UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File number 1-11278
THE DEWOLFE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2895334
------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
80 Hayden Avenue 02421-7962
Lexington, MA ----------
------------- (Zip Code)
(Address of principal executive offices)
(781) 863-5858
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of latest practicable date (July 30, 1999)
Common Stock, par value $.01 per share 3,364,105 shares
<PAGE>
THE DEWOLFE COMPANIES, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of 3
June 30, 1999 and December 31, 1998
Condensed Consolidated Statements of Income for the 4
Three Months and Six Months ended June 30, 1999
and June 30, 1998
Condensed Consolidated Statements of Cash Flows for 5 the
Six Months ended June 30, 1999 and June 30, 1998
Notes to Condensed Consolidated Financial Statements 6
June 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and 7
Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
2
<PAGE>
THE DEWOLFE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
ASSETS --------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $3,928,000 $ 6,171,000
Commissions receivable, net of allowance of $1,784,000 at June 30, 1999
and $826,000 at December 31, 1998 42,156,000 17,227,000
Mortgage loans held for sale 29,422,000 24,289,000
Note receivable from stockholder 66,000 66,000
Prepaid expenses and other current assets 1,730,000 548,000
--------------------------------------
TOTAL CURRENT ASSETS 77,302,000 48,301,000
PROPERTY AND EQUIPMENT
Furniture and equipment 9,456,000 8,177,000
Land, building and improvements 4,732,000 4,230,000
--------------------------------------
14,188,000 12,407,000
Accumulated depreciation and amortization (6,941,000) (5,622,000)
--------------------------------------
NET PROPERTY AND EQUIPMENT 7,247,000 6,785,000
OTHER ASSETS
Excess of cost over value in net assets acquired, net of accumulated
amortization of $1,530,000 at June 30, 1999 and $1,206,000 at
December 31, 1998 10,281,000 6,568,000
Other assets 3,144,000 1,998,000
--------------------------------------
TOTAL ASSETS $97,974,000 $63,652,000
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $28,681,000 $23,825,000
Current portion of long-term debt 2,830,000 896,000
Current portion of obligations under capital leases 876,000 1,037,000
Commissions payable 28,639,000 11,643,000
Accounts payable and accrued expenses 6,466,000 4,132,000
Deferred mortgage fee income 356,000 216,000
Dividend payable --- 389,000
--------------------------------------
TOTAL CURRENT LIABILITIES 67,848,000 42,138,000
Long-term debt, net of current portion 12,100,000 7,091,000
Obligations under capital leases, net of current portion 715,000 1,104,000
Non-compete agreements and consulting agreements payable 215,000 248,000
--------------------------------------
TOTAL LIABILITIES 80,878,000 50,581,000
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; 3,000,000 shares authorized; none outstanding
Common stock, $.01 par value; 10,000,000 shares authorized;
3,615,498 shares issued at June 30, 1999 and 3,474,108 shares issued at
December 31, 1998 36,000 35,000
Additional paid-in capital 7,610,000 6,842,000
Retained earnings 11,767,000 7,903,000
Treasury stock (251,611 shares at June 30, 1999
and 251,611 shares at December 31, 1998), at cost (1,439,000) (1,439,000)
Notes receivable from sale of stock (878,000) (270,000)
--------------------------------------
TOTAL STOCKHOLDERS' EQUITY 17,096,000 13,071,000
--------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $97,974,000 $63,652,000
======================================
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
THE DEWOLFE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Real estate brokerage $54,850,000 $41,427,000 $90,646,000 $70,815,000
Mortgage 1,443,000 1,102,000 2,392,000 1,895,000
Insurance 271,000 120,000 620,000 146,000
Other 337,000 144,000 465,000 188,000
----------- ----------- ----------- -----------
TOTAL REVENUES 56,901,000 42,793,000 94,123,000 73,044,000
Commission Expense 36,173,000 26,584,000 60,003,000 45,615,000
----------- ----------- ----------- -----------
NET REVENUES 20,728,000 16,209,000 34,120,000 27,429,000
Operating Expenses:
Compensation and benefits 6,307,000 5,005,000 11,967,000 9,584,000
Facilities 1,942,000 1,596,000 3,699,000 3,158,000
General and administrative 3,582,000 3,079,000 6,406,000 5,470,000
Marketing and promotion 1,930,000 1,942,000 3,413,000 3,264,000
Communications 619,000 470,000 1,133,000 901,000
Acquisition related costs 226,000 60,000 261,000 360,000
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 14,606,000 12,152,000 26,879,000 22,737,000
----------- ----------- ----------- -----------
OPERATING INCOME 6,122,000 4,057,000 7,241,000 4,692,000
Other Income (Expenses):
Interest expense (550,000) (506,000) (1,000,000) (922,000)
Interest income 424,000 345,000 784,000 617,000
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 5,996,000 3,896,000 7,025,000 4,387,000
Income Taxes 2,698,000 1,753,000 3,161,000 1,974,000
----------- ----------- ----------- -----------
Net Income $ 3,298,000 $ 2,143,000 $ 3,864,000 $ 2,413,000
=========== =========== =========== ===========
Basic earnings per share $ 0.98 $ 0.66 $ 1.16 $ 0.74
Diluted earnings per share $ 0.92 $ 0.62 $ 1.08 $ 0.70
Basic weighted average shares
outstanding 3,361,000 3,263,000 3,331,000 3,243,000
Diluted weighted average shares
outstanding 3,575,000 3,475,000 3,569,000 3,427,000
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
THE DEWOLFE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 3,864,000 $ 2,413,000
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,508,000 1,703,000
Amortization 632,000 449,000
Additions to valuation allowance for mortgage servicing rights 24,000 28,000
Gain on sale of mortgage loans, net (2,280,000) (1,839,000)
Change in Assets and Liabilities:
Increase in commissions receivable (22,266,000) (16,862,000)
Increase in prepaid expenses and other current assets (594,000) (101,000)
(Increase) decrease in other assets (151,000) 1,529,000
Mortgage loans held for sale (191,172,000) (156,929,000)
Proceeds from mortgage loan sales 188,081,000 141,573,000
Increase in commissions payable 15,455,000 11,149,000
Increase in accounts payable and accrued expenses 1,747,000 2,383,000
Increase in deferred mortgage fee income 140,000 193,000
------------- -------------
Total Adjustments (8,876,000) (16,724,000)
------------- -------------
Cash used in operating activities (5,012,000) (14,311,000)
INVESTING ACTIVITIES
Expenditures for business combinations, net of cash acquired (4,923,000) (4,747,000)
Expenditures for property and equipment (841,000) (1,027,000)
------------- -------------
Cash used in investing activities (5,764,000) (5,774,000)
FINANCING ACTIVITIES
Net borrowings under revolving line of credit --- 900,000
Net borrowings on note payable, bank 4,856,000 16,673,000
Note receivable from stockholder --- 25,000
Borrowing on acquisition line of credit 5,177,000 4,625,000
Notes receivable from sale of stock (608,000) (270,000)
Repayment of long-term debt (1,201,000) (990,000)
Purchase of treasury stock --- (352,000)
Issuance of common stock 698,000 341,000
Payment of common stock dividend (389,000) ---
------------- -------------
Cash provided by financing activities 8,533,000 20,952,000
------------- -------------
Net (decrease) increase in cash and cash equivalents (2,243,000) 867,000
Cash and cash equivalents at beginning of period 6,171,000 2,542,000
------------- -------------
Cash and cash equivalents at end of period $ 3,928,000 $ 3,409,000
============= =============
Supplemental disclosure of non-cash activities:
Leases capitalized and property and equipment financed $ 897,000 $ 640,000
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,010,000 $ 898,000
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
THE DEWOLFE COMPANIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30, 1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1998.
Certain prior year balances have been reclassified to conform with current year
presentation.
NOTE 2- SEGMENT REPORTING
- -------------------------
The Company has three reportable operating segments, based upon its services:
real estate, including both real estate brokerage and relocation services;
mortgage banking; and insurance services. The Company evaluates its segments
based on pre-tax income. Financial information for the three operating segments
is provided in the following table.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Real Estate $55,187,000 $41,571,000 $91,111,000 $71,003,000
Mortgage Banking 1,443,000 1,102,000 2,392,000 1,895,000
Insurance Services 271,000 120,000 620,000 146,000
----------- ----------- ----------- -----------
Total Segment Revenues $56,901,000 $42,793,000 $94,123,000 $73,044,000
=========== =========== =========== ===========
Pre-tax Income (Loss)
Real Estate $5,672,000 $3,696,000 $6,697,000 $4,145,000
Mortgage Banking 454,000 272,000 506,000 384,000
Insurance Services (130,000) (72,000) (178,000) (142,000)
----------- ----------- ----------- -----------
Total Segment Pre-tax Income $5,996,000 $3,896,000 $7,025,000 $4,387,000
=========== =========== =========== ===========
Balance at June 30:
Assets
Real Estate $63,823,000 $46,805,000
Mortgage Banking 32,526,000 32,070,000
Insurance Services 1,625,000 1,394,000
------------ -----------
Total Segment Assets $97,974,000 $80,269,000
=========== ===========
</TABLE>
6
<PAGE>
THE DEWOLFE COMPANIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
Net income in the second quarter of 1999 increased 54% to $3.3 million as
compared to net income of $2.1 million in the second quarter of 1998. Net income
for the first six months of 1999 increased 60% to $3.9 million as compared to
net income of $2.4 million for the first six months of 1998. The increase in the
1999 earnings was primarily attributed to continued growth in the Company's
existing real estate markets and the effect of business combinations.
Business Combinations
- ---------------------
During the first six months of 1999, the Company acquired five real estate
companies in New England. The combined purchase price of these acquisitions was
$6.5 million in cash and guaranteed payments, plus contingent payments not to
exceed $1.7 million.
Results of Operations
- ---------------------
Real Estate Brokerage Revenues:
Real estate brokerage revenues increased 32% in the second quarter of 1999 to
$54.8 million, an increase of $13.4 million over the second quarter of 1998. For
the first six months of 1999, real estate brokerage revenues increased 28% to
$90.6 million, an increase of $19.8 million as compared to the first six months
of 1998. The increase in real estate brokerage revenues is primarily attributed
to continued growth in the Company's existing markets and the effect of business
combinations. The Company's growth in its existing markets is attributed to the
continued strong economy and low interest rate environment combined with the
Company's integrated homeownership service marketing strategy.
Real estate brokerage revenues includes $2.5 million of revenue from relocation
services in the second quarter of 1999 as compared to $2.0 million in the second
quarter of 1998, an increase of 25%. Real estate brokerage revenues from
relocation services were $3.9 million for the first six months of 1999, as
compared to $3.5 million for the first six months of 1998, an increase of 11%.
The increase was primarily due to an increase in the number of corporate
services clients as well as the Company's expansion into new markets.
Net revenues from real estate brokerage increased 26% or $3.8 million in the
second quarter of 1999 to $18.7 million, and increased 22% or $5.4 million for
the first six months of 1999 to $30.6 million. Net real estate brokerage
revenues as a percentage of real estate brokerage revenues were 34% for the
second quarter and first six months of 1999 as compared to 36% in the second
quarter and first six months of 1998.
Net revenues from real estate brokerage are impacted by many factors, including
those beyond the Company's control, such as the number of co-brokered home sales
and prevailing rates for sales associates commission structures.
Mortgage Revenues:
Mortgage revenues increased 31% in the second quarter of 1999 to $1.4 million,
an increase of $341,000 compared to the second quarter of 1998. For the first
six months of 1999, mortgage revenues increased 26% to $2.4 million, an increase
of $497,000 as compared to the same period in 1998. The increase is primarily
due to an increase in closed loan volume, which the Company believes was caused
by the continued low interest rate market, and the Company's expansion into new
markets.
7
<PAGE>
THE DEWOLFE COMPANIES, INC.
The Company's closed loan volume in the second quarter of 1999 and 1998 was
$142.9 million and $108.9 million, respectively. For the first six months of
1999 and 1998 closed loan volume was $232.5 million and $191.8 million,
respectively.
Insurance Revenues:
Insurance revenues increased 126% in the second quarter of 1999 to $271,000 an
increase of $151,000 from the second quarter of 1998. For the first six months
of 1999, insurance revenues increased 325%, an increase of $474,000 as compared
to the first six months of 1998. The increase was primarily due to the
acquisition of the personal lines business of the Curtin Insurance Agency, Inc.
in May 1998, as well as a higher percentage of real estate brokerage customers
purchasing their insurance through the Company.
Operating Expenses:
Operating expenses increased 20% in the second quarter of 1999 to $14.6 million,
an increase of $2.4 million from the second quarter of 1998. Operating expenses
increased 18% for the first six months of 1999 to $26.9 million, an increase of
$4.1 million, compared to the first six months of 1998. Operating expenses as a
percentage of net revenues were 70% and 75% for the second quarter of 1999 and
1998, respectively. Operating expenses as a percentage of net revenues were 79%
and 83% for the six months ending June 30, 1999 and 1998, respectively. The
increase in operating expenses in the second quarter and first six months of
1999 are primarily due to costs associated with the increase in the Company's
overall business.
Interest Expense and Interest Income:
Interest expense increased by $44,000 in the second quarter of 1999 as compared
to 1998 and increased by $78,000 for the first six months of 1999 as compared to
1998. The increase is primarily due to additional interest of $108,000 in the
second quarter of 1999 and $169,000 for the first six months of 1999 related to
the financing of 1999 and 1998 acquisitions, partially offset by interest
expense decreases from other financing activities.
Interest income increased by $79,000 in the second quarter of 1999 as compared
to 1998 and increased by $167,000 for the first six months of 1999 as compared
to 1998. The increase in the second quarter of 1999 was primarily due to
additional interest earned on originated mortgage loans held for sale. The
increase for the first six months of 1999 was primarily due to additional
interest earned on originated mortgage loans held for sale of $143,000 and
$24,000 in net additional interest earned on bank accounts. The increase in
mortgage loan interest was due to the increased mortgage loan closings for the
three months and six months ending June 30, 1999. The change in net interest
earned on bank accounts was primarily due to balances kept in escrow and
operating bank accounts and interest rates earned on these accounts.
Liquidity and Sources of Capital
Cash and cash equivalents at June 30, 1999 and 1998 were $3.9 million and $3.4
million, respectively. Cash used in operating activities for the first six
months of 1999 was $5.0 million as compared to $14.3 million for the first six
months of 1998. The changes in cash used in operating activities in the first
six months of 1999 and 1998 were primarily due to the increases in the Company's
mortgage loans held for sale which were funded by the Company's mortgage
warehouse line of credit with First Union National Bank and by cash generated by
net earnings. Net cash used relating to increases in mortgage loans held for
sale was $3.1 and $15.4 million for the first six months of 1999 and 1998,
respectively.
Cash expenditures for property and equipment totaled $841,000 in the first six
months of 1999 and $1.0 million in the first six months of 1998. Capital
spending during this period was primarily attributed to the Company's investment
in improvements to acquired and existing sales offices and upgrades to systems
8
<PAGE>
THE DEWOLFE COMPANIES, INC.
and technology. The Company intends to continue to make expenditures for
property and equipment in order to maintain the standards for a quality
appearance and processing systems in all of the Company's locations.
The Company has various credit arrangements with BankBoston, N.A., including a
$20.0 million acquisition line of credit and a revolving line of credit of $5.0
million. Additionally, the arrangements provide for a term note of $725,000 and
an equipment lease line of credit and chattel mortgage financing of $4.0
million.
The outstanding amount of the acquisition line of credit was $10.3 million and
$4.6 million at June 30, 1999 and 1998, respectively.
There was no outstanding amount under the revolving line of credit at June 30,
1999 and $2.4 million was outstanding at June 30, 1998. The remaining
outstanding balance of the term note was $375,000 and $675,000 at June 30, 1999
and 1998, respectively. The Company had outstanding balances under lease lines
of credit and chattel mortgage financing of $2.9 million and $2.5 million at
June 30, 1999 and 1998, respectively.
In connection with the mortgage loan activity, the Company maintains a $40.0
million mortgage warehouse line of credit with First Union National Bank that is
used to finance mortgage loans that it originates. The credit line had
outstanding balances of $28.7 million and $28.9 million at June 30, 1999 and
1998, respectively.
In May of 1998, the Company authorized an increase in the amount of the
Company's stock that may be repurchased under its stock repurchase plan to a
total of $1.9 million. At June 30, 1999 the Company had acquired a total of $1.3
million of stock under the plan. There were no repurchases during the first six
months of 1999.
The Company considers its cash flow from operations combined with its credit
arrangements with BankBoston, N.A. and First Union National Bank, adequate to
fund continuing operations. However, the Company expects to continue to expand
its existing businesses, which may include opening new real estate sales offices
as well as making investments in or acquiring other real estate and/or insurance
businesses. As a result, the Company from time-to-time may seek additional or
alternate sources of debt or equity financing which may include the issuance of
shares of the Company's capital stock.
Cautionary statement for purposes of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995
Certain statements, which are not historical fact, may be deemed to be forward
looking statements. There are many important factors that could cause the
Company's actual results to differ materially from those indicated in the
forward-looking statements. Such factors include, but are not limited to,
interest rates and economic conditions generally, regulatory changes
(legislative or otherwise) affecting the residential real estate and mortgage
lending industries, competition, and prevailing rates for sales associate
commission structures.
Year 2000 Disclosures
The Year 2000 issue ("Y2000") results from computer programs written using two
digits rather than four to define the applicable year. Computer programs that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of the Company's operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities. The Company has
completed its assessment of Y2000 risks and a summary of this assessment
9
<PAGE>
THE DEWOLFE COMPANIES, INC.
follows. This assessment should be deemed as a forward looking statement and as
such the Company cannot assure that the actual impact of Y2000 on the Company's
operating results and the costs to minimize such impact will not be more or less
than these identified in the assessment.
State of readiness and cost: The Company believes that approximately $400,000
will be required to update various hardware systems to prepare for Y2000. The
majority of these systems were scheduled for replacement as part of the
Company's ongoing technology upgrade. The hardware upgrade has been
substantially completed and the most critical elements were completed during the
first quarter of 1999. As such, the Company does not feel that these upgrades
will materially affect the Company's business or capital requirements.
The Company does not believe the cost to update its information software systems
related to Y2000 to be material. Several of the Company's systems, which are not
yet Y2000 compliant, are currently in process of being replaced as part of the
Company's ongoing technology upgrade. The Company expects to replace these
systems prior to September 30, 1999.
The Company has reviewed the state of readiness of third party vendors and
believes that these systems either are compliant or the vendor has plans to make
the systems Y2000 compliant.
Risks: If due to a hardware or software problem the Company's systems were not
able to operate due to Y2000, the Company believes it would face the following
risks: additional costs to correct the problem and loss of revenue due to an
inability to deliver customer services. The Company believes it is taking the
necessary steps to eliminate or reduce these risks where possible.
Contingency Plan: The Company has developed a contingency plan related to the
Y2000 issue and will continue to evaluate the plan during 1999.
PART II. OTHER INFORMATION
Item 4. Submissions of Matters to a vote of Security Holders
The annual meeting of the shareholders was held on May 11,
1999 in Newton, Massachusetts. A brief description of each
matter voted upon at the meeting and a tabulation of votes
with respect to each such matter is attached as Exhibit (22).
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibits are included herein:
See Exhibit Index on page 12 of this report
(b) Reports on Form 8-K:
None
10
<PAGE>
THE DEWOLFE COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 6, 1999 THE DEWOLFE COMPANIES, INC.
By: /s/ James A. Marcotte
-----------------------
James A. Marcotte
Senior Vice President
and Chief Financial Officer
11
<PAGE>
THE DEWOLFE COMPANIES, INC.
EXHIBIT INDEX
June 30, 1999 Form 10-Q
<TABLE>
<CAPTION>
ITEM DESCRIPTION
- ---- -----------
<S> <C>
3(ii) Amended Bylaws
10 Amendment dated June 18, 1999 to Mortgage Warehousing Loan
and Security Agreement between DeWolfe Mortgage Services,
Inc. and First Union National Bank.
11 Statement re: Computation of Basic earnings per share and
Diluted earnings per share
22 Published Report Regarding Matters Submitted to a Vote of
Security Holders
27 Financial Data Schedule
</TABLE>
12
<PAGE>
EXHIBIT (3ii)
BYLAWS
OF
THE DEWOLFE COMPANIES, INC.
Section 1. ARTICLES OF ORGANIZATION
The name and purposes of the corporation shall be as set forth in the
articles of organization. These bylaws, the powers of the corporation and of its
directors and stockholders, or of any class of stockholders if there shall be
more than one class of stock, and all matters concerning the conduct and
regulation of the business and affairs of the corporation shall be subject to
such provisions in regard thereto, if any, as are set forth in the articles of
organization as from time to time in effect.
Section 2. STOCKHOLDERS
2.1. Annual Meeting. The annual meeting of the stockholders shall be held
on the third Tuesday in May of each year, at 10 A.M. local time unless a
different hour is fixed by the president or the directors. If that day be a
legal holiday at the place where the meeting is to be held, the meeting shall be
held on the next succeeding day not a legal holiday at such place. Purposes for
which an annual meeting is to be held, additional to those prescribed by law, by
the articles of organization or by these bylaws, may be specified by the
president or by the directors.
2.2. Special Meeting in Place of Annual Meeting. If no annual meeting has
been held in accordance with the foregoing provisions, a special meeting of the
stockholders may be held in place thereof, and any action taken at such special
meeting shall have the same force and effect as if taken at the annual meeting,
and in such case all references in these bylaws to the annual meeting of the
stockholders shall be deemed to refer to such special meeting. Any such special
meeting shall be called as provided in Section 2.3 hereof.
2.3. Special Meetings. A special meeting of the stockholders may be
called at any time by the president or by the directors. Each call of a meeting
shall state the place, date, hour and purposes of the meeting.
2.4. Place of Meetings. All meetings of the stockholders shall be held at
the principal office of the corporation in Massachusetts or, to the extent
permitted by the articles of organization, at such other place within the United
States as shall be fixed by the president or the directors. Any adjourned
session of any meeting of the stockholders shall be held at the same city or
town as the initial session, or within Massachusetts, in either case at the
place designated in the vote of adjournment.
2.5. Notice of Meetings. A written notice of each meeting of
stockholders, stating the place, date, and hour and the purposes of the meeting,
shall be given at least ten days before the meeting to each stockholder entitled
to vote thereat and to each stockholder who, by law, by the articles of
organization or by these bylaws, is entitled to notice, by leaving such notice
with him or at his residence or usual place of business, or by mailing it,
postage prepaid, addressed to such stockholder at his address as it appears in
the records of the corporation. Such notice shall be given by the clerk or an
assistant clerk or by an officer designated by the directors. Whenever notice of
a meeting is required to be given to a stockholder under any provision of the
Business Corporation Law of the Commonwealth of Massachusetts or of the articles
of organization or these bylaws, a written waiver thereof, executed before or
after the meeting by such stockholder or his attorney thereunto authorized and
filed with the records of the meeting, shall be deemed equivalent to such
notice.
2.6. Quorum of Stockholders. At any meeting of the stockholders, a quorum
shall consist of a majority in interest of all stock issued and outstanding and
entitled to vote at the meeting, except when a larger quorum is required by law,
by the articles of organization or by these bylaws. Stock owned directly or
indirectly by the corporation, if any, shall not be deemed outstanding for this
purpose. Any meeting may be adjourned from time to time by a majority of the
votes properly cast upon the question, whether or not a quorum is present, and
the meeting may be held as adjourned without further notice.
2.7. Action by Vote. When a quorum is present at any meeting, a plurality
of the votes properly cast for election to any office shall elect to such
office, and a majority of the votes properly cast upon any question other than
an election to an office shall decide the question, except when a larger vote is
required by law, by the articles of organization or by these bylaws. No ballot
shall be required for any election unless requested by a stockholder present or
represented at the meeting and entitled to vote in the election.
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2.8. Voting. Stockholders entitled to vote shall have one vote for each
share of the stock entitled to vote held by them of record according to the
records of the corporation, unless otherwise provided by the articles of
organization. The corporation shall not, directly or indirectly, vote any share
of its own stock.
2.9. Action by Writing. Any action required or permitted to be taken at
any meeting of the stockholders may be taken without a meeting if all
stockholders entitled to vote on the matter consent to the action in writing and
the written consents are filed with the records of the meetings of stockholders.
Such consents shall be treated for all purposes as a vote at a meeting.
2.10. Proxies. To the extent permitted by law, stockholders entitled to
vote may vote either in person or by proxy. No proxy dated more than six months
before the meeting named therein shall be valid. Unless otherwise specifically
limited by their terms, such proxies shall entitle the holders thereof to vote
at any adjournment of such meeting but shall not be valid after the final
adjournment of such meeting.
Section 3. BOARD OF DIRECTORS
3.1. Number. At the annual meeting of stockholders, such stockholders as
have the right to vote for the election of directors shall fix the number of
directors at not less than three nor more than nine directors and shall elect
the number of directors so fixed; provided, however, that the number of
directors shall be fixed at not less than two whenever there shall be only two
stockholders and not less than one whenever there shall be only one stockholder.
The number of directors may be increased at any time or from time to time either
by the stockholders or by the directors by vote of a majority of the directors
then in office. The number of directors may be decreased to any number permitted
by law at any time or from time to time either by the stockholders or by the
directors by a vote of a majority of the directors then in office, but only to
eliminate vacancies existing by reason of the death, resignation, removal or
disqualification of one or more directors. No director need be a stockholder.
3.2. Tenure. Except as otherwise provided by law, by the articles of
organization or by these bylaws, each director shall hold office until the next
annual meeting of the stockholders and until his successor is duly elected and
qualified, or until he sooner dies, resigns, is removed or becomes disqualified.
3.3. Powers. Except as reserved to the stockholders by law, by the
articles of organization or by these bylaws, the business of the corporation
shall be managed by the directors who shall have and may exercise all the powers
of the corporation. In particular, and without limiting the generality of the
foregoing, the directors may at any time issue all or from time to time any part
of the unissued capital stock of the corporation from time to time authorized
under the articles of organization and may determine, subject to any
requirements of law, the consideration for which stock is to be issued and the
manner of allocating such consideration between capital and surplus.
3.4 Committees. The directors may, by vote of a majority of the
directors, then in office, elect from their number an executive committee and
other committees and delegate to any such committee or committees some or all of
the powers of the directors except those which by law, by the articles of
organization or by these bylaws they are prohibited from delegating. Except as
the directors may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the directors or such
rules, its business shall be conducted as nearly as may be in the same manner as
is provided by these bylaws for the conduct of business by the directors.
3.5. Regular Meetings. Regular meetings of the directors may be held
without call or notice at such places and at such times as the directors may
from time to time determine, provided that reasonable notice of the first
regular meeting following any such determination shall be given to absent
directors. A regular meeting of the directors may be held without call or notice
immediately after and at the same place as the annual meeting of the
stockholders.
3.6. Special Meetings. Special meetings of the directors may be held at
any time and at any place designated in the call of the meeting, when called by
the president or the treasurer or by two or more directors, reasonable notice
thereof being given to each director by the secretary or an assistant secretary,
or, if there be none, by the clerk or an assistant clerk, or by the officer or
one of the directors calling the meeting.
3.7. Notice. It shall be sufficient notice to a director to send notice
by mail at least forty-eight hours or by
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telegram at least twenty-four hours before the meeting addressed to him at his
usual or last known business or residence address or to give notice to him in
person or by telephone at least twenty-four hours before the meeting. Notice of
a meeting need not be given to any director if a written waiver of notice,
executed by him before or after the meeting, is filed with the records of the
meeting, or to any director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. Neither notice of a
meeting nor a waiver of a notice need specify the purposes of the meeting.
3.8. Quorum. At any meeting of the directors a majority of the directors
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
3.9. Action by Vote. When a quorum is present at any meeting, a majority
of the directors present may take any action, except when a larger vote is
required by law, by the articles of organization or by these bylaws.
3.10. Action by Writing. Unless the articles of organization otherwise
provide, any action required or permitted to be taken at any meeting of the
directors may be taken without a meeting if all the directors consent to the
action in writing and the written consents are filed with the records of the
meetings of the directors. Such consents shall be treated for all purposes as a
vote taken at a meeting.
3.11. Presence Through Communications Equipment. Unless otherwise
provided by law or the articles of organization, members of the board of
directors may participate in a meeting of such board by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
Section 4. OFFICERS AND AGENTS
4.1. Enumeration; Qualification. The officers of the corporation shall be
a president, a treasurer, a clerk, and such other officers, if any, as the
incorporators at their initial meeting, or the directors from time to time, may
in their discretion elect or appoint. The corporation may also have such agents,
if any, as the incorporators at their initial meeting, or the directors from
time to time, may in their discretion appoint. Any officer may be, but none need
be a director or stockholder. The clerk shall be a resident of Massachusetts
unless the corporation has a resident agent appointed for the purpose of service
of process. Any two or more offices may be held by the same person. Any officer
may be required by the directors to give bond for the faithful performance of
his duties to the corporation in such amount and with such sureties as the
directors may determine.
4.2. Powers. Subject to law, to the articles of organization, and to the
other provisions of these bylaws, each officer shall have, in addition to the
duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such duties and powers as the directors may from time
to time designate.
4.3. Election. The president, the treasurer and the clerk shall be
elected annually by the directors at their first meeting following the annual
meeting of the stockholders. Other officers, if any, may be elected or appointed
by the board of directors at said meeting or at any other time.
4.4. Tenure. Except as otherwise provided by law or by the articles of
organization or by these bylaws, the president, the treasurer and the clerk
shall hold office until the first meeting of the directors following the next
annual meeting of the stockholders and until their respective successors are
chosen and qualified, and each other officer shall hold office until the first
meeting of the directors following the next annual meeting of the stockholders
unless a shorter period shall have been specified by the terms of his election
or appointment, or in each case until he sooner dies, resigns, is removed or
becomes disqualified. Each agent shall retain his authority at the pleasure of
the directors.
4.5. Chief Executive Officer. The chief executive officer of the
corporation shall be the president or such other officer as is designated by the
directors and shall, subject to the control of the directors, have general
charge and supervision of the business of the corporation and, except as the
directors shall otherwise determine, preside at all meetings of the stockholders
and of the directors. If no such designation is made, the president shall be the
chief executive officer.
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4.6 Chairman of the Board. If a chairman of the board of directors is
elected, he shall have the duties and powers specified in these bylaws and shall
have such other duties and powers as may be determined by the directors.
4.7. President and Vice Presidents. The president shall have the duties
and powers specified in these bylaws and shall have such other duties and powers
as may be determined by the directors.
Any vice presidents shall have such duties and powers as shall be
designated from time to time by the directors.
4.8. Treasurer and Assistant Treasurers. Except as the directors shall
otherwise determine, the treasurer shall be the chief financial and accounting
officer of the corporation and shall be in charge of its funds and valuable
papers, books of account and accounting records, and shall have such other
duties and powers as may be designated from time to time by the directors.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the directors.
4.9. Clerk and Assistant Clerks. The clerk shall record all proceedings
of the stockholders in a book or series of books to be kept therefor, which book
or books shall be kept at the principal office of the corporation or at the
office of its transfer agent or of its clerk and shall be open at all reasonable
times to the inspection of any stockholder. In the absence of the clerk from any
meeting of stockholders, an assistant clerk, or if there be none or he is
absent, a temporary clerk chosen at the meeting, shall record the proceedings
thereof in the aforesaid book. Unless a transfer agent has been appointed, the
clerk shall keep or cause to be kept the stock and transfer records of the
corporation, which shall contain the names and record addresses of all
stockholders and the amount of stock held by each. If no secretary is elected,
the clerk shall keep a true record of the proceedings of all meetings of the
directors and in his absence from any such meeting an assistant clerk, or if
there be none or he is absent, a temporary clerk chosen at the meeting, shall
record the proceedings thereof.
Any assistant clerks shall have such other duties and powers as shall be
designated from time to time by the directors.
4.10. Secretary and Assistant Secretaries. If a secretary is elected, he
shall keep a true record of the proceedings of all meetings of the directors and
in his absence from any such meeting an assistant secretary, or if there be none
or he is absent, a temporary secretary chosen at the meeting, shall record the
proceedings thereof.
Any assistant secretaries shall have such other duties and powers as
shall be designated from time to time by the directors.
Section 5. RESIGNATIONS AND REMOVALS
Any director or officer may resign at any time by delivering his
resignation in writing to the president, the treasurer or the clerk or to a
meeting of the directors. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. A director (including
persons elected by directors to fill vacancies in the board) may be removed from
office (a) with or without cause by the vote of the holders of a majority of the
shares issued and outstanding and entitled to vote in the election of directors,
provided that the directors of a class elected by a particular class of
stockholders may be removed only by the vote of the holders of a majority of the
shares of such class, or (b) with cause by the vote of a majority of the
directors then in office. The directors may remove any officer elected by them
with or without cause by the vote of a majority of the directors then in office.
A director or officer may be removed for cause only after reasonable notice and
opportunity to be heard before the body proposing to remove him. No director or
officer resigning, and (except where a right to receive compensation shall be
expressly provided in a duly authorized written agreement with the corporation)
no director or officer removed, shall have any right to any compensation as such
director or officer for any period following his resignation or removal, or any
right to damages on account of such removal, whether his compensation be by the
month or by the year or otherwise; unless in the case of a resignation, the
directors, or in the case of a removal, the body acting on the removal, shall in
their or its discretion provide for compensation.
Section 6. VACANCIES
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Any vacancy in the board of directors, including a vacancy resulting from
the enlargement of the board, may be filled by the stockholders or, in the
absence of stockholder action, by the directors by vote of a majority of the
directors then in office. If the office of the president or the treasurer or the
clerk becomes vacant, the directors may elect a successor. If the office of any
officer becomes vacant, the directors may elect or appoint a successor by vote
of a majority of the directors present. Each such successor shall hold office
for the unexpired term, and in the case of the president, the treasurer and the
clerk, until his successor is chosen and qualified, or in each case until he
sooner dies, resigns, is removed or becomes disqualified. The directors shall
have and may exercise all their powers notwithstanding the existence of one or
more vacancies in their number.
Section 7. CAPITAL STOCK
7.1. Number and Par Value. The total number of shares and the par value,
if any, of each class of stock which the corporation is authorized to issue
shall be as stated in the articles of organization.
7.2. Stock Certificates. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
be prescribed from time to time by the directors. Such certificate shall be
signed by the president or a vice president and by the treasurer or an assistant
treasurer. Such signatures may be facsimiles if the certificate is signed by a
transfer agent, or by a registrar, other than a director, officer or employee of
the corporation. In case any officer who has signed or whose facsimile signature
has been placed on such 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 time of its issue.
7.3. Loss of Certificates. In the case of the alleged loss or destruction
or the mutilation of a certificate of stock, a duplicate certificate may be
issued in place thereof, upon such conditions as the directors may prescribe.
Section 8. TRANSFER OF SHARES OF STOCK
8.1. Transfer on Books. Subject to the restrictions, if any, stated or
noted on the stock certificates, shares of stock may be transferred on the books
of the corporation by the surrender to the corporation or its transfer agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
directors or the transfer agent of the corporation may reasonably require.
Except as may be otherwise required by law, by the articles of organization or
by these bylaws, the corporation shall be entitled to treat the record holder of
stock as shown on its books as the owner of such stock for all purposes,
including the payment of dividends and the right to receive notice and to vote
with respect thereto, regardless of any transfer, pledge or other disposition of
such stock until the shares have been transferred on the books of the
corporation in accordance with the requirements of these bylaws. It shall be the
duty of each stockholder to notify the corporation of his post office address.
8.2. Record Date. The directors may fix in advance a time, which shall
not be more than sixty (60) days before the date of any meeting of stockholders
or the date for the payment of any dividend or making of any distribution to
stockholders or the last day on which the consent or dissent of stockholders may
be effectively expressed for any purpose, as the record date for determining the
stockholders having the right to notice of and to vote at such meeting and any
adjournment thereof or the right to receive such dividend or distribution or the
right to give such consent or dissent, and in such case only stockholders of
record on such record date shall have such right, notwithstanding any transfer
of stock on the books of the corporation after the record date. If no record
date is fixed:
(1) The record date for determining stockholders having the right to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the date next preceding the day on which notice is given.
(2) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
acts with respect thereto.
Section 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the extent legally permissible, indemnify, each
of its directors and officers (including persons who serve at its request as
directors, officers or trustees of another organization; or in any capacity with
respect to any employee benefit plan) against all liabilities and expenses,
including amounts paid in
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satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees, reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which he
may be involved or with which he may be threatened, while in office or
thereafter, by reason of his being or having been such a director, officer or
trustee, except with respect to any matter as to which he shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his action was in the best interests of the corporation (any person
serving another organization in one or more of the indicated capacities at the
request of the corporation who shall not have been adjudicated in any proceeding
not to have acted in good faith in the reasonable belief that his action was in
the best interest of such other organization shall be deemed so to have acted in
good faith with respect to the corporation) or, to the extent that such matter
relates to service with respect to any employee benefit plan, in the best
interest of the participants or beneficiaries of such employee benefit plan;
provided, however, that as to any matter disposed of by a compromise payment by
such director or officer, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless such compromise shall be approved as in the best interests of
the corporation, after notice that it involves such indemnification: (a) by a
disinterested majority of the directors then in office; or (b) by a majority of
the disinterested directors then in office, provided that there has been
obtained an opinion in writing of independent legal counsel to the effect that
such director or officer appears to have acted in good faith in the reasonable
belief that his action was in the best interests of the corporation; or (c) by
the holders of a majority of the outstanding stock at the time entitled to vote
for directors, voting as a single class, exclusive of any stock owned by any
interested director or officer. Expenses, including counsel fees, reasonably
incurred by any director or officer in connection with the defense or
disposition of any such action, suit or other proceeding shall be paid from time
to time by the corporation in advance of the final disposition thereof upon
receipt of an undertaking by such director or officer to repay the amounts so
paid to the corporation if it is ultimately determined that indemnification for
such expenses is not authorized under this section. If in an action, suit, or
proceeding brought by or in the right of the corporation, a director of the
corporation is held not liable for monetary damages, whether because that
director is relieved of personal liability under the provisions of Article VI of
the Articles of Organization of the corporation or otherwise, that director
shall be deemed to have met the standard of conduct set forth herein and to be
entitled to indemnification for expenses reasonably incurred in the defense of
such action, suit, or proceeding. The right of indemnification hereby provided
shall not be exclusive of or affect any other rights to which any director or
officer may be entitled. As used in this section, the terms "director" and
"officer" include their respective heirs, executors and administrators, and an
"interested" director or officer is one against whom in such capacity the
proceedings in question or another proceeding on the same or similar grounds is
then pending. Nothing contained in this section shall affect any rights to
indemnification to which corporate personnel other than directors and officers
may be entitled by contract or otherwise under law.
Section 10. CORPORATE SEAL
The seal of the corporation shall, subject to alteration by the
directors, consist of a flat-faced circular die with the word "Massachusetts",
together with the name of the corporation and the year of its organization, cut
or engraved thereon.
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Section 11. EXECUTION OF PAPERS
Except as the directors may generally or in particular cases authorize
the execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the corporation shall be signed by the president or by one of the
vice presidents or by the treasurer.
Section 12. FISCAL YEAR
The fiscal year of the corporation shall end on December 31.
Section 13. AMENDMENTS
These bylaws may be altered, amended or repealed at any annual or special
meeting of the stockholders called for the purpose, of which the notice shall
specify the subject matter of the proposed alteration, amendment or repeal or
the sections to be affected thereby, by vote of the stockholders. These bylaws
may also be altered, amended or repealed by vote of a majority of the directors
then in office, except that the directors shall not take any action which
provides for indemnification of directors nor any action to amend this Section
13, and except that the directors shall not take any action unless permitted by
law. Any bylaw so altered, amended or repealed by the directors may be further
altered or amended or reinstated by the stockholders in the above manner.
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EXHIBIT (10)
PROMISSORY NOTE
$40,000,000 Date: June 18, 1999
Philadelphia, Pennsylvania
FOR VALUE RECEIVED, and intending to be legally bound, DEWOLFE MORTGAGE
SERVICES, INC., a Massachusetts corporation ("Borrower"), hereby promises to pay
to the order of FIRST UNION NATIONAL BANK, a national banking association
("Bank") at Bank's office on the Termination Date, as defined in the Mortgage
Warehousing Loan and Security Agreement hereinafter referred to, the lesser of
FORTY MILLION Dollars ($40,000,000) or the principal balance outstanding
hereunder pursuant to the provisions of said Mortgage Warehousing Loan and
Security Agreement. The actual amount due and owing from time to time hereunder
shall be evidenced by Bank's records of receipts and disbursements hereunder.
Borrower further agrees to pay interest on the unpaid principal amount
outstanding hereunder in accordance with the terms and conditions of said
Mortgage Warehousing Loan and Security Agreement.
This Promissory Note is the Note referred to in and is entitled to the benefits
of that certain Mortgage Warehousing Loan and Security Agreement dated as of
June 15, 1993, as amended and as it may be extended, renewed, amended or
modified from time to time (the "Agreement"), between Borrower and Bank, to
which reference is hereby made for the terms and provisions thereof, and for
additional rights and limitations of such rights of Borrower and Bank
thereunder, including, but not limited to, provisions for Borrower's right to
borrow, prepay and reborrow part or all of the principal hereof under certain
conditions and for the acceleration of Borrower's liabilities to Bank upon the
occurrence of certain events as therein specified.
Borrower shall pay all of Bank's reasonable expenses incurred to enforce or
collect this Note and any of the Obligations, as defined in the Agreement,
including without limitation, reasonable arbitration, paralegals', attorneys',
and experts' fees and expenses, whether incurred with or without the
commencement of a suit, in any trial, arbitration or administrative proceeding,
or in any appellate or bankruptcy proceeding. Attorneys' and paralegals' fees of
Bank shall include, in the case of a salaried attorney or paralegal employed by
Bank, the hourly cost to Bank of the service of such attorney or paralegal, as
determined by Bank.
Borrower and any endorser, jointly and severally, waive presentment, protest and
demand, notice of protest, demand and dishonor and nonpayment of this Note, and
expressly agree that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of Borrower or any
endorser hereof.
The validity and construction and enforceability of and the rights and
obligations of Borrower and Bank under this Note and the Agreement shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania. This Note replaces and supersedes but does not
extinguish Borrower's liabilities and obligations to Bank under the Note dated
June 15, 1993, as amended, from Borrower payable to the order of Bank. This Note
is not a novation.
Attest: DEWOLFE MORTGAGE SERVCES, INC.
(affix corporate seal)
By /s/ John P. White By /s/ Gail F. Hayes
Print Name and Title Print Name and Title
John P. White, V.P. Gail F. Hayes, President
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AMENDMENT NO. 4 TO MORTGAGE WAREHOUSING
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 TO MORTGAGE WAREHOUSING LOAN AND SECURITY AGREEMENT, dated
as of June 18, 1999 ("Amendment"), is between DEWOLFE MORTGAGE SERVICES, INC., a
Massachusetts corporation, ("Borrower") and FIRST UNION NATIONAL BANK, a
national banking association, successor by merger to CoreStates Bank, N.A.
("Bank"), with reference to the following
BACKGROUND:
A. Bank and Borrower have entered into a Mortgage Warehousing Loan and Security
Agreement dated June 15, 1993, as the same may be amended from time to
time (the "Agreement").
B. Bank and Borrower desire to amend certain terms and conditions of the
Agreement, including but not limited to the term of the Agreement,
interest rate and certain operating procedures, all as more specifically
set forth therein.
THEREFORE, in consideration of the promises contained herein and intending to be
legally bound, Bank and Borrower hereby agree as follows:
1. Addendum. Bank and Borrower agree that certain defined terms used in this
Amendment and certain operating procedures related to the terms and conditions
to borrowing under the Agreement, as amended hereby, are set forth in the
Addendum attached hereto and by this reference made a part hereof (the
"Addendum"). If and to the extent any definitions, terms, conditions or
procedures contained in the Addendum are inconsistent or conflict with or
constitute additions to or deletions from definitions, terms, conditions or
procedures previously used or followed in connection with borrowings under the
Agreement, the definitions, terms, conditions and procedures in the Addendum
shall control. The Agreement is hereby amended to the fullest extent necessary
to incorporate into the Agreement and into the operating procedures applicable
to borrowings under the Agreement the definitions, terms, conditions and
procedures in the Addendum.
2. Definitions.
a. Capitalized terms which are not defined, amended or added in this
Amendment or the Addendum attached hereto and which are defined in
the Agreement shall have the respective meanings given to those
terms in the Agreement and are used herein and therein defined.
b. Any capitalized terms which are used in this Amendment and which
have not previously been defined in the Agreement shall have the
respective meanings given to them herein or in the Addendum.
3. Term; Borrowing Base.
a. Notwithstanding anything to the contrary contained in the
Agreement, Bank agrees, on the terms and conditions set forth in
the Agreement, as amended hereby, to advance and lend to Borrower
from time to time during the period from the date of this Amendment
up to but not including the Termination Date amounts, in connection
with Eligible Mortgage Loans acceptable as Collateral to Bank. The
aggregate unpaid principal amount of all loans to Borrower
(individually, a "Loan" and, collectively, the "Loans") outstanding
at any time shall not exceed the lesser of the Maximum Loan Amount
and the Collateral Value of the Borrowing Base.
b. The term "Termination Date" means the earlier of May 31, 2000 or
the date or the termination in full of the obligations of Bank
under the Agreement, as amended hereby.
c. All references in the Agreement or the Note to payment of the Loans
60 days after demand by the Bank and Loans to be made solely at
Bank's discretion are hereby deleted from the Agreement. This
Amendment constitutes a commitment on the part of Bank to make
Loans to Borrower, subject to the terms and conditions of the
Agreement, as amended hereby, and so long as no Event of Default
has occurred and is continuing thereunder, up to but not including
the Termination Date.
4. Interest Rate. Borrower shall pay to Bank interest on the daily
outstanding principal balance of the Loans at the per annum rate equal to the
lesser of the Corporate Base Rate plus 1.75% or the Prime Rate.
5. Funding and Settlement Accounts; Security Interest in Accounts. Borrower
shall maintain at Bank the following separate designated deposit accounts:
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a. demand deposit account # ____________________ (the "Funding
Account") into which Bank may fund Loans and against which Bank may
debit Borrower's principle reduction payments, monthly interest
charges, processing fees and other fees and charges in accordance
with the Agreement; and
b. restricted account # 21000174-17241 (the "Settlement Account")
owned by Borrower but under the control of the Bank into which
payments of proceeds received from Investors from the sale of
Mortgage Loans securing the Loans shall be directly deposited.
c. In addition to the security interests in the Collateral heretofore
pledged, assigned and granted by Borrower to Bank under the
Agreement, Borrower hereby pledges, assigns and grants to Bank as
security for the Loans and the Obligations a first perfected
security interest in the Funding Account and the Settlement Account
and any and all other accounts and property of Borrower held at
Bank and all proceeds of foregoing (except for account
#2000207477939). The term "Collateral" as used in the Agreement is
hereby amended to include the Funding Account, the Settlement
Account and all such other accounts and property. For purposes of
such pledge, assignment and grant, this Amendment shall be deemed a
"security agreement" under and for all purposes of the Uniform
Commercial Code. Borrower shall execute and deliver to Bank such
UCC financing statements for filing as such jurisdictions as Bank
may require to perfect Bank's security interest in such Collateral.
6. Advance Rates; Post Closing Delivery of Mortgage Notes.
a. With respect to each Eligible Mortgage Loan included in the
Borrowing Base, the "Unit Collateral Value" thereof shall mean
ninety-eight percent (98%) of the lesser of: (A) the Committed
Purchase Price thereof; (B) the current principal balance thereof;
and (C) the Fair Market Value thereof.
b. Borrower shall deliver to Bank within seven business days following
the date of inclusion of a Mortgage Loan in the Borrowing Base the
original executed Mortgage Note evidencing said Mortgage Loan, duly
endorsed in blank and otherwise conforming to the requirements set
forth in the Agreement so long as the Unit Collateral Value of said
Mortgage Loan when added to the Unit Collateral Value of all other
such Mortgage Loans for which Bank has not received the original,
properly endorsed Mortgage Note at the time of inclusion in the
Borrowing Base does not exceed the lesser of ( x ) $12,000,000 or
( y ) 30% of the Maximum Loan Amount.
7. Maximum Warehouse Period; Maximum Collateral Value Released under
Trust Receipt.
a. A Mortgage Loan shall cease to be an Eligible Mortgage Loan on the
date which is 61 days (91 days in the case of an Eligible Mortgage
Loan in a pool) after the date it was included in the Borrowing
Base.
b. If a Mortgage Loan was withdrawn by Borrower for purposes of
correcting clerical or other nonsubstantive documentation problems
pursuant to a trust receipt, as permitted under Paragraph 6 of the
Addendum, the Unit Collateral Value of said Mortgage Loan when
added to the Unit Collateral Values of other Mortgage Loans
included in the calculation of the Collateral Value of the
Borrowing Base, the promissory notes for which have been similarly
withdrawn by Borrower shall not exceed $600,000, and the promissory
note and other documents relating to said Mortgage Loan shall be
returned to Bank within ten (10) calendar days from the date of
withdrawal.
8. Replacement Note. Borrower shall execute and deliver to Bank a promissory
note in the form attached hereto to evidence the Loan (the "Replacement Note").
Upon execution and delivery of the Replacement Note by Borrower to Bank, the
Replacement Note shall replace and supersede but shall not extinguish Borrower's
obligations to Bank evidenced by the Note, and the term "Note" as used in the
Agreement shall mean and refer to the Replacement Note.
9. Representations and Warranties. All representations, warranties and
covenants of Borrower contained in the Agreement are hereby ratified and
confirmed without condition as if made anew upon the execution of this Amendment
and are hereby incorporated herein by reference. Borrower has taken all
corporate action necessary to approve this Amendment and the Replacement Note,
and upon execution and delivery thereof by Borrower, this Amendment and the
Replacement Note shall constitute the legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.
10. Certification of No Default. Borrower hereby represents and warrants to
Bank that, as of the date of
3
<PAGE>
execution of this Amendment, no Event of Default under the Agreement and no
event which, with the giving of notice or passage of time or both, could become
such an Event of Default has occurred.
11. ARBITRATION. Upon demand of Borrower or Bank whether made before or
after institution of any judicial proceeding, any claim or controversy arising
out of, or relating to the Loan or the Agreement, as amended hereby, between
parties hereto (a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims a dispute as to whether a matter is subject to arbitration, claims
brought as class actions, or claims arising from documents executed in the
future. A judgement upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements (as defined in 11 U.S.C.
S101) between the parties.
Special Rules. All Arbitration hearings shall be conducted in the city in
which the office of Bank first stated above is located. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall be concluded
within 120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more than a
total of 60 days. The expedited procedures set forth in Rule 51 at seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.
Arbitrators shall be licensed attorneys selected from the Commercial Financial
Dispute Arbitration Panel of the AAA. The parties do not waive applicable
Federal or State substantive law except as provided herein.
Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise before or after an
arbitration proceeding is brought. The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property, (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgement by confession of judgement. Any claim or controversy with regard to
any party's entitlement to such remedies is a Dispute.
The parties agree that they shall not have a remedy of punitive or exemplary
damages against the other in any Dispute and hereby waive any right or claim to
punitive or exemplary damages they have now or which may arise in the future in
connection with any Dispute, whether the Dispute is resolved by arbitration or
judicially.
WAIVER OF JURY TRIAL. BORROWER AND BANK ACKNOWLEDGE THAT BY AGREEING TO BINDING
ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO A JURY TRIAL
WITH REGARD TO A DISPUTE.
IN WITNESS WHEREOF, Bank and Borrower have executed this Amendment as of the day
and year first written above.
FIRST UNION NATIONAL BANK
By /s/ John P. White
--------------------------
- -----------------------------
John P. White, Vice President
DEWOLFE MORTGAGE SERVICES, INC.
By /s/ Gail F. Hayes
------------------------------
Gail F. Hayes, President
---------------------------------
Print Name and Title
4
<PAGE>
ADDENDUM
TO
FIRST UNION NATIONAL BANK
MORTGAGE WAREHOUSING LOAN AND SECURITY AGREEMENT
DATED JUNE 15, 1993, AS AMENDED
BORROWER: DEWOLFE MORTGAGE SERVICES, INC.
1. LENDING PROVISIONS:
1.1 Request for Loans; Making of Loans If Borrower desires to receive the
proceeds of a Loan hereunder, Borrower shall make a Loan Request to Bank on the
proposed funding date, (1) no later than 10:00 a.m. (Charlotte, North Carolina
time) on said date, if the proposed funding is to be funded by Bank by way of
wire transfer to the recipient, and (2) no later than 2:00 p.m. (Charlotte,
North Carolina time) on said date, if the proposed funding is to be funded by
Bank's cashier's check payable to the order of the recipient. Bank will make
available the amount of the proposed Loan on the proposed funding date by the
method approved by Bank.
1.2 Repayment of Principal. Subject to the prepayment requirements of
Paragraph 1.3 below and the required application of proceeds from the sale or
other disposition of Mortgage Loans as provided in the Agreement, Borrower shall
pay the principal amount of all Loans on the Termination Date.
1.3 Borrowing Base Conformity.
(a) Borrower shall cause to be maintained with Bank, a
Borrowing Base such that the Collateral Value of the Borrowing Base is not less
than, at any date, the sum of the aggregate dollar amount of outstanding Loans.
(b) Borrower shall prepay to Bank upon telephonic or facsimile
demand by Bank, on any day in the amount by which the aggregate principal amount
of outstanding Loans exceeds the Collateral Value of the Borrowing Base, said
prepayment to be made on the date on which demand is made by Bank if made prior
to 4:00 p.m. (Charlotte, North Carolina time) or, if made later than 4:00 p.m.
(Charlotte, North Carolina time), before 10:00 a.m. (Charlotte, North Carolina
time) on the next Business Day.
(c) If, at such time as Borrower shall be required to prepay
Loans under this Paragraph 1.3, there shall not have occurred and be continuing
an Event of Default hereunder, in lieu of prepaying the Loans as required,
Borrower may deliver to Bank additional Eligible Mortgage Loans such that the
Collateral Value of the Borrowing Base, after giving effect to the inclusion of
such Eligible Mortgage Loans in the Borrowing Base, shall be in compliance with
the requirements of subparagraphs 1.3(a) and (b) above.
2. DELIVERY OF COLLATERAL. Borrower shall deliver the Collateral or cause the
Collateral to be delivered to Bank, it being agreed and understood that
all Mortgage Loans acquired or originated by Borrower following the date
hereof which are intended by Borrower to constitute Eligible Mortgage
Loans are to be delivered to Bank as provided herein. Delivery of
Collateral consisting of Mortgage Loans shall be effected by delivery of
the Required Documents therefor. Bank's responsibility to review such
Collateral is limited to the review steps described on Exhibit E hereto,
said review of Collateral delivered on any Business Day to be completed
before the opening of business of Bank on the next succeeding Business
Day; provided, however, that in the event Borrower delivers Collateral to
Bank on any Business Day in an amount which exceeds Bank's reasonable
capacity to review such Collateral before the opening of business of Bank
on the next succeeding Business Day, Bank shall not be obligated to review
such Collateral before the opening of business of Bank on the next
succeeding Business Day but shall use its best efforts to do so. No
Collateral will be included in the computation of the Collateral Value of
the Borrowing Base until Bank's review thereof has been completed pursuant
to this Paragraph. All Mortgage Loans at any time delivered to Bank
hereunder shall be held by Bank in a fire resistant vault, drawer or other
suitable depository maintained and controlled solely by Bank,
conspicuously marked to show the interest of Bank therein and not
commingled with any other assets or property of, or held by, Bank. Bank is
not, and shall not at any time in the future be, subject, with respect to
the Collateral, in any manner or to any extent, to the direction or
control of Borrower except as expressly permitted hereunder or under the
Agreement. Under no circumstances will Bank deliver possession of the
Collateral to Borrower except in accordance with the express terms of the
Agreement.
3. CONDITIONS TO MAKING LOANS. As conditions precedent to Bank's obligation
to make any Loan under the Agreement, including the first Loan, and in
addition to the conditions precedent set forth in the Agreement, at and as
of the date thereof;
5
<PAGE>
3.1 Loan Request. There shall have been delivered to Bank a Loan Request in
the form of Exhibit C therefor.
3.2 Representations and Warranties. The representations and warranties of
Borrower contained in the Agreement shall be accurate and complete in all
respects as if made on and as of the date of such advance.
3.3 Borrowing Base Schedule. Borrower shall have delivered to Bank the most
recent Borrowing Base Schedule in the form of Exhibit D hereto, certified
by Borrower pursuant to Paragraph 5.2. In preparing any such reports Bank
shall be entitled to rely, without independent investigation (other than
the review steps described on Exhibit E hereto), on information supplied
to Bank by Borrower.
3.4 No Event of Default. There shall not have occurred an Event of Default,
and the making of such Loan will not create or give rise to an Event of
Default;
3.5 Maximum Amount Not Exceeded. Following the funding of the requested Loan,
the aggregate principal amount of all Loans outstanding will not exceed
the lesser of: (a) the Maximum Loan Amount and (b) the Collateral Value of
the Borrowing base.
4. BANK'S REVIEW OF COLLATERAL.
4.1. Bank Review. Upon the receipt of Required Documents for any Mortgage Loan,
Bank shall review the same and verify that:
(a) All Required Documents relating to such item of Collateral
appear regular on their face and are in Bank's possession;
and
(b) The statements set forth on Exhibit E hereto are accurate
and complete in all respects.
4.2. Exceptions. Such verification for Collateral delivered shall be set forth
in the Borrowing Base Schedule pursuant to Paragraph 5.2 below. If Bank
notes any exception in the review described in subparagraph 4.1. (a) or
(b) above or questions, in its reasonable discretion, the genuineness,
regularity, propriety, or accuracy of any item of Collateral, Bank shall
so note in the next such Borrowing Base Schedule delivered.
4.3. Additional Required Documents. Upon the occurrence and during the
continuance of an Event of Default, and upon a demonstration of reasonable
need at any other time, Bank may request that Borrower deliver to it the
Additional Required Documents with respect to any Mortgage Loan, and
Borrower hereby agrees to deliver such Additional Required Documents upon
any such request therefor.
5. COLLATERAL VALUE DETERMINATION.
5.1. Collateral Value Determination. No later than 1:00 p.m. (Charlotte, North
Carolina time) on each Business Day (i) on which any Collateral is
delivered to Bank by Borrower; (ii) on which any Collateral is released by
Bank pursuant to Paragraph 6 below; (iii) on which any payment is received
by Bank from Borrower or from a purchaser pursuant to Paragraph 6 below;
or (iv) on which a Loan Request is made, Bank shall compute the Collateral
Value of the Borrowing Base (a "Collateral Value Determination") as of
1:00 p.m. on such Business Day.
5.2. Borrowing Base Schedule. No later than 1:00 p.m. (Charlotte, North
Carolina time) on each Business Day, Bank shall prepare and deliver to
Borrower via facsimile a schedule showing the composition of the Borrowing
Base in the form attached hereto as Exhibit D, on a per-Mortgage Loan
basis, as of such time. Borrower shall certify as to the accuracy of such
Borrowing Base Schedule and shall return such schedule, with such
certification attached, to Bank via facsimile no later than 2:00 p.m.
(Charlotte, North Carolina time) on each such Business Day.
6. HANDLING AND SHIPPING OF COLLATERAL; SETTLEMENT ACCOUNT.
6.1. Release of Documents Against Trust Receipts. Prior to the occurrence of an
Event of Default, Bank may in its sole discretion release documentation
relating to Mortgage Loans to Borrower against a trust receipt executed by
Borrower in the form of Exhibit F hereto. Borrower hereby represents and
warrants that any request by Borrower for release of Collateral under this
subparagraph 6.1 shall be solely for the purposes of correcting
6
<PAGE>
clerical or other non-substantial documentation problems in preparation of
returning such Collateral to Bank for ultimate sale or exchange and that
Borrower has requested such release in compliance with all terms and
conditions of such release set forth herein and in the Agreement,
including, without limitation, Paragraph 7 b of amendment No. 4 to the
Agreement.
6.2. Shipping of Mortgage Loans to Purchasers. Prior to the occurrence of an
Event of Default, upon delivery by Borrower to Bank of a shipping request
in the form of that attached hereto as Exhibit G, Bank will transmit
Mortgage Loans held by it as directed by Borrower to a purchase in
connection with the sale thereof, such transmittal to be sent via Federal
Express or another overnight courier approved by Borrower under cover of a
transmittal letter in the form of that attached hereto as Exhibit H (or
such other form as may be required under any government or other program
pursuant to which the relevant Mortgage Loans are being shipped).
In no event shall Bank have any obligation to obtain written Acknowledgement
of receipt from the addressee of any transmittal letter or other
communication sent by Bank hereunder.
6.3. Payment into Settlement Account. All amounts payable on account of the sale
of Mortgage Loans (including, but not limited to a sale pursuant to a
repurchase agreement) will be instructed to be paid directly by the
purchaser to the Settlement Account. Borrower has granted to bank a
security interest in and lien upon the Settlement Account and in any and
all amounts at any time held therein as collateral security for the Loans
and the Obligations.
6.4. Further Assurances. Prior to the occurrence of an Event of Default, Bank
shall take such steps as it may be reasonably directed from time to time by
Borrower in writing which are not inconsistent with the provisions of this
Addendum and the Agreement and which Borrower deems necessary to enable
Borrower to perform and comply with agreements for the sale or other
disposition in whole or in part of Mortgage Loans.
7. ADDITIONAL OPERATING PROCEDURES. Borrower agrees to comply with the
additional operating procedures relating to Loans made under the Agreement
as described in the Bank's Specialty Finance Collateral Operations, Guide,
a copy of which has been furnished to Borrower.
8. DEFINITIONS. For purposes of this Addendum and of the Agreement, the terms
set forth below shall have the following meanings:
"Additional Required Documents" shall mean for any Mortgage
Loan those items described on Exhibit B attached hereto.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in Philadelphia, Pennsylvania and Charlotte,
North Carolina are authorized or obligated to close their regular banking
business.
"Borrowing Base" shall mean at any date all Eligible Mortgage
Loans delivered to and held by Bank or otherwise identified as Collateral under
the Agreement as collateral security for the Obligations.
"Borrowing Base Schedule" shall mean a schedule prepared by
Bank and certified to by Borrower in the form of that attached hereto as Exhibit
D.
"Collateral Value of the Borrowing Base" shall mean at any
date the sum of the Unit Collateral Values of all Eligible Mortgage Loans
included in the Borrowing Base at such date.
"Corporate Base Rate" shall mean for any day a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with numbers of the Federal Reserve System averaged
by Federal funds brokers for such day as reported by the Federal Reserve Bank of
New York, or if no longer so reported then as published in Statistical Release
H.15 of the Federal Reserve System, or if such rate is not so published for any
day, the average of the quotations for such day of such transactions received by
Bank from three (3) Federal funds brokers of recognized standing selected Bank.
"Fair Market Value" shall mean, with respect to any Mortgage
Loan, the market bid price obtainable for such Mortgage Loan, as determined on a
reasonable basis by Bank (based upon whole loan prices currently available to
Borrower) at such time as it shall elect.
"Loan Request" shall mean a request for a Loan conveyed to
Bank from a duly authorized
7
<PAGE>
employee of Borrower, with such request to be confirmed in writing upon the
request Bank and to be in the form of Exhibit C hereto.
"Prime Rate" shall mean a rate per annum equal to the rate
announced from time to time by Bank to be its "Prime Rate" as such "Prime Rate"
may change from time to time, said changes to occur on the first date the "Prime
Rate" changes; it being understood that the "Prime Rate" is the rate announced
by Bank from time to time as its "Prime Rate" and is not necessarily the lowest
interest rate charged by Bank to its customers.
"Required Documents" shall mean for any Mortgage Loan those
items described on Exhibit A attached hereto.
8
<PAGE>
Exhibit (11) Statement Re: Computation of Basic Earnings Per Share and Diluted
Earnings per Share
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator:
Net Income $3,298,000 $2,143,000 $3,864,000 $2,413,000
Denominator:
Basic weighted average shares 3,361,000 3,263,000 3,331,000 3,243,000
Effect of Stock Options 214,000 212,000 238,000 184,000
----------------------------- -----------------------------
Diluted weighted average shares 3,575,000 3,475,000 3,569,000 3,427,000
============================= =============================
Basic Earnings per Share $ 0.98 $ 0.66 $ 1.16 $ 0.74
============================= =============================
Diluted Earnings Per Share $ 0.92 $ 0.62 $ 1.08 $ 0.70
============================= =============================
</TABLE>
EXHIBIT (22)
May 12, 1999
Mr. Robert McCauley
The DeWolfe Companies, Inc.
80 Hayden Avenue
Lexington, MA 02173
Dear Bob:
As requested, we have tabulated the votes cast at the Annual Meeting of
Stockholders of The DeWolfe Companies, Inc. held on May 11, 1999. The results of
this tabulation are as follows:
PROPOSAL I
- ----------
To fix the size of the Board at four and to elect the nominees named in the
Proxy Statement.
<TABLE>
<CAPTION>
Number of Shares/Votes
----------------------
For Withheld
--- --------
<S> <C> <C>
Richard B. DeWolfe 2,952,884.796 16,736
A. Clinton Allen 2,949,910.796 19,710
Paul R. Del Rossi 2,952,410.796 17,210
R. Robert Popeo 2,952,409.796 17,211
</TABLE>
PROPOSAL II
- -----------
To approve the amendment to the Company's 1998 Stock Option Plan.
<TABLE>
<S> <C>
For 2,577,740.219
Against 119,240.350
Abstain 3,226.227
Non-vote 269,414.000
</TABLE>
PROPOSAL III
- ------------
To ratify the Company's Selection of Ernst & Young LLP as the Company's
Independent Auditors.
<TABLE>
<S> <C>
For 2,969,018.608
Against 208.000
Abstain 394.188
</TABLE>
<PAGE>
We certify that the number of shares issued, outstanding and eligible to vote as
of the record date of March 15, 1999 were 3,359,228.000. We tabulated proxies
representing 2,969,620.796 shares of common stock or 88 percent of the eligible
voting shares.
Sincerely,
Therese M. Collins
Account Manager
Authorized Signatory
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET (UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF
INCOME (UNAUDITED), AS REFLECTED ON THE COMPANY'S FORM 10Q FOR THE QUARTER ENDED
JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<CIK> 0000888138
<NAME> THE DEWOLFE COMPANIES, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-06-1999
<EXCHANGE-RATE> 1
<CASH> 3,928
<SECURITIES> 0
<RECEIVABLES> 43,940
<ALLOWANCES> 1,784
<INVENTORY> 0
<CURRENT-ASSETS> 77,302
<PP&E> 14,188
<DEPRECIATION> 6,941
<TOTAL-ASSETS> 97,974
<CURRENT-LIABILITIES> 67,848
<BONDS> 16,736
0
0
<COMMON> 36
<OTHER-SE> 17,060
<TOTAL-LIABILITY-AND-EQUITY> 97,974
<SALES> 0
<TOTAL-REVENUES> 94,123
<CGS> 0
<TOTAL-COSTS> 60,003
<OTHER-EXPENSES> 26,879
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> 7,025
<INCOME-TAX> 3,161
<INCOME-CONTINUING> 3,864
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,864
<EPS-BASIC> 1.16
<EPS-DILUTED> 1.08
</TABLE>
