Option Agreement between Consumers Financial Corporation and CFC Partners Ltd. (February 13, 2002)
Summary
This agreement grants CFC Partners Ltd. the right to purchase 2,700,000 shares of Consumers Financial Corporation's common stock at a specified price. The option can only be exercised during a set period following the company's tender offer to its preferred shareholders, and expires no later than May 31, 2002, unless extended. CFC Partners must deposit the purchase price in escrow and may forfeit $25,000 if the option is not exercised. The agreement also includes confidentiality obligations and conditions for termination by either party.
EX-2.1 3 doc2.txt EXHIBIT 2.1 OPTION AGREEMENT THIS OPTION AGREEMENT (this "Agreement") is made as of this 13th day of February, 2002 (the "Effective Date"), by and between CONSUMERS FINANCIAL CORPORATION, a Pennsylvania corporation with its principal offices at 1513 Cedar Cliff Drive, Camp Hill, Pennsylvania 17011(the "Company"), and CFC PARTNERS LTD., a New York corporation with its principal offices at 132 Spruce Street, Cedarhurst, New York 11516 (the "Optionee"). RECITALS -------- WHEREAS, the Company desires to grant to Optionee the right and option to purchase shares of the Common Stock of the Company at the Exercise Price (as hereinafter defined) for such Option (as hereinafter defined); and WHEREAS, in consideration of the grant of such Option at the Exercise Price, the Company desires and the Optionee agrees to be bound by certain confidentiality covenants as more particularly described herein; and WHEREAS, Optionee desires to accept such grant of the Option and to be bound by certain confidentiality covenants all as set forth in this Agreement. NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: 1. Grant of Option. The Company hereby grants to Optionee the right ----------------- and option to purchase 2,700,000 shares of the Common Stock of the Company, stated value $.01 (the "Common Stock"), for the Exercise Price as set forth and defined in Section 4, subject to the terms and conditions as hereinafter provided (the "Option"). 2. Exercise of Option and Provisions for Expiration. ------------------------------------------------------- (a) Exercise Period. Optionee may only exercise this Option ---------------- during the Exercise Period which shall commence on the first business day following completion of the Company's tender offer (the "Tender Offer") to its preferred shareholders which will be defined as the close of business on the day the Company mails the final checks to tendering shareholders (subject to any minor outstanding matters with respect to payee or address) and shall end on the fifteenth business day following completion of the Company's Tender Offer. (b) Expiration Date and Time of Option. This Option shall expire ------------------------------------ at 5:00 p.m., prevailing time, on the fifteenth business day after the completion of the Tender Offer (the "Expiration Date"), but in no event shall 1 the Optionee be entitled to exercise this Option later than 5:00 p.m. on May 31, 2002, unless the Tender Offer has commenced by May 31, 2002, in which case the Option shall expire on the Expiration Date. (c) Exercise Procedure. Subject to the conditions set forth in ------------------- this Agreement, this Option shall be exercised by Optionee's delivery to the treasurer of the Company (the "Treasurer") of (i) a written notice of exercise (the "Exercise Notice"); and (ii) release of the Purchase Price in full in accordance with Section 4 hereof. Such exercise shall be effective upon receipt by the Treasurer of the Exercise Notice and release of the Purchase Price from the Escrow Account to the Company. (d) Escrow Account. Optionee shall deposit the full Purchase --------------- Price into an escrow account at Allfirst Bank, Lemoyne, Pennsylvania upon the execution of this Agreement and pursuant to the Escrow Agreement attached hereto as Exhibit A and incorporated by reference herein. (e) Forfeiture Upon Expiration of Option. (i) If the Optionee --------------------------------------- does not exercise this Option during the Exercise Period, then the Optionee shall forfeit $25,000 to the Company from the funds held in the Escrow Account in accordance with Section 2(d) above. The remaining balance of the funds held in the Escrow Account, including any interest accrued thereon, shall be returned to the Optionee and this Agreement shall terminate with the exception of Sections 12(a) and 12(b) which shall survive termination of this Agreement. (ii) If this Agreement terminates in accordance with Section 2(g) below, and the Company's failure to complete the Tender Offer was the result of any actions or inactions by the Optionee (including failure to provide information acceptable to any governmental agency, including the U.S. Securities and Exchange Commission), then the Optionee shall forfeit $25,000 to the Company from the funds held in the Escrow Account in accordance with Section 2(d) above. The remaining balance of the funds held in the Escrow Account, including any interest accrued thereon, shall be returned to the Optionee and this Agreement shall terminate with the exception of Sections 12(a) and 12(b) which shall survive termination of this Agreement. (iii) If this Agreement terminates in accordance with Section 2(g) and if the Company's failure to complete the Tender Offer is not the result of any actions or inactions by the Optionee (including failure to provide information acceptable to any governmental agency, including the U.S. Securities and Exchange Commission), then the funds held in the Escrow Account, including any interest accrued thereon, shall be returned to the Optionee, this Agreement shall terminate, with the exception of Sections 12(a) and 12(b) which shall survive termination of this Agreement, and the Company shall have no obligation to pay a termination fee to the Optionee. (iv) The parties agree that the maximum payment due from Optionee pursuant to the forfeiture provisions of this Section 2(e) shall not exceed $25,000. (f) Termination of the Agreement at Sole Discretion of the -------------------------------------------------------------- Company. (i) The Company shall not solicit additional offers to purchase interests in the Company but may consider and/or respond to a bona fide, unsolicited inquiry or offer and, if it deems the inquiry or offer to be in the 2 best interest of the shareholders, the Company may terminate this Agreement and the underlying Option at any time before the Optionee exercises the Option. In the event the Company terminates this Agreement pursuant to this Section 2(f)(i), the Company shall pay a termination fee of $50,000 to the Optionee and the balance of the Escrow Account, including any interest accrued thereon, shall be returned to the Optionee and this Agreement shall terminate with the exception of Sections 12(a) and 12(b) which shall survive termination of this Agreement. (ii) The Company may terminate this Agreement and the underlying Option, if the Board determines, in its sole discretion, that such termination is in the best interests of the shareholders based on the criminal background checks of the principals of the Optionee. These background checks shall be completed on or before February 28, 2002. In the event the Company terminates this Agreement and the underlying Option pursuant to this Section 2(f)(ii), the Company shall have no obligation to pay a termination fee to the Optionee. The Escrow Account, including any interest accrued thereon, shall be returned to the Optionee and this Agreement shall terminate with the exception of Sections 12(a) and 12(b) which shall survive termination of this Agreement. (g) Automatic Termination of the Agreement. If for any reason, ----------------------------------------- the Optionee has not exercised this Option on or before May 31, 2002, this Agreement and the underlying Option shall terminate at 5:00 p.m. on that date unless (i) the Tender Offer has commenced by that date, in which case the Option shall continue until the Expiration Date or (ii) the parties mutually agree in writing to extend such termination date. 3. Delivery of Shares. -------------------- (a) General. As promptly as reasonably practicable after receipt ------- of the Exercise Notice and release of the full Purchase Price from the Escrow Account in accordance with Section 2 above and the Escrow Agreement, the Company shall execute and deliver, or cause to be executed and delivered, to Optionee a certificate representing 2,700,000 shares of Common Stock (the "Stock Certificate"). The Stock Certificate shall be issued in the name of Optionee or Optionee's Permitted Designee. "Permitted Designee" shall mean an affiliate of Optionee or any other person consented to by the Company. The Stock Certificate shall be deemed to have been issued, and such Optionee shall be deemed for all purposes to have become a holder of record of such shares, as of the date the full Purchase Price is released from the Escrow Account and paid to the Company. The Company shall pay all expenses, taxes (if any) and any other charges payable in connection with the preparation, issuance and delivery of the Stock Certificate, unless any such taxes or charges are imposed by law upon Optionee, in which case such taxes or charges shall be paid by Optionee. (b) Shares to be Fully Paid and Nonassessable. All shares of ---------------------------------------------- Common Stock issued upon the exercise of this Option shall be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof (other than transfer taxes). (c) Share Legend. The Stock Certificate issued upon exercise of ------------- this Option shall have affixed thereto the following legend, in addition to any other legends required by applicable law: 3 THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED. Any share certificate issued at any time in exchange or substitution for the Stock Certificate bearing such legend shall also bear such legend unless, in the Opinion of Counsel, the shares represented thereby are no longer subject to restrictions on resale under the Act, or any applicable state securities laws, or under the Option Agreement. As used herein, an "Opinion of Counsel" shall mean an opinion of counsel selected by Optionee, which opinion is reasonably satisfactory to counsel for the Company as to the identity of the opining counsel and the substance of the opinion. (d) Majority Interest. The Stock Certificate shall, as of the ------------------ date of delivery, represent a majority of the Company's outstanding Common Stock. 4. Exercise Price. The Company shall sell each share of Common Stock --------------- upon exercise of the Option at an exercise price of $.04 per share (the "Exercise Price") or $108,000.00 in the aggregate (the "Purchase Price"). 5. Reservation; Authorization and Existing Litigation. ------------------------------------------------------ (a) As of, from and after the date hereof, the Company shall at all times reserve and keep available for issue upon the exercise of this Option such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of this Option. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to permit the exercise in full of this Option, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, taking appropriate board action, recommending such an increase to the shareholders of Common Stock, holding shareholders meetings, soliciting votes and proxies in favor of such increase to obtain the requisite shareholder approval and upon such approval, the Company shall reserve and keep available such additional shares solely for the purpose of permitting the exercise of this Option. All shares of Common Stock which shall be so issuable, when issued upon exercise of this Option and payment therefor in accordance with the terms of this Option, shall be duly and validly issued, fully paid and nonassessable and free and clear of any liens, claims and restrictions (other than as provided herein). No shareholder of the Company has or shall have any preemptive rights to subscribe for such shares of Common Stock. As of, from and after the date hereof, there shall be no outstanding options or warrants for Common Stock except pursuant to this Agreement. (b) Except as set forth on Exhibit B, there is no litigation, arbitration or mediation pending, or to the Company's knowledge threatened, before any Court, arbitrator, mediator or administrative body which could adversely affect the Company or its assets. 4 6. Nontransferability of Option. This Option is personal and no rights ---------------------------- granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise), nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or of such rights contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this Option or such rights, this Option and such rights shall, at the election of the Company, become null and void. 7. Appointment to the Board of Directors. Upon issuance of the Stock --------------------------------------- Certificate to Optionee, the Company shall identify three people, who are satisfactory to the Optionee, to recommend to the existing directors to fill three vacancies on the Board of Directors of the Company. Upon election to the Company's Board of Directors of persons satisfactory to the Optionee, the two current directors of the Company's Board of Directors have indicated their intention to resign immediately. 8. Current Employees of Company. Upon issuance of the Stock ------------------------------- Certificate to Optionee, the Company's President and Chief Executive Officer, Mr. James C. Robertson, shall resign effective immediately. At this time, the Optionee shall have the right to request the resignation of the Company's two remaining employees. If the Optionee does not request the resignation of the two remaining employees of the Company, such employees may nonetheless elect to so resign. Any position vacated as a result of a resignation under this Section 8 shall be filled by the Board of Directors. As of the date of the delivery of the Stock Certificate, the Company shall not be bound by any pension obligation or labor or employment contracts except for any remaining severance obligation for which sufficient assets shall have been reserved. 9. No Rights as a Shareholder. The Optionee shall have no rights as a --------------------------- shareholder with respect to any shares of Common Stock which may be purchased by exercise of this Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until the Stock Certificate representing such shares is duly issued and delivered to the Optionee. 10. Investment Representations. The Optionee represents, warrants and --------------------------- covenants that: (a) The shares purchased upon exercise of this Option shall be acquired for the Optionee's account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933 (the "Act") or any rule or regulation under the Act. No other person has any right with respect to or interest in the shares of the Common Stock referenced in this Option nor has Optionee agreed to give any person any such interest or right in the future. (b) The Optionee is familiar with the operations of the Company and has had such an opportunity as it has deemed adequate to obtain from the Company such information as is necessary to permit Optionee to evaluate the merits and risks of Optionee's receipt of this Option and has consulted with Optionee's own advisors with respect to Optionee's receipt of shares of the Common Stock pursuant to this Agreement. 5 (c) The Optionee has sufficient experience in business, financial and investment matters to be able to evaluate the risks and merits involved in the receipt of this Option. (d) The Optionee has had such opportunity as it has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Optionee to evaluate the merits and risks of its investment in the Company. In making its decision, Optionee has relied on no oral or written representations with respect to the Common Stock, the Company, the Company's business or prospects, or other matters. Optionee confirms that neither the Company, nor any of its affiliates or agents has made any representations or warranties concerning Optionee's receipt of the rights granted herein, including, without limitation, any representations or warranties concerning the return Optionee may receive on its investment in the Company or tax consequences that may arise in connection with the same. In making its decision to execute this option, Optionee has relied upon independent investigations made by it and by its professional advisors, if any. Optionee and its advisors, if any, have been furnished with any and all nonproprietary materials available to the Company reasonably requested by Optionee, and have been afforded the opportunity to ask questions concerning the Company, the Company's proposed business and any other matters relating to the formation of the Company, and the grant of this Option. Optionee has also been afforded the opportunity to obtain any additional nonproprietary information, to the extent the Company possesses that information or can acquire it without unreasonable effort or expense, and has the right to furnish it to Optionee, necessary to verify the accuracy of any representations or information contained in this Agreement. (e) The Optionee is able to bear the economic risk of holding shares acquired pursuant to the exercise of this Option for an indefinite period. Optionee further understands that its receipt of the shares of the Common Stock pursuant to this Option involves substantial risks and represents that it understands these risks. (f) The Optionee understands that (i) there is and will likely be no public market for the Common Stock acquired pursuant to exercise of this Option; (ii) the shares acquired pursuant to the exercise of this Option will not be registered under the Act or any applicable state securities laws or "blue sky" laws; (iii) such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Act or an exemption from registration is then available; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to the shares of Common Stock to be purchased by Optionee upon exercise of the Option and the Company has no obligation or current intention to register any shares acquired pursuant to the exercise of this Option under the Act. Optionee further acknowledges that the Stock Certificate representing the shares of the Common Stock acquired pursuant to this Option will bear restrictive legends reflecting the foregoing. Optionee understands that it must bear the economic risk of this Option indefinitely unless the shares of the Common Stock acquired hereunder are 6 registered pursuant to the Act or an exemption from registration is available, and unless the disposition of such shares is qualified under applicable state securities laws or an exemption from such qualification is available. Optionee acknowledges that the Company has no obligation or present intention of registering the shares of Common Stock to be purchased upon exercise of the Option. Optionee further understands that there is no assurance that any exemption from the Act will be available, or, if available, that such exemption will allow the Optionee to transfer any or all of such shares acquired hereunder, in the amounts or at the times the Optionee may propose. Optionee understands that an exemption from registration under Rule 144 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise under the Act may not be available for at least one (1) year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public and other terms and conditions of Rule 144 are complied with. (g) Optionee has the full power and legal right to execute and deliver this Agreement and to perform its obligations hereunder. 11. Additional Representations of the Optionee. The Optionee: ---------------------------------------------- (a) acknowledges that the Tender Offer may deplete substantially all of the Company's assets; (b) acknowledges that the shares of Common Stock it purchases upon exercise of the Option may be subject to certain antitakeover provisions under the Pennsylvania Business Corporation Law of 1988, as amended, and the Company's Articles of Incorporation and Bylaws, including, but not limited to (i) disgorgement of profits realized from the sale of the shares of Common Stock within 18 months after the purchase of the Common Stock upon exercise of the Option; (ii) loss of voting power of the shares of Common Stock purchased upon exercise of the Option until such time as the disinterested shareholders of the Company vote to restore such voting rights; (iii) required severance payments to certain employees whose employment is terminated within 90 days before or 24 months after disinterested shareholders of the Company vote to restore voting rights on the shares of Common Stock purchased upon exercise of the Option; and (iv) a prohibition against terminating or impairing a covered labor contract within five years after disinterested shareholders of the Company vote to restore voting rights on the shares of Common Stock purchased upon exercise of the Option, provided, however, that the Company has represented, in Section 8 hereof that, as of the date of the delivery of the Stock Certificate, the Company will not be bound by any such labor contracts; (c) acknowledges that the Company's sole obligation with respect to the antitakeover provisions that may be applicable to the shares of Common Stock purchased by Optionee upon exercise of the Option is to submit the matter to its shareholders to obtain the requisite approval for restoring voting rights to the shares of Common Stock purchased by Optionee upon such exercise of the Option either: (i) at the Company's own expense at the next annual or special meeting called for another purpose and for which notice has not yet been sent pursuant to 15 Pa.C.S.A Sec.2565(b); or (ii) upon the request of and at the expense of the Optionee pursuant to15 Pa.C.S.A. Sec.2565(a), at a special meeting called as soon as practical after receipt of such request. In either event, the matter shall be submitted to shareholders after the new directors are appointed to the Board of Directors and the current directors of the Company resign from the Board of Directors in accordance with Section 7 and the current 7 President and Chief Executive Officer of the Company resigns in accordance with Section 8; (d) represents that neither it nor any of its principals or affiliates has ever been the subject of a bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship or similar proceeding; (e) represents that it is duly organized, validly existing and in good standing under the laws of the State of its incorporation or organization and has the power and authority to own and operate its assets and to conduct business as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where its ownership of property or the nature of its business requires such qualification or licensing; it is authorized to execute this Agreement, all necessary action to authorize the execution and delivery of this Agreement has been properly taken, and the Optionee is and will continue to be authorized to exercise the Option; the Optionee has full power and authority to enter into the transactions provided for in this Agreement and has been duly authorized to do so by appropriate action of its Board of Directors or otherwise as may be required by law, charter, other organizational documents or agreements; and this Agreement, when executed and delivered by the Optionee, will constitute the legal, valid and binding obligation of Optionee enforceable in accordance with its terms; (f) covenants that prior to delivery of the Stock Certificate it shall not make or permit any material change in the nature of its business, in its equity ownership, on its board of directors or in its management as of the date hereof; and (g) acknowledges that the Company intends, prior to delivery of the Stock Certificate, to place into trust for the benefit of the preferred shareholders of the Company, an amount equal to the price per share offered in the Tender Offer multiplied by the number of preferred shares not tendered in the Tender Offer. This amount may only be released by the trustee for the purpose of distribution, including dividends, to the preferred shareholders. 12. Confidentiality Covenants. -------------------------- (a) Acknowledgments. Optionee acknowledges that: --------------- (i) as a result of entering into this Agreement and upon the purchase of the shares acquired pursuant to the exercise of this Option, Optionee will have access to and knowledge of confidential and proprietary information of the Company which is of vital importance to the Company (collectively, "Confidential and/or Proprietary Information"); (ii) the Optionee's compliance with the covenants in this Section 12 is necessary to protect the goodwill and other proprietary interests of the Company; (iii) the direct or indirect disclosure of any Confidential and/or Proprietary Information would place the Company at a serious competitive disadvantage and would do serious damage, financial and otherwise, to the Company's business; 8 (iv) Optionee's position with the Company as a majority shareholder and association with the directors to be appointed to the Company's Board of Directors by Optionee will be special and unique; and (v) if Optionee becomes engaged, directly or indirectly, for a competitive business, in any capacity, it would cause the Company irreparable harm. (b) Covenant Against Disclosure. Optionee, therefore, covenants ----------------------------- and agrees that all Confidential and/or Proprietary Information relating to the business of the Company, any subsidiary, affiliate or customer shall be and remain the sole property and confidential and/or proprietary business information of the Company, free of any rights of Optionee. Optionee further agrees not to make any use of the Confidential and/or Proprietary Information except in the performance of Optionee's duties hereunder and not to use or disclose the information to third parties, without the prior written consent of the Company or as otherwise required by law, whether or not such Confidential and/or Proprietary Information was discovered or developed by Optionee. The obligations of Optionee under this section, "Confidentiality Covenants," shall survive any termination of this Agreement. Optionee agrees that, upon any termination of Optionee's association with the Company as a majority shareholder, all Confidential and/or Proprietary Information in Optionee's or its representatives' possession, directly or indirectly, in any form or format whatsoever (together with all duplicates thereof), will forthwith be returned to the Company and will not be retained by Optionee or furnished to any third party, either by sample, facsimile, film, audio or video cassette, electronic data, verbal communication or any other means of communication. (c) Termination. This Section 12 shall terminate upon the ----------- delivery of the Stock Certificate to Optionee. 13. Fundamental Changes. Prior to Optionee's exercise of the Option, ------------------- the Company shall not: (i) merge or consolidate with or into any person, firm or corporation; (ii) recapitalize; (iii) incur new indebtedness in excess of the assets of the Company; (iv) distribute or declare dividends in excess of the assets in the Company; (v) make material capital expenditures; or (vi) pay or declare bonuses to employees, officers or directors. Notwithstanding the foregoing, the Optionee acknowledges that it is the intention of the Company to engage in a tender offer with preferred shareholders to allow the preferred shareholders to sell their preferred stock to the Company. 14. Reporting Obligations. The Company has filed all returns and ---------------------- reports that are required to be filed by it in connection with any federal, state or local tax, duty or charge and all of such taxes have either been paid or adequate reserve or other provision has been made therefor. The Company has filed all reports that are required to by filed by it with the U.S. Securities and Exchange Commission. 9 15. Miscellaneous. ------------- (a) No Impairment. Company shall not by any action avoid or seek -------------- to avoid the observance or performance of any of the terms of this Option, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Optionee against impairment. Without limiting the generality of the foregoing, Company will (i) take all such action as may be necessary or appropriate in order that Company may validly and legally issue fully paid and nonassessable shares of the Common Stock upon the exercise of this Option, and (ii) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable Company to perform its obligations under this Option. (b) Amendment and Waiver. Except as otherwise provided herein, no -------------------- modification, amendment or waiver of any provision of this Option shall be effective against the Company or the Optionee unless such modification, amendment or waiver is approved in writing by the Company and the Optionee. The failure of any party to enforce any of the provisions of this Option shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Option in accordance with its terms. (c) Severability. Whenever possible, each provision of this ------------ Option shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Option is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Option shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (d) Entire Agreement. Except as otherwise expressly set forth ----------------- herein, this document embodies the complete agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. (e) Successors and Assigns. Except as otherwise provided herein, ----------------------- this Option shall bind and inure to the benefit of and be enforceable by the Company and the Optionee and the respective heirs, successors and assigns of each of them. (f) Limitation of Liability. No provision hereof, in the absence ------------------------ of affirmative action by the Optionee to purchase shares of the Common Stock, and no enumeration herein of the rights or privileges of the Optionee hereof, shall give rise to any liability of the Optionee for the Purchase Price of the Common Stock or as a shareholder of Company, whether such liability is asserted by Company or by creditors of Company. Notwithstanding this limitation of Optionee's liability, Optionee shall be held liable for the $25,000 to be forfeited to the Company upon failure to exercise the Option in accordance with Section 2(e)(i) hereof, or for the $25,000 to be forfeited if this Agreement terminates in accordance with Section 2(e)(ii) hereof, but in any event the 10 maximum payment due from Optionee as a result of a forfeiture under Section 2(e) shall be limited to $25,000. (g) Notices. All notices, demands or other communications to be ------- given or delivered under or by reason of the provisions of this Option shall be in writing and shall be deemed to have been given when delivered personally to the recipient, sent to the recipient by facsimile or reputable express courier service (charges prepaid) or mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications shall be sent to the Company and the Optionee at the address indicated below: If to the Company: -------------------- Consumers Financial Corporation 1513 Cedar Cliff Drive Camp Hill, Pennsylvania 17011 Attn: R. Fredric Zullinger, Senior Vice President and Treasurer with a copy to: ------------------ Shaun R. Eisenhauer, Esq. Duane, Morris LLP 305 North Front Street, 5th Floor P.O. Box 1003 Harrisburg, PA 17108-1003 If to Optionee: ---------------- CFC Partners Ltd. 132 Spruce Street Cedarhurst, NY 11516 Attn: Jack Ehrenhaus with a copy to: ----------------- Shalom S. Maidenbaum, Esq. Rosenfeld & Maidenbaum 132 Spruce Street Cedarhurst, NY 11516 or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. (h) Governing Law. This Option is made pursuant to, and shall be -------------- construed and enforced in accordance with, the internal laws of the Commonwealth of Pennsylvania, without giving effect to applicable principles of conflicts of laws. 11 (i) Descriptive Headings. The descriptive headings of this Option -------------------- are inserted for convenience only and do not constitute a part of this Option. IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed, this Option Agreement as of the day and year first above written. CONSUMERS FINANCIAL CORPORATION By: /s/ R. Fredric Zullinger ------------------------------ Its: Senior VP & CFO ------------------------------ CFC PARTNERS LTD. By: /s/ Shalom S. Maidenbaum ------------------------------ Its: President ------------------------------ 12
