statements. Furnish to lender:
(i) Within ninety (90) days after the last day of each fiscal
year, financial statements (consolidated and consolidating) showing the
financial position and results of operations of the Company and its Subsidiaries
for the year ended on such date, audited by a firm
6
<PAGE>
of independent certified public accountants of nationally recognized standing
acceptable to Lender, together with a balance sheet and statement of income
(consolidated and consolidating) which has been subjected to the audit
procedures applied in the examination of Company's consolidated financial
statements. Such financial statements shall be prepared in conformity with GAAP
consistently applied, present fairly the financial position of the Company and
its Subsidiaries and the results of their operations as of the end of such
period and for the period then ended, and conform to the requirements of HUD
Handbook 1G 4000.3 REV, as amended from time to time, which financial statements
shall be accompanied by an unqualified report of independent certified public
accountants acceptable to Lender; and
(ii) Within forty-five (45) days after the last day of each of the
Company's four (4) fiscal quarters, consolidated and consolidating financial
statements showing the consolidated and consolidating financial position and
results of operations of the Company and its Subsidiaries as of and for the
period from the beginning of the current fiscal year to such date, together with
a certificate executed by the principal financial officer or principal
accounting officer or treasurer of Company certifying that, to the best of his
knowledge, such financial statements were prepared in conformity with GAAP
consistently applied (subject to year-end audit adjustments) and present fairly
the financial position of the Company and its Subsidiaries, and the results of
operations as of the end of such period and for the period then ended.
(b) Certificates: Reports; Other Information. Furnish or cause to be
---------------------------------------
furnished to Lender:
(i) Simultaneously with the quarterly reports under 5(a)(ii)
above a Compliance Certificate in the form of Exhibit 5 annexed hereto;
(ii) No later than the tenth business day of each calendar month
and at such other times as Lender may reasonably request, a Borrowing Base
Certificate in the form of Exhibit 6 as of the last day of the immediately
preceding calendar month; and
(iii) Promptly, such additional financial and other information,
including, without limitation, financial statements of Guarantors, as Lender may
from time to time reasonably request.
(c) Payment of Indebtedness. Pay, discharge, or otherwise satisfy at or
-----------------------
before maturity or before they become delinquent, defaulted, or accelerated, as
the case may be, all its Indebtedness, except Indebtedness being contested in
good faith and by appropriate proceedings and for which provision is made to the
satisfaction of Lender for the payment thereof in the event the Company is found
to be obligated to pay such Indebtedness and which Indebtedness is thereupon
promptly paid by the Company.
(d) Maintenance of Existence. Maintain all rights, privileges, licenses,
approvals, and franchises necessary or desirable in the normal conduct of its
business, and comply with all Contractual Obligations and Requirements of Law.
(e) Inspection of Property; Books and Records. Discussions. Keep proper
------------------------------------------------------
books of record and account in which full, accurate, and complete entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of Lender to visit and inspect any of its properties and examine
and make abstracts from any of its books and records at any time and as often as
may reasonably be desired, and to discuss the business, operations, properties,
and financial and other condition of the Company and its Subsidiaries, with its
independent certified public accountants and with the Guarantors and any other
parties.
7
<PAGE>
(f) Notices. Promptly give notice to Lender of:
-------
(i) The occurrence of any Potential Default or Event of
Default;
(ii) Any litigation or proceeding against or affecting the
Company, any Subsidiary or Guarantor, or the Collateral, in excess of $25,000.00
or which could have a material adverse affect on the Collateral or the business,
operations, property, or financial or other condition of the Company or any
Subsidiary or Guarantor, and
(iii) A material adverse change in the business, operations,
property, or financial or other condition of the Company or any Subsidiary or
Guarantor.
(g) Expenses. Pay all reasonable out-of-pocket expenses of Lender
--------
(including fees and disbursements of counsel) incident to the transactions
contemplated by the Loan Documents including, but not limited to, any amendments
to or waivers of the provisions of the Loan Documents, the protection of the
rights of Lender under the Loan Documents, the enforcement of payment of the
Obligations, whether by judicial proceedings or otherwise, including, without
limitation, in connection with bankruptcy, insolvency liquidation,
reorganization, moratorium, or other proceedings involving the Company, and the
reasonable fees and disbursements of counsel to Lender in connection with the
preparation of the Loan Documents. The obligations of the Company under this
Paragraph 5(g) shall survive payment of the Obligations.
(h) Loan Documents. Comply with and observe all terms and
--------------
conditions of the Loan Documents.
6. Negative Covenants. The Company hereby agrees that, as long as any
------------------
Obligations remain unpaid or Lender has any obligations to make Loans hereunder,
the Company shall not, directly or indirectly:
(a) Liens. Create, incur, assume, or suffer to exist, any Lien upon
-----
the Collateral or, except as disclosed to and approved by Lender in writing,
upon any servicing rights of the Company or its rights to payment on account
thereof.
(b) Fundamental Changes. Change the essential nature of its
-------------------
business from that conducted on the date of this Agreement, or enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up,
or dissolve itself (or suffer any liquidation or dissolution), convey, sell,
lease, assign, transfer, or otherwise dispose of, in one transaction or a series
of transactions, all or substantially all of its business or assets or acquire
by purchase or otherwise all the business or assets of, or stock or other
evidences of beneficial ownership of, any Person, make any change in its present
method of conducting business, or make any change in its existing management
structure.
(c) Sale of Assets. Convey, sell, lease, assign, transfer, or
--------------
otherwise dispose of any of its assets (other than obsolete or worn out
property), whether now owned or hereafter acquired, other than in the ordinary
course of business as presently conducted; provided, however, that in no event
shall the Company sell, transfer, or otherwise dispose of any part of its
servicing portfolio without the prior written consent of Lender if the amount so
sold, when aggregated with all such transactions within the preceding twelve
(12) month period, equals twenty-five percent (25%) or more in dollar amount of
the Company's remaining servicing portfolio.
(d) Dividends Etc. Declare or pay any dividends, purchase, redeem,
-------------
or otherwise
8
<PAGE>
acquire for value any of its capital stock now or hereafter outstanding, or make
any distribution of assets to its stockholders as such, or permit any of its
Subsidiaries to purchase or otherwise acquire for value of stock of the Company,
except that the Company may:
(i) Declare and deliver dividends and distributions payable in
common stock of the Company, and
(ii) Purchase or otherwise acquire shares of its capital stock with
the proceeds received from the issue of new shares of its capital stock.
(iii) Declare or pay cash dividends to its stockholders and purchase or
otherwise acquire shares of its own outstanding capital stock for cash solely
out of net income of the Company, computed on a cumulative consolidated basis,
provided that the payment of any such dividend will not result in violation of
e, f, or g below.
(e) Adjusted Net Worth. Permit the Company's Adjusted net Worth to be less
------------------
than the Minimum Permitted Adjusted Net Worth at any time.
(f) Tangible Net Worth. Permit the Company's Tangible Net Worth to be less
------------------
than the Minimum Permitted Tangible Net Worth at any time.
(g) Debt to Adjusted Net Worth. Permit the ratio of the Company's
--------------------------
consolidated Debt to its Adjusted Net Worth to exceed the Permitted Debt to
Adjusted Net Worth Ratio at any time.
7. Event of Default. Upon the occurrence and continuance of any of the
----------------
following events (an "Event of Default"):
(a) The Company or any Guarantor shall fail to pay any of the Obligations on
the date when due; or
(b) Any representation or warranty made by the Company or any Guarantor in
any Loan Document or in connection with any Loan Document shall be inaccurate or
incomplete in any respect on or as of the date made; or
(c) The Company or any Guarantor or any Subsidiary shall default in the
observance or performance of any agreement contained in Paragraph 5(a) or (e) or
6 above or under the Security Agreement or any other Loan Document; or
(d) The Company or any Subsidiary shall default in the observance or
performance of any other agreement contained in this Agreement and such default
shall continue unremedied for a period of ten (10) days; or
(e) The Company or any Subsidiary or any Guarantor shall default in any
payment of principal of or interest on any Indebtedness or any other event
shall occur, the effect of which is to allow the hereof to cause the maturity of
such Indebtedness to be accelerated prior to its stated maturity; or
(f) [1] The Company or any Subsidiary or any Guarantor shall commence any
case, proceeding or other action;
(i) Under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, or relief of
debtors, seeking to have an order
9
<PAGE>
for relief entered with respect to it, or seeking to adjudicate it insolvent, or
seeking reorganization, arrangement, adjustment, winding up, liquidation,
dissolution, composition, or other relief in respect to it or its debts; or
(ii) Seeking appointment of a receiver, trustee, custodian, or other
similar official for it or for all or any substantial part of its assets; or
[2] The Company or any Subsidiary or any Guarantor shall make a general
assignment for the benefit or its creditors; or
[3] There shall be commenced against the Company or any Subsidiary or
any Guarantor any case, proceeding, or other action of a nature referred to in
clause [1] above which:
(i) Results in the entry of an order for relief or any such adjudication
or appointment; or
(ii) Remains undismissed, undischarged, or unbonded for a period of
sixty (60) days.
[4] There shall be commenced against the Company or any Subsidiary or
any Guarantor any case, proceeding, or other action seeking similar issuance of
a warranty of attachment, execution, distraint, or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
[5] The Company or any Subsidiary or any Guarantor shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause [1], [2], [3], or [4] above; or
[6] The Company or any Subsidiary or any Guarantor shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due.
(g) [1] Any person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Internal Revenue Code) involving
any Plan.
[2] Any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan;
[3] A Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be appointed, to
administer or terminate, any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the reasonable opinion of Lender, likely to
result in the termination of such Plan for purposes of Title IV of ERISA, and,
in the case of a Reportable Event, the continuance of such Reportable Event
unremedied for ten (10) days after notice of such Reportable Event pursuant to
Section 4043(a), (c) or (d) of ERISA is given or the continuance of such
proceedings for ten (10) days after commencement thereof, as the case may be;
[4] Any Single Employer Plan shall terminate for purposes of Title
IV of ERISA;
[5] Any withdrawal liability to a Multiemployer Plan shall be incurred
by the Company or any Commonly Controlled Entity; or
10
<PAGE>
[6] Any other event or condition shall occur or exist; and in
each case in clauses [1] through [6] above, such event or condition, together
with all other such events or conditions, if any, could subject the Company or
any Subsidiary to any tax, penalty, or other liabilities in the aggregate
material in relation to the business, operations, property, or financial or
other condition of the Company or any Subsidiary.
(h) One or more judgments or decrees shall be entered against the
Company or any Subsidiary involving claims not paid or not fully covered by
insurance and all such judgments or decrees shall not have been vacated,
discharged, or stayed or bonded pending appeal within thirty (30) days from
entry thereof; or
(i) Any of the Guarantors shall fail to perform any of its obligations
under its guaranty of the Obligations or shall notify Lender of its intention to
rescind, modify, terminate, or revoke its guaranty with respect to future
transactions or otherwise;
THEN, automatically upon the occurrence of an Event of Default under Paragraph
7(f) above, and, in all other cases, at the option of Lender, the principal
balance of outstanding Loans and interest accrued but unpaid thereon shall
become immediately due and payable and Lender may exercise any other remedies
under the Uniform Commercial Code or other applicable law, or any other Loan
Document, including but not limited to proceeding to enforce its right by suit
in equity, action at law or other appropriate proceeding, whether for payment or
the specific performance of the covenants or agreements contained in this
Agreement or any other Loan Documents.
8. Miscellaneous Provisions.
------------------------
(a) Assignment. The Company may not assign its rights or obligations
----------
under this Agreement without the prior written consent of Lender. Lender may,
at any time, from time to time, sell or assign all or any part of the Loan or
Loans made under this Agreement. All provisions contained in this Agreement or
any document or agreement referred to herein or relating hereto shall inure to
the benefit of Lender, its successors and assigns, and shall be binding upon the
Company, its successors, and assigns.
(b) Disclosure. The Company consents and agrees that Lender may
----------
disclose to any other financial institution and to any prospective or actual
successors or assigns financial statements, Loan Requests, credit reports,
credit ratings, and any and all other information in the possession of or
available to Lender relating to the Company and that Lender shall not be liable
to Company for any error, omission, or inaccuracy in any of the foregoing.
Company agrees to hold Lender harmless and to defend and indemnity Lender
against any claims by or liabilities to Company or to any such financial
institution or successor or assign of Lender arising out of or related to any
disclosure by Lender related to Company and/or breach by Company of any
representation or warranty, affirmative covenant, negative covenant, or other
Event of Default or Potential Default, or other breach by Company of this
Agreement or any related agreement.
(c) Amendment. This Agreement may not be amended or in any manner
---------
modified by an oral agreement, whether or not such oral agreement is supported
by a new consideration. This Agreement may not be amended or in any manner
modified unless such amendment or modification is in writing and signed by
Lender and the Company. This Agreement, The Security Agreement, and all related
agreements are for the sole benefit of Lender and Company and may be amended,
modified, or canceled at any time or from time to time without consultation or
consent of any other entity.
(d) Cumulative Rights; No waiver. The rights, powers, and remedies of
-----------------
Lender hereunder
11
<PAGE>
are cumulative and in addition to all rights, powers, and remedies provided
under any and all agreements between the Company and Lender relating hereto, at
law, in equity, or otherwise. Any delay or failure by Lender to exercise any
right, power, or remedy shall not constitue a waiver thereof by Lender, and no
single or partial exercise by Lender of any right, power, or remedy shall
preclude other or further exercise thereof or any exercise of any other rights,
powers, or remedies.
(e) Entire Agreement. This Agreement and the documents and agreements
----------------
referred to herein embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings relating
to the subject matter hereof and thereof.
(f) Survival. All representations, warranties, covenants, and agreements
--------
herein contained on the part of the Company shall survive the termination of
this Agreement and shall be effective until Obligations are paid and performed
in full or longer as expressly provided herein.
(g) Notices. All notices given by either party to the other shall be
-------
in writing, delivered personally, or by depositing the same in the United States
mail, certified, with postage prepaid, addressed to the party at the address set
forth in the Commitment Letter. Either party may change the address to which
notices are to be sent by notice of such change to the other party given as
provided herein.
(h) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New Jersey.
9. Definitions. For purposes of this Agreement, the terms as set forth below
-----------
shall have the following meanings:
"Acceptable Jurisdiction" shall have the meaning set forth in the Commitment
Letter.
"Adjusted Net Worth" shall mean at any date the sum of:
(a) Tangible Net Worth plus subordinated notes payable to stockholders,
plus;
(b) One percent (1.00%) of the aggregate outstanding principal balance
of the Company's FNMA, FHLMC AND GNMA mortgage loan servicing portfolio and one
half of one percent (.50%) of the Company's private investor Mortgage Loan
servicing portfolio (internally generated or acquired by purchase), less the sum
of;
(c) Any amounts included in Tangible Net worth (however designated on
the Consolidated Balance Sheet of the Company) allocated to the purchase of the
Company's servicing portfolio or any part thereof, or any amounts (however
designated on such balance sheet) attributable to the capitalization of
servicing fees in excess of the cost of servicing.
(d) Any amounts relating to non-mortgage banking items included in
Tangible Net Worth (however designated on the Consolidated balance sheet of the
Company) which the Lender may exclude in its sole discretion.
"Agreement" shall mean this Agreement, as the same may be amended, extended, or
replaced from time to time, including the Commitment Letter.
"Available Deposits" shall mean those net collected balances in the Company's
noninterest-bearing accounts maintained with Lender, (computed after deduction
of amounts required to compensate Lender for services rendered and deduction of
amounts required by Lender to be maintained on
12
<PAGE>
deposit as reserves, determined in accordance with Lender's standard system of
analysis for similar accounts).
"Borrowing Base" shall mean at any date all Eligible Collateral delivered and
held by Lender or any custodian appointed by Lender in writing as collateral
security for the obligations.
"Borrowing Base Certificate" shall mean a certificate in form and substance
acceptable to lender.
"Closing Representative" means the attorney, title company or other entity which
will close any proposed Mortgage Loan.
"Collateral" shall have the meaning set forth in the Security Agreement.
"Collateral Value of the Borrowing Base" shall have the meaning set forth in the
Commitment Letter.
"Commitment Letter" shall mean any letter of most recent date from time to time
addressed to the Company and duly executed by Lender and the Company referencing
this Agreement and setting forth the specifics of certain terms and provisions
thereof, including without limitation a letter dated _______________, 1997.
"Commonly Controlled Entity" of a Person shall mean a Person, whether or not
incorporated, which is under common control with such Person within the meaning
of Section 414(c) of the Internal Revenue Code.
"Compliance Certificate" shall mean a report in form and substance acceptable to
Lender.
"Contact Office" shall mean that office of Lender set forth in the Commitment
Letter.
"Contractual Obligation" as to any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument, or undertaking
to which such Person is a party or by which it or any of its property is bound.
"Credit Limit" shall mean the aggregate amount of credit agreed to be made
available by the Lender to the Company, from time to time, to and including the
Maturity Date, as set forth in the Commitment Letter.
"Debt" of any Person shall mean:
(a) Indebtedness for borrowed money or for the deferred purchase price of
property or services in respect of which such Person is liable, contingently, or
otherwise, as obligor, guarantor or otherwise, or in respect of which such
Person otherwise assures a creditor against loss; and
(b) Obligations under leases, which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases in respect to which obligations such Person is liable, contingently or
otherwise, as obligor, guarantor, or otherwise, or in respect of which
obligations such Person or entity otherwise assures a creditor against loss; and
(c) Unfunded vested benefits under each Plan maintained for employees of
such Person.
"Eligible Collateral" shall mean all Eligible Mortgage Loans and all other
Collateral meeting the requirements of "Types of Eligible Collateral" set forth
in the Commitment Letter, and, in each
13
<PAGE>
case, as to which there shall have been delivered to Lender or its custodian
those items set forth in Exhibit "A" attached hereto. In determining the
eligibility of any Collateral Lender may require delivery to it of satisfactory
opinions of counsel relating to local laws of the jurisdiction to which the
Collateral is related.
Notwithstanding anything contained in this Agreement, Lender in its sold
discretion may reject any Collateral as ineligible under this Agreement when
presented by the Company for inclusion in the Borrowing Base. Any of the
requirements for eligibility may be waived by Lender; provided, however, that
any Collateral which is initially acceptable as Eligible collateral and which
subsequently fails to meet any of the foregoing requirements or representations
hereof shall forthwith cease to be eligible Collateral.
"Eligible Mortgage Loan" shall mean a Mortgage Loan with respect to which each
of the following statements shall be accurate and complete (and the Company by
including such Mortgage Loan in any computation of the Borrowing Base shall be
deemed to so represent and warrant to Lender at and as of the date of such
computation);
(a) Said Mortgage Loan is a binding and valid obligation of the Obligor
thereon, in full force and effect and enforceable in accordance with its term;
(b) Said Mortgage Loan is genuine, in all respects as appearing on its
fact or as represented in the books and records of the Company, and all
information set forth therein is true and correct;
(c) Said Mortgage Loan is free of:
(i) default of any party thereto (including the Company);
(ii) counterclaims, offsets and defenses and from;
(iii) any rescission, cancellation or avoidance, and all right
thereof, whether by operation of law or otherwise; or
(iv) any assertion by the Obligor that he has aright of
defense, set-off, counterclaim, rescission, cancellation or avoidance;
(d) No payment under said Mortgage Loan is more than thirty (30) days
past due the payment due date set forth in the underlying promissory note and
deed of trust (or mortgage);
(e) Said Mortgage Loan contains the entire agreement of the parties
thereto with respect to the subject matter thereof, has not been modified or
amended in any material respect and is free of concessions or understandings
with the Obligor thereon of any kind not expressed in writing therein;
(f) Said Mortgage Loan is in all respects as required by and in
accordance with all applicable laws and regulations governing the same,
including without limitation, the Federal Consumer Credit Protection Act and the
regulations promulgated thereunder and all applicable usury laws and
restrictions, and all notices, disclosures, and other statements or information
required by law or regulation to be given, and any other act required by law or
regulation to be performed, in connection with said Mortgage Loan have been
given and performed as required;
(g) All advance payments and other deposits on said Mortgage Loan have
been paid in full, and not part of said sums have been loaned, directly or
indirectly, by the Company to the Obligor,
14
<PAGE>
and other than as disclosed to Lender in writing there have been no prepayments
on said Mortgage Loan;
(h) At all times said Mortgage Loan (with the exception of the Property)
will be free and clear of all liens, encumbrances, charges, rights, and
interests of any kind, except in favor of Lender;
(i) The Property covered by said Mortgage Loan is insured against loss
or damage by fire, flood (if applicable) and all other hazards normally included
within standard extended coverage in accordance with the provisions of said
Mortgage Loan with the Company named as mortgagee thereon;
(j) The Property covered by said Mortgage Loan is free and clear of all
liens, encumbrances, charges, rights, and interests of any kind except of the
Company (which has assigned any and all such liens, encumbrances, charges,
rights, and interests to Lender) or disclosed in a title policy, or preliminary
title report delivered to Lender concurrently with the delivery of the Mortgage
Loan or otherwise proved by Lender in writing;
(k) The Property covered by said Mortgage Loan is located in an
Acceptable Jurisdiction;
(l) If said Mortgage Loan has been withdrawn by the Company on terms and
subject to conditions set forth in the Security Agreement, said unit has not
been withdrawn for a time period in excess of the time permitted by the
Security Agreement;
(m) Said Mortgage Loan is covered by a Take-Out Commitment which is in
full force and effect and is in full compliance therewith;
(n) The date of the promissory note is no earlier than seven (7) days
prior to the date said Mortgage Loan is first included in the Borrowing Base;
(o) Said Mortgage Loan has not been included in the Borrowing Base for
a period of time in excess of the Permissible Warehouse Period;
(p) Said Mortgage Loan conforms in all respects to the description of
"Types of Eligible Collateral" set forth in the Commitment Letter; and
(q) In the event the Mortgage Loan is a Residential Mortgage Loan, and
the Loan-to-Value Ratio of said Mortgage Loan exceeds eighty percent (80%), said
Mortgage Loan is the subject of a mortgage guaranty insurance policy in favor of
the Company covering not less than the difference between the original principal
of the underlying promissory note and the Loan-to-Value ratio of said Mortgage
Loan.
"Event of Default" shall have the meaning set forth in Paragraph 7 above.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the
same may from time to time be supplemented or amended.
"Fair Market Value of the Borrowing Base" shall mean at any date the aggregate
fair market value of Eligible Collateral at such date, determined by Lender in
its reasonable discretion.
"FHA" shall mean the Federal Housing Administration and any successor agency.
15
<PAGE>
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation and any successor
agency.
"FNMA" shall mean the Federal National Mortgage Association and any successor
agency.
"Funding Account" shall mean the deposit account of the Company described in the
Commitment Letter maintained in the Company's name alone at the Contact Office
of Lender.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time as determined by the AICPA.
"GNMA" shall mean the Government National Mortgage Association and any successor
agency.
"Guarantors" shall mean guarantors of the Obligations described more
particularly in the Commitment Letter or any other party who guarantees the
Obligations.
"Indebtedness" of any Person shall mean all items of indebtedness which, in
accordance with generally accepted accounting principles and practices, would
be included in determining liabilities as shown on the liability side of a
balance sheet of such Person as of the date as of which indebtedness is to be
determined, including, without limitation, all obligations for money borrowed
and capitalized lease obligations, and shall also include all indebtedness and
liabilities of others assumed or guaranteed by such Person or in respect of
which such Person is secondarily or contingently liable (other than by
endorsement of instruments in the course of collection) whether by reason of
any agreement to acquire such indebtedness or to supply or advance sums or
otherwise.
"Interest Rate" shall mean the interest rate accruing on the Obligations prior
to the maturity thereof, as set forth in the Commitment Letter.
"Interim Date" shall have the meaning set forth in the Commitment Letter.
"Lien" shall mean any security interest, mortgage, pledge, lien, claim, charge,
or encumbrance (including any conditional sale or other title retention
agreement), any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction.
"Loan Documents" shall mean this Agreement, the Commitment Letter, the Security
Agreement, the Additional Collateral Documents, and any other documents,
instrument, or agreement executed by the Company for time in connection
herewith or therewith.
"Loan Request Form" shall mean a request in form and substance acceptable to
Lender.
"Loan-to-Value Ratio" shall mean: With respect to any residential Mortgage
Loan, the ratio of the aggregate indebtedness secured by such Property
(including the indebtedness represented by such Residential Mortgage Loan) to
the appraised fair market value of the subject Property at the date the loan
represented by such Residential Mortgage Loan was made.
"Maturity Date" shall mean the date set forth in the Commitment Letter (as such
date may be expressly extended from time to time in writing by Lender).
16
<PAGE>
"Minimum Permitted Adjusted Net Worth" shall have the meaning set forth in the
Commitment Letter
"Minimum Permitted Tangible Net Worth" shall have the meaning set forth in the
Commitment Letter.
"Mortgage Loan" shall mean a real estate secured loan, made by the Company to an
Obligor or acquired by the Company, including without limitation:
(a) A promissory note and related deed of trust and/or security agreements;
(or mortgage)
(b) All guaranties and insurance policies, including, without limitation,
all mortgage and title insurance policies and all fire and extended coverage
insurance policies and rights of the Company to return premiums or payments with
respect thereto;
(c) All right, title, and interest of the Company in the Property covered
by said deed of trust (or mortgage); and
(d) The Take-Out Commitment related thereto.
"Multiemployer Plan" as to any Person shall mean a Plan of such Person which is
a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Obligations" shall mean any and all debts, obligations and liabilities of the
Company to Lender (whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owed with others, direct or indirect,
absolute or contingent, liquidated or unliquidated, and whether or not from time
to time decreased or extinguished and later increased, created, or incurred),
arising out of or related to the Loan Documents or any other present or future
document or agreement to or held by Lender whether or not related to the Loans.
"Obligor" shall mean the individual or individuals obligated to pay the
indebtedness which is the subject of a Mortgage Loan.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permissible Warehouse Period" shall mean for any item of Eligible Collateral
the earlier of the period of time set forth in the Commitment Letter or upon the
expiration of the applicable Take-Out Commitment.
"Permitted Debt-to-Tangible-Net-Worth Ratio" shall have the meaning set forth in
the Commitment Letter.
"Person" shall mean any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, government, or any department
or agency of any government.
"Plan" shall mean as to any Person, any pension plan that is covered by Title IV
of ERISA and in respect of which such Person is an "employer" as defined in
Section 3(5) of ERISA.
"Potential Default" shall mean an event which but for the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
17
<PAGE>
"Prime Rate" shall mean the rate announced by Lender as its prime rate for Loans
to its Commercial Borrowers, as the same is in effect from time to time.
"Proceeds" shall mean whatever is receivable or received when Collateral or
proceeds is sold, collected, exchanged, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes, without limitation, all
rights to payment, including return premiums, with respect to any insurance
relating thereto.
"Property" shall mean the real property, including the improvements thereon, and
the personal property (tangible and intangible), which are encumbered as
collateral security for a Mortgage Loan.
"Reportable Event" shall mean a reportable event as defined in Title IV of
ERISA, except actions of general applicability by the Secretary of Labor under
Section 110 of ERISA.
"Required Fees" shall have the meaning set forth in the Commitment Letter.
"Requirements of Law" shall mean as to any Person the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule, or regulation, or a final and binding
determination of an arbitrator or a determination or a court or other
Governmental Authority, in each case applicable to or finding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Residential Mortgage Loan" shall mean a Mortgage Loan, the proceeds of which
were advanced to enable the Obligor (or its predecessor if the Mortgage Loan has
been assumed by the present Obligor) to acquire a 1-4 unit family residence.
"Security Agreement" shall mean a security agreement in form and substance
acceptable to Lender.
"Single Employer Plan" shall mean as to any Person or Plan of such Person which
is not a Multiemployer Plan.
"Statement Date" shall have the meaning set forth in the Commitment Letter.
"Subsidiary" shall mean any corporation more than fifty percent (50%) of the
stock of which have by the terms thereof ordinary voting power to elect the
board of directors, managers or trustees of the corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any continency) shall, at the time as of which any determination is being made,
be owned by the Company, either directly or through Subsidiaries.
"Take-Out Commitment" with respect to any Collateral shall mean a bona fide
current, unused, and unexpired commitment made by FNMA, FHLMC, or a financial
institutional or an investment banker acceptable to lender, under which said
Person agrees, prior to or on the expiration thereof, upon the satisfaction of
certain terms and conditions therein, to acquire such Collateral, which
commitment is not subject to any term or condition which is not customary in
commitments of like nature or which, in the reasonably anticipated course of
events, cannot be fully complied with prior to the expiration thereof.
"Tangible Net Worth" shall mean the sum of the amounts set forth on the
consolidated balance sheet of the Company, prepared in accordance with GAAP as:
18
<PAGE>
(a) The par or stated value of all outstanding common stock;
(b) Paid-in capital and retained earnings, less the sum of;
(i) Goodwill, including any amounts (however designated on such
balance sheet) representing the cost of acquisitions of subsidiaries in excess
of underlying tangible assets;
(ii) Patents, trademarks, copyrights, leasehold improvement not
recoverable at the expiration of a lease, and deferred charges (including, but
not limited to unamortized debt discount and expense, organizational expenses);
and
(iii) Loans receivable by Company from parents, affiliates,
subsidiaries, or Commonly Controlled Entities, or officers, directors, and
holders of stock in parents, affiliates or subsidiaries or other Commonly
Controlled Entities.
"VA" shall mean the Veterans Administration and any successor agency.
10. WAIVER OF TRIAL BY JURY. COMPANY WAIVES TRIAL BY JURY IN ANY LITIGATION
-----------------------
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
COMPANY: MORTGAGE PLUS EQUITY & LOAN CORPORATION
a New York corporation
By:
---------------------------------
Name: Steven Latessa
Title: President
LENDER: SUMMIT BANK
By:
---------------------------------
Name: Walter Hrycyna
Title: Vice President
19
<PAGE>
EXHIBIT 1
LOAN ADVANCE REQUEST
Company:
Street:
City/State:
To: Summit Bank
We hereby request that you advance $ for the loan described below.
--------
This loan advance request is submitted pursuant to the Mortgage Loan Warehouse
Agreement between Summit Bank and the Company. Please forward the proceeds as
per the enclosed Closing Proceeds Delivery Instructions.
Originator Loan Number --------------------
Mortgagor -------------------- Co-Mortgagor---------------------------
Property Address:---------------------------------
City/State/Zip ---------------------------------
County ---------------------------------
Loan Description: Type of Program
FIXED ------------ ARM ------------ BALLOON ------------- JUMBO ----------
OTHER-------------
Note Amount -------------- NOTE RATE -----------------------------
Note Date -------------- NOTE TERM YRS.-------------------------
The Take-Out Purchaser Is:
Name
- -----------------------------
Commitment No.
- -----------------------------
Commitment Price/Yield
- -----------------------------
Commitment Expires
- -----------------------------
20
<PAGE>
The following documents are enclosed: Please check
Summit Initial Loan Advance Request Form; ------------
Closing Loan Proceeds Delivery Instructions; ------------
Copy Investor Commitment or Trade Sheet; ------------
Executed Assignment of Mortgage to Summit Bank; ------------
Copy Preliminary Title Report; ------------
Copy of Closing Agent Protection Letter; ------------
Copy of Originators Closing Instructions to Closing Agent; ------------
Copy Application (Original Signed); ------------
Form of Mortgage Note; ------------
Form of Mortgage or Deed of Trust; ------------
PMI Certificate and/or Flood Insurance (if applicable) ------------
We represent and warrant that we hold in our files the original of all documents
of which copies are enclosed herewith.
Company:
Authorized Signer
--------------------------
Name and Title
--------------------------
Date:
--------------------------
- --------------------------------------------------------------------------------
FOR SUMMIT BANK USE ONLY
ADVANCE AMOUNT: SUMMIT REF #:
------------------------ ---------------------------
APPROVED FOR FUNDING: DATE:
--------------------------------------
<PAGE>
EXHIBIT 2 Required Documents
First mortgage "wet" fundings required an initial package including:
- -Loan advance request form;
- -Closing proceeds delivery instructions;
- -Copies of the unsigned note and mortgage;
- -Fully executed original assignment in recordable form;
- -Copy of the Take-Out Commitment;
- -Attorney's closing instructions;
- -Signed hand-written loan application;
- -Closing agent protection letter;
- -Copy preliminary title binder;
- -Copies of the PMI Certification and flood insurance where applicable.
We must receive the following within two business days of funding including:
- -Original note;
- -Certified true copy of the mortgage and applicable riders;
- -Copy of the signed HUD 1;
- -Original executed Closing Representative Instruction and Certification Letter.
22
<PAGE>
EXHIBIT 3
LOAN ADVANCE DELIVERY INSTRUCTIONS
Date:
To: Summit Bank
We hereby request that you deliver $ , on , for the closing of the
-------- -----
mortgage loan. We hereby authorize you to debit our account Summit Bank
# for any difference between the Loan Advance and the amount requested.
-------
Indicate form of payment:
Cashiers check: --------------------------------
Please issue your cashier's check in the amount indicated above drawn to:
Closing Representative: --------------------------------
and/or
Mortgagor: --------------------------------
Attention: --------------------------------
Street: --------------------------------
City, State, Zip Code: --------------------------------
Telephone: -----------------Fax:-----------
Wire Transfer: --------------------------------
Please wire transfer the amount indicated above to:
Closing Representative: --------------------------------
Account Number: --------------------------------
Bank: --------------------------------
Street: --------------------------------
23
<PAGE>
City, State, Zip Code: ________________________________
ABA # & Telegraphic Abbr: ________________________________
Attention & Phone Number: ________________________________
Re: Mortgagors Name: ________________________________
Telephone: _________________ Fax:__________
Company: _______________________
Authorized Signer ______________
Name & Title ___________________
Date: __________________________
24
<PAGE>
EXHIBIT 4
SUMMIT BANK
CLOSING REPRESENTATIVE INSTRUCTIONS AND CERTIFICATION LETTER
Date: date
To Closing Agent: name, title
company
address
city/state/zip
Real Property Purchaser: name
address
city/state/zip
mortgage amt:$___________
Mortgage Banker: company
address
city/state/zip
Dear Sir or Madam:
We herewith deliver to you our Cashier's Check #________ in the amount of
$___________, which you are hereby authorized to disburse provided only that
prior thereto or concurrently therewith you shall have:
1. Signed this letter acknowledging receipt and agreement to act in
accordance with the terms hereof and have faxed the executed letter to Summit
Bank-Mortgage Banking Finance Group # 908/709-6405;
2. Recorded or cause to be recorded a deed in favor of the real
property purchaser above named;
3. Obtained a duly executed and delivered original note, payable to the
mortgage banker in the sum stated above;
4. Recorded or cause to be recorded a duly executed mortgage or deed
of trust securing the note described in 3;
5. Within 30 days of closing, obtained or issued a policy of title
insurance in the usual and ordinary form insuring the purchaser, the mortgagee
and the assignee of the mortgagee that the mortgage or deed of trust is a valid
first lien on the real property, prior to all other liens and encumbrances
except current taxes not yet due or payable;
6. Obtained a certificate or other appropriate evidence of insurance of
the improvements on said real property against loss by fire, vandalism or
malicious mischief, naming as beneficiaries the owner, mortgagee and assignee of
the mortgagee as their interests may appear.
7. Have complied with the mortgage bankers closing instructions,
provided that they are not contrary to anything contained therein.
25
<PAGE>
By endorsing and depositing our check you represent, warrant and certify that
the original note, item 3, is the sole original note, that it has been duly
executed and delivered by the makers thereof, that no duplicate original
notes have been executed or delivered.
Upon closing of the Mortgage Loan you must immediately deliver by overnight
courier the original note, item 3, a certified true copy of the Mortgage, copy
of executed HUD 1 and this original executed letter to:
SUMMIT BANK
MORTGAGE BANKING FINANCE GROUP
750 WALNUT AVENUE
CRANFORD, NEW JERSEY 07016
Upon written instruction of Summit Bank or if the Mortgage Loan does not close
for any reason, return the Cashier's Check by overnight courier to the above
address.
All costs of closing and recordation are to be paid by the purchaser of mortgage
banker. These escrow instructions may be modified only in writing duly signed
on behalf of Summit Bank. The Summit Bank reserves the right to amend, modify or
withdraw these closing instructions at any time until the Mortgage Loan closes.
Summit Bank
By: ____________________________
Name: Walter Hrycyna
Title: Vice President
Received and agreed to on this day _________________, 19_____
By: ____________________________
Name:
Title:
26
<PAGE>
EXHIBIT 5
COMPLIANCE CERTIFICATE
Reference is made to that certain Mortgage Loan Warehousing Agreement (the
"Agreement"), dated [[date]] between the undersigned (the "Company") and Summit
Bank (the "Lender"). All terms used in this Report, which are defined in the
Agreement, shall have the same meaning herein as in the Agreement. The
information on this Report is as of the last day of the Company's fiscal quarter
ending [[date]].
A. Common Stock $-------------------
B. Paid in Capital $-------------------
C. Retained Earnings $-------------------
D. 1.00% of FNMA,
FHLMC, & GNMA Servicing Portfolio
& .50% of Private Investor Servicing $-------------------
E. TOTAL A, B, C, D $-------------------
F. Intangible Assets* $-------------------
G. Balance Sheet Items**
Attributable to Servicing Portfolio $-------------------
H. TOTAL F, G
I. Adjusted Net Worth: E minus H $-------------------
J. Tangible Net Worth A+B+C minus F $-------------------
K. Debt $-------------------
L. Leverage Ratio - K+I to 1.0
-------------------
*Including Goodwill, Loans to Officers, etc. (as defined in the Agreement).
**Including Unamortized Cost to Purchase Servicing, Capitalized Servicing,
Premiums, etc. (as defined in the Agreement).
CERTIFICATION
To the best of the knowledge and belief (after reasonable investigation) of the
officer of the Company executing this Report, the above information and
computations are accurate and complete in all respects, and there exist no event
of default or potential event of default.
27
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Compliance Certificate to be
executed and delivered by its duly authorized Chief Financial Officer,
Treasurer, or Vice President - Finance this (date)
(company)
a (state) corporation
By:
---------------------------------------
Name:
Title:
28
<PAGE>
EXHIBIT 6
BORROWING BASE CERTIFICATE
To: Summit Bank
750 Walnut Street
Cranford, NJ 07016
Date:
ATTENTION: Walter Hrycyna
Reference is made to the Mortgage Loan Warehousing Agreement (the "Agreement")
dated as of (date) (including any amendments thereto) between the undersigned
("Borrower") and Summit Bank ("Lender"). All terms used in this Certificate,
which are defined in the Agreement shall have the same meaning herein as in the
Agreement.
1. Mortgage Loans Held By Summit Bank As Security Collateral. As of the date
hereof, the aggregate principal amount of Mortgage Loans held by Summit Bank as
security collateral is $_____________________.
2. Borrowing Outstanding At Summit Bank. As of the date hereof, the borrowing
outstanding at Summit Bank is $_______________________.
3. Collateral Value of the Borrowing Base. As of the date hereof, the Collateral
Value of the Borrowing Base is $__________ based on Take-Out Commitments
previously provided to Lender or as shown on the attached listing.
4. Borrowing Outstanding At Other Institutions. As of the date hereof, the
borrowings outstanding at other institutions is $________________.
5. Certification. To the best of the knowledge and belief (after reasonable
investigation) of the officer of the Borrower executing this Certificate:
(a) The above information and computations are accurate and complete, and
(b) As of the date hereof:
(1) All representations and warranties of the Borrower set forth in the
Agreement are accurate and complete, and
(2) There does not exist a Potential Default or an Event of Default under the
Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Borrowing Base Certificate to
be executed and delivered by its Responsible Officer this _______ date of
_________, 199_.
(Company)
a [state} corporation
By:_____________________________
Name:
Title:
29
<PAGE>
EX-10.7
EMPLOYMENT AGREEMENT
AGREEMENT, made as of the 13th day of October, 1995, by and between
Mortgage Plus Equity and Loan Corporation, a New York limited liability company,
having an office at 6851 Jericho Turnpike, Suite 246, Syosset, New York 11791
(the "Company"), and Jon P. Blasi, an individual residing at 3 Barton Drive,
West Orange, New Jersey 07052 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of the Employee; and
WHEREAS, the Employee is willing to serve as employee of the Company upon
the terms and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, and the mutual covenants
herein contained, the parties hereby agree as follows:
ARTICLE I: EMPLOYMENT
1.1 Capacity. Throughout the Term, as defined hereunder, the Company shall
employ the Employee and the Employee shall render services to the Company. The
Employee shall have such responsibilities and duties as are delegated to him by
the Officers and Board of Directors of the company.
<PAGE>
1.2 Time and Attention. Throughout the Term, the Employee shall devote
substantially all of his time, attention, knowledge and skills, faithfully,
diligently and to the best of his ability, to the active performance of his
duties hereunder.
ARTICLE II: TERM OF EMPLOYMENT
2.1 Initial Term. The term of this Agreement ("Initial Term") shall be one
(1) year commencing October 16th, 1995.
2.2 Renewal Term. Upon expiration of the Initial Term, this Employment
Agreement shall be automatically renewed for successive one-year periods
thereafter (each such one-year period being referred to as a "Renewal Term") on
the same terms and conditions contained herein, unless at least thirty (30) days
prior to the expiration of the Initial Term or any Renewal Term thereof, written
notice of termination is delivered by either party to the other, or unless
earlier terminated as hereinafter provided.
2.3 Term. The Initial Term and any Renewal Term shall collectively be
referred to hereunder as the "Term".
2.4 Termination for Cause. At any time, at the option of the Company, this
Agreement may be terminated by the Company for Cause, as hereinafter defined,
effective upon written notice of termination to the Employee. As used herein,
the term "Cause" shall mean:
2
<PAGE>
(A) any act committed by the Employee constituting, (i) fraud, (ii)
misappropriation of corporate opportunity, (iii) self-dealing, (iv)
embezzlement of funds, (v) felony conviction for conduct involving moral
turpitude or other criminal conduct, (vi) serious misconduct or gross
negligence arising out of the Employee's performance of his duties, (vii)
any act that exceeds the authority given to the Employee by the Company, or
(viii) the repeated and unexcused absence from work;
(B) the breach or default by the Employee in the performance of any
covenant on the part of the Employee to be performed hereunder; or
(C) chronic alcoholism or any other form of addiction or substance
abuse.
2.5 Death and Disability. This Agreement shall terminate upon written
notice to the Employee or his personal representative upon the following: (i)
the death of the Employee; and (ii) in the event that the Employee shall be
physically or mentally disabled or impaired so as to prevent him from continuing
the normal and proper performance of his duties and responsibilities hereunder
for a period of sixty (60) consecutive days or for more than one hundred (100)
days in any twelve (12) month period.
2.6 30-Day Severance Payments. If this Agreement is terminated for any
reason within 30 days of the date of this Agree-
3
<PAGE>
ment, other than for Cause as specified in Section 2.4, or as a result of the
Employee's voluntary termination, the Company shall pay to the Employee the
Compensation, as defined below, remaining to be paid, less any appropriate
withholding taxes, as provided pursuant to Section 3.1 hereunder.
2.7 Payments in Case of Termination For Cause. Upon any termination of this
Agreement by the Company for Cause pursuant to Section 2.4 hereunder, neither
the Company nor any subsidiary or affiliate thereof shall be liable for or shall
pay or cause to be paid to the Employee any further compensation or other
benefits hereunder.
ARTICLE III: COMPENSATION
3.1 Compensation. In compensation for the Employee's services rendered
hereunder during the first four (4) weeks of the Term of this Agreement, the
Company shall pay to the Employee compensation ("Compensation) of Twelve
Thousand Five Hundred Dollars ($12,500), less appropriate withholding taxes, in
installments in accordance with the standard payroll practices of the Company in
effect.
3.2 Commissions. The Company shall pay to Employee commissions
("Commission") based upon the closing and funding of each Non-Conforming Loan
by the Company, provided such loans are originated by Employee and as
acknowledged by Company to be attributable to Employee's efforts. Such
commission shall be fifteen percent (15%) of the gross income generated by each
Non-
4
<PAGE>
Conforming Loan closed and funded, provided that the total Commission paid to
the Employee annually, measured as of the date of this Agreement, shall not
exceed Forty-Seven Thousand Five Hundred Dollars ($47,500). The Commission
payable, upon determination by the Company, shall be paid monthly, less the
appropriate withholding taxes, if applicable, within fifteen (15) days after the
end of such month in which such Commission is determined by the Company.
3.3 Fringe Benefits. The Company shall also make available to the Employee
throughout the Term, such benefits (including any disability, hospitalization,
medical benefit plans, pension plan or similar benefits) that are offered to
other employees holding similar positions in the Company.
3.4 Vacations. The Employee shall be entitled to four (4) weeks vacation
during the applicable Term hereunder, provided the timing of such vacations is
consistent with the then applicable policy of the Company.
3.5 Expenses. The Company shall reimburse Employee for the reasonable
expenses incurred by him in promoting the Company's business, including expenses
for entertainment and travel, automobile and similar items, upon presentment of
proper vouchers and otherwise in accordance with established company policy as
in effect during the Term.
5
<PAGE>
ARTICLE IV: PERFORMANCE REQUIREMENTS
4.1 As a condition of continued employment hereunder, Employee shall
achieve the performance requirements as set forth below;
(A) For the period beginning December 1, 1995 and ending April 31, 1996, a
total of Five Million Dollars ($5,000,000) of non-conforming loans shall have
been closed and funded by the Company, such loans attributable, at the Company's
determination, to Employee's origination efforts.
(B) For the period beginning May 1, 1995 and ending July 31, 1996, a total
of Four Million Five Hundred Thousand Dollars ($4,500,000) of non-conforming
loans shall have been closed and funded by the Company, such loans attributable,
at the Company's determination, to Employee's origination efforts.
(C) For the period beginning August 1, 1996 and ending October 31, 1996, a
total of Six Million Dollars ($6,000,000) of non-conforming loans shall have
been closed and funded by the Company, such loans attributable, at the Company's
determination, to Employee's origination efforts.
4.2 The Company, upon the failure of Employee to attain any of the
performance requirements set forth in paragraphs A through C of Section 4.1
hereof, shall have the option, exercisable at its sole discretion, to terminate
this Agreement. The exercise
6
<PAGE>
of such option shall be made by company by providing two (2) weeks notice to
Employee.
ARTICLE V: NON-COMPETITION: CONFIDENTIALITY
5.1 Non-Competition. The Employee agrees that, throughout the Term, the
Employee shall not directly or indirectly engage, participate, or have any
interest or be involved in any capacity, whether as an owner, agent, stockholder
(excluding ownership of not more than 5% of the outstanding shares of a publicly
held corporation provided such ownership does not involve any managerial or
operational responsibility), officer, director, manager, partner, joint
venturer, employee, consultant or otherwise, in any business enterprise that is,
or shall be, at any time during the Term, engaged in any manner in the
conforming or non-conforming mortgage loan business in States in which the
Company is then currently engaged in such mortgage loan business.
5.2 Renewal of Non-Competition Agreement.
(A) At the end of the Term hereunder, provided the end of the Term
occurs less than two (2) years from the date of this Agreement, the
non-competition provisions of Section 5.1 shall continue an additional six
(6) months unless the Company shall waive its rights to such
non-competition continuation.
(B) At the end of the Term hereunder, provided the end of the Term
occurs greater than two (2) years from the date of this Agreement, the
non-competition provisions of Section
7
<PAGE>
4.1 shall continue an additional three (3) months unless the Company shall
waive its rights to such non-competition continuation.
(C) The provisions of this Section 5.2 shall not apply in the event of
termination by the Company for no Cause.
5.3 Confidential Information Personal Relationships. The Employee shall not
divulge, transmit or otherwise disclose to any person or entity any confidential
or proprietary information relating to the business conducted by the Company
(including, but not limited to, any technology, "know-how," trade secrets,
supplier lists, customer lists, details of client, subcontractor or consultant
contracts, business contacts, funding services, services, pricing policies,
operational methods, marketing plans or strategies, marketing techniques,
project development, acquisition or bidding techniques or plans, business
acquisition plans, new personnel acquisition plans, technical processes,
procedures, inventions and research projects) known to the Employee, unless the
Employee is directed by the Board of Directors or a court of competent
jurisdiction to disclose such confidential information.
5.4 Property of the Company.
(A) All lists, records and other non-personal documents or papers
(and all copies thereof), including such items stored in computer memories,
on microfiche or by any other means, made or compiled by or on behalf of
the Employee, or made available to the Employee, relating to the
8
<PAGE>
Company or its business or any part thereof, are and shall be the property
of the Company and shall be delivered by the Employee to the Company on the
date of termination of this Agreement.
(B) All inventions, including any procedures, formulas, methods,
processes, uses, apparatuses, patterns, designs, devices or configurations
of any kind, any and all improvements to them which are developed,
discovered, made, or produced, trade secrets, or information used by the
Company shall be the exclusive property of the Company, and shall be
delivered to the Company, on the date of termination of this Agreement.
5.5 Specific Performance. Employee hereby acknowledges and agrees that any
breach by him, directly or indirectly, of the foregoing restrictive covenants
set forth in this Article may cause the Company irreparable injury for which
there is no adequate remedy at law. Accordingly, Employee expressly agrees that
in the event of any such breach or any threatened breach by Employee hereunder,
the Company shall be entitled, in addition to any and all other remedies
available, to seek and obtain injunctive and/or other equitable relief to
require specific performance of or prevent a breach under the provisions of this
Agreement, without proof of any actual damages that have been or may be caused
by such actual or threatened breach. Nothing contained in this Agreement shall
be construed to prohibit the Company from
9
<PAGE>
pursuing any other available remedies against Employee for such breach or
threatened breach.
5.6 Severability of Covenants. The Employee acknowledges and agrees that
the provisions of this Article are reasonable and valid in all respects. If any
tribunal having jurisdiction determines that any of the provisions of this
Article or any part thereof is invalid or unenforceable because of the duration
of such provision, such tribunal shall have the power to reduce the duration
and/or scope of such provision and in its reduced form, such provision shall
then be enforceable.
ARTICLE VI: MISCELLANEOUS
6.1 Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto concerning the subject matter hereof and may not be
altered, amended or otherwise changed or modified except in a writing signed by
all parties.
6.2 Joint Preparation. This Agreement is to be deemed to have been prepared
jointly by the parties hereto, and if any inconsistency or ambiguity exists
herein, it shall not be interpreted against any party, but according to the
application of rules of interpretation of contracts, if such an uncertainty or
ambiguity exists.
6.3 Severability. If any part of this Agreement is void or otherwise
invalid and, hence, unenforceable, such invalid or void
10
<PAGE>
portion shall be deemed to be separate and severable from the other portions of
this Agreement, and the other portions shall be given full force and effect as
though said void and invalid portions or provisions had never been a part of
this Agreement.
6.4 Successors; Assigns. This Agreement shall inure to the benefit of, be
enforceable by, and bind the parties hereto and their respective heirs,
executors, successors, permitted assigns and personal representatives. The
parties hereby agree it is intended that this Agreement be assigned at a later
date by the Company to JMB Equity & Mortgage Company, LLC. Notwithstanding the
foregoing, in no event shall this Agreement be assignable by the Employee.
6.5 Notices. Any notice, request, instruction or other document to be given
hereunder shall be in writing and, except as otherwise provided for herein,
shall be delivered personally or sent by facsimile (with a duplicate copy sent
by ordinary mail, postage prepaid) or by registered or certified mail, return
receipt requested, postage prepaid, as follows:
To Employee:
Jon P. Blasi
3 Barton Drive
West Orange, New Jersey 07052
To the Company:
Mortgage Plus Equity and Loan Corporation
6851 Jericho Turnpike
Syosset, New York 11791
11
<PAGE>
With a copy to:
Muchriick, Golieb & Golieb, P.C.
630 Fifth Avenue, Suite 1425
New York, New York 10111
Attn: Howard W. Muchnick, Esq.
or such other address as any party hereto hereinafter designates in writing to
the other party in accordance with the provisions of this paragraph. Notice
shall be deemed effective hereunder as of the date of delivery in the case of
personal delivery, or three (3) days after mailing if mailed in accordance with
the foregoing provisions
6.6 Governing Law. The parties hereby agree that this Agreement and its
validity, effect and performance shall be governed by and construed and enforced
in accordance with the substantive laws of the State of New York applicable to
contracts made and to be performed entirely within said State, without reference
to choice or conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the date first set forth above.
Mortgage Plus Equity and Loan
Corporation
By:
- ------------------------- -------------------------
/s/ JON P. BLASI
- ------------------------- -------------------------
JON P. BLASI, Employee
12
