28.3
SECOND AMENDMENT TO PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO PURCHASE AGREEMENT, dated as of August ___,
2000, among XCEL Capital, L.L.C., a Georgia limited liability company ("XCEL"),
First Atlanta Financial Group LLC ("FAFG"), Institutional Equity Holdings, Inc.,
a Nevada corporation, ("Purchaser"), First Atlanta Securities, L.L.C., a Georgia
limited liability company ("FAS"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"). (XCEL, FAFG, Povolotsky, Steinkirchner, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ will
sometimes hereinafter be referred to collectively as "Sellers".)
WHEREAS, XCEL, FAFG, Purchaser, FAS, Povolotsky, Steinkirchner,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ are parties to that certain Purchase Agreement dated as of
April 20, 2000 as amended by First Amendment to Purchase Agreement dated as of
May 16, 2000, (collectively the "Purchase Agreement"or the "Agreement") pursuant
to which Purchaser is to purchase all of the issued and outstanding Interests of
FAS; and
WHEREAS, the parties to the Purchase Agreement desire to again amend
such agreement; and NOW, THEREFORE, in consideration of the mutual
agreements herein, the sufficiency of which is hereby
acknowledged, each of the parties hereto agrees to amend the Purchase Agreement
as follows:
1. Agreement Has Not Been Terminated. Paragraph 18.15 of the Agreement
is amended by deleting the first two sentences from such paragraph. The parties
agree that the Agreement has not been terminated, presently is in full force and
effect and that all schedules and Exhibits to the Agreement have been prepared,
exchanged and placed in a book and are part of the Agreement.
2. Inspection Periods. Purchaser and Sellers acknowledge that
they have had the opportunity to conduct their inspections in accordance with
Paragraph 11 and 12 of the Agreement.
3. Closing Date. Paragraph 4.01 of the Agreement is amended to provide that the
Closing Date ------------- shall be 6:00 p.m., E.D.T, August 18, 2000, or such
other date and time upon which the parties may agree in writing.
4. FAS Payables. The Parties agree that notwithstanding any other
provisions of the Agreement, including, but not limited to, Paragraph 14.01(e),
FAS may have unpaid at Closing its current payables and up to $50,000.00 of old
payables and that Sellers shall have no responsibility to pay such payables. In
addition, FAS may have unpaid at Closing all of its current commissions and the
Sellers shall have no responsibility to pay such current commissions. Schedule I
hereto is a listing of current payables which Sellers believe will be
outstanding at closing. Schedule II hereto is a listing of old payables which
Sellers believe will be outstanding at closing. For purposes of this paragraph
"current payables" shall mean account payables of FAS which are less than 30
days old, "old payables" shall mean account payables which are more than 30 days
old and "current commissions" shall mean commissions which are payable to
brokers (and others, if applicable) as a result of transactions which have
cleared on or after August 1, 2000 and for which the full commission has been or
will be paid to FAS on or after August 1, 2000. Sellers warrant and represent
that to the best of their knowledge FAS has paid to the applicable brokers all
commissions due such brokers as a result of transactions which have cleared
before August 1, 2000 and for which FAS received prior to August 1, 2000 the
full commission for such transaction. Should FAS's old payables at closing be
greater than $50,000, then Paragraph 16 of the Purchase Agreement as amended
shall apply to old payables in excess of $50,000.00.
5. Additional Disclosures By Purchaser. Schedule III hereto, with
attached Form 10Q for the quarter ending June 30, 2000, contain additional
disclosures by Purchaser to the other parties. Sellers hereby acknowledge
receipt of such disclosures and agree that the facts disclosed shall not be a
breach of the Agreement as amended. Purchaser warrants and represents that
except as disclosed in Schedule III, Purchaser has not issued any other shares
of its common stock, contracted for issuance of such shares (except for stock
options), paid or declared any stock split or stock dividend or otherwise
entered into or contracted for any transaction which would dilute or affect the
proportionate ownership on a fully diluted basis of Purchaser represented by the
common stock of Purchaser Sellers are to receive pursuant to the Agreement.
Purchaser warrants and represents that immediately prior to the closing of the
transaction contemplated by this Purchase Agreement as amended, there are on a
fully diluted basis between 6,500,000 and 6,560,000 issued and outstanding
shares of Purchaser's common stock. The parties acknowledge that Purchaser is in
the process of issuing new employee stock options to certain employees and
cancelling certain employee stock options of other employees for the purchase of
common shares of Purchaser; however, Purchaser warrants and represents to the
best of its knowledge that such actions will basically offset each other and not
affect the above range of issued and outstanding shares of Purchaser's common
stock.
6. Real Property Lease Assumption. Paragraph 14.02(d) is amended to
provide that the landlord for the business premises of FAS need not consent
prior to closing to the assumption of the lease for the premises by FAS or
Purchaser. Instead the parties after Closing shall cooperate in seeking approval
of such assumption and a release of FAFG by the landlord from further obligation
on the lease. If such approval is not obtained, then the lease shall remain in
place and Purchaser or FAS shall pay all payments due upon such lease after
Closing and Purchaser and FAS jointly and severally shall indemnify FAFG from
any loss as a result of such lease, including attorney's fees. At closing
Purchaser or FAS shall pay to FAFG a sum of money equal to all payments due
under the lease in the following month (see Schedule IV hereto) and FAFG shall
then timely forward such payment to the landlord. Thereafter on the 20th of each
month, until such lease is assumed, Purchaser or FAS shall pay to FAFG a sum of
money equal to all payments due under the lease in the following month (see
Schedule IV hereto) and FAFG shall then timely forward such payment to the
landlord.
7. Personal Property Lease Assumptions. Paragraph 14.02(e) is amended
to provide that the lessors for the certain leased furniture and the two copiers
need not consent prior to closing to the assumption of such leases. Instead the
parties after Closing shall cooperate in seeking approval of such assumptions.
If one or more of such approvals is not obtained, then the applicable lease
shall remain in place and Purchaser or FAS shall pay all payments due upon such
lease after Closing and Purchaser and FAS jointly and severally shall indemnify
FAFG from any loss as a result of such lease, including attorney's fees. At
closing Purchaser or FAS shall pay to FAFG a sum of money equal to all payments
due under the leases in the following month (see Schedule IV hereto) and FAFG
shall then timely forward such payment to the lessors. Thereafter on the 20th of
each month, until such leases are assumed, Purchaser or FAS shall pay to FAFG a
sum of money equal to all payments due under the leases in the following month
(see Schedule IV hereto) and FAFG shall then timely forward such payment to the
lessors.
8. Pre and Post Closing Bills to FAFG. Purchaser will pay or reimburse
FAFG for bills received by FAFG for FAS expenses incurred before or after
closing as listed on Schedule IV hereof. Schedule IV hereof lists such bills
which have already been incurred (and which are also included in Schedule I or
II) and also estimates on a monthly basis other such expenses for which FAFG
will be entitled to reimbursement. Upon the request of Purchaser or FAS, FAFG
will keep in place for a reasonable time after Closing certain trade accounts
used by FAS so that Purchaser or FAS can use those accounts while they are
establishing new accounts in the name of Purchaser and/or FAS. The previously
due bills and accounts (which are also listed on Schedule I and II) and
anticipated bills and accounts for which FAFG will expect reimbursement from
Purchaser are listed on Schedule IV hereof. At closing Purchaser or FAS shall
pay to FAFG a sum of money equal to all payments anticipated to be due in the
following month for such accounts in accordance with Schedule IV hereto and FAFG
shall then timely forward such amounts to the creditors. If the amount billed
for a trade account is more than the amount paid by Purchaser or FAS to FAFG,
then Purchaser or FAS shall promptly pay the difference to FAFG. If the amount
billed for a trade account is less than the amount paid by Purchaser or FAS to
FAFG, then FAFG shall promptly pay the difference to Purchaser or FAS.
Thereafter, until all such trade accounts are closed, on the 20th of each month,
Purchaser or FAS shall pay to FAFG a sum of money equal to all payments
anticipated to be due in the following month for such accounts in accordance
with Schedule IV hereto and FAFG shall then timely forward such amounts to the
creditors.. If the amount billed for a trade account is more than the amount
paid by Purchaser or FAS to FAFG, then Purchaser or FAS shall promptly pay the
difference to FAFG. If the amount billed for a trade account is less than the
amount paid by Purchaser or FAS to FAFG, then FAFG shall promptly pay the
difference to Purchaser or FAS.
9. Vesting of FAS Interests. The Sellers other than ▇▇▇▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇ and FAS acknowledge and agree that the Closing will cause the full
vesting of all of the member interests of ▇▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ in FAS.
10. Issuance of Additional Membership Units in FAS. FAS advises
Purchaser that it has issued an additional 200,000 membership units to FAFG for
a consideration of $50,000.00, an additional 15,000 membership units to ▇▇▇▇▇▇▇
for a consideration of $10.00 and other good and valuable consideration and an
additional 15,000 membership units to ▇▇▇▇▇▇▇▇ for a consideration of $10.00 and
other good and valuable consideration. Sellers hereby acknowledge receipt of
such disclosures and agree that the facts disclosed shall not be a breach of the
Agreement as amended. All parties acknowledge and agree that this sale of
additional membership units in FAS shall not change the consideration being paid
by Purchaser pursuant to this Agreement.
11. Amendment to Representations Concerning Outstanding FAS Units of
Interest. All representations and statements in the Agreement, including, but
not limited to, paragraph 5.2 concerning the number of units of interest in FAS
currently outstanding are changed to state that there are presently 2,729,000
units of interest outstanding.
12. Amendment to List of Ownership of FAS Interests. The list of ownerhsip of
interests of FAS as ------------------------------------------------ contained
opposite the signatures of the Sellers on the Purchase Agreement is hereby
amended as follows:
Seller FAS Interests Owned
------ -------------------
▇▇▇▇▇▇▇▇▇▇ 300,000
▇▇▇▇▇▇▇▇▇▇▇▇▇ 209,000
▇▇▇▇▇▇▇▇ 75,000
▇▇▇▇▇▇▇ 75,000
XCEL 400,000
FAFG 1,670,000
---------
TOTAL 2,729,000
13. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Matter Settled.. Paragraph 5.13 of the Purchase Agreement
is hereby amended --------------------------------- to provide that the ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Matter referred to in such paragraph has been settled. 14. Amendment
to Schedule I. Schedule I to the Purchase Agreement is hereby amended as
follows: ------------------------
A. The first sentence of paragraph 1 of Schedule I is amended to provide that
Purchaser shall tender to Sellers at Closing 1,300,000 unregistered shares of
common stock of Purchaser.
B. The last sentence of paragraph 1 of Schedule I is amended to provide that the
aforesaid shares received by Sellers shall be divided between the Sellers as
follows:
Seller Shares of Purchaser To Be Received
------ ----------------------------------
▇▇▇▇▇▇▇▇▇▇ 142,909
▇▇▇▇▇▇▇▇▇▇▇▇▇ 99,561
▇▇▇▇▇▇▇▇ 35,727
▇▇▇▇▇▇▇ 35,727
XCEL 190,546
FAFG 795,530
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TOTAL 1,300,000
C. Paragraph 3 of Schedule I is hereby deleted in its entirety and the following
inserted in the place of such provision:
"3. At closing, XCEL shall assign to Purchaser that
certain interest bearing subordinated
secured demand note of FAS to XCEL (the "Secured
Demand Note") in the principal amount of One Hundred
Thousand Dollars ($100,000.00) (the "Subordinated
Debt") and its security interest in all assets which
are security for such note, including the underlying
cash deposit of $100,000.00. As of August 18, 2000,
the accrued but unpaid interest for such note is
$15,081.97. In consideration for the assignment,
Purchaser at Closing shall issue and deliver to XCEL
50,000 restricted shares of its common stock free and
clear of all liens and encumbrances. Said shares
shall be a part of and subject to the Registration
Rights Agreement referred to in Schedule I of the
Purchase Agreement. In further consideration for such
assignment, Purchaser at Closing shall deliver to
XCEL Purchaser's promissory note ("Purchaser's Note")
in the amount of $115,081.97 bearing interest at the
rate of eight percent per annum with all principal
and accrued interest due sixty days from date of
Closing. Said Purchaser's Note shall be secured by
145,000 shares of Purchaser's common stock (the
"Escrowed Shares") to be held in escrow by an escrow
agent or agents mutually agreeable to the parties
upon such terms that are mutually agreeable to the
parties. Upon default by Purchaser in failing to pay
Purchaser's Note, XCEL shall be entitled to delivery
of the Escrowed Shares which shall be its sole remedy
against Purchaser for such default. XCEL warrants and
represents that it has good title to Secured Demand
Note, that it has fulfilled all of its obligations
under such note, if any, up to the date of this
assignment and that to the best of its knowledge
there are no claims against such note.
16. Consulting Agreement. At Closing, XCEL and Purchaser shall
execute a consulting agreement in
---------------------
the form of Exhibit A hereto and Purchaser shall deliver to XCEL a certificate
for the shares of its common stock
which is consideration for such agreement.
17. Additional Representations by Sellers.
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Sellers hereby make the following additional representations:
(a) The Sellers are acquiring the Purchaser's shares of Common
Stock (the "Shares") for their own accounts, for investment and not
with a view to any distribution within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").
(b) The Sellers have received all information relating to the
business and affairs of the Purchaser which they have requested. The
Sellers have had the opportunity to ask questions of and receive
answers from the Purchaser regarding its business, operations and
financial condition. In evaluating the suitability of an investment in
the Company, the Sellers have only relied upon the representations of
Purchaser and attachments to the Purchase Agreement. The Sellers are
familiar with the business, operations and financial condition of the
Purchaser.
(c) The Sellers understand that the Shares are a speculative
investment which involve a high degree of risk, and the Sellers could
lose their entire investment in the Shares. The market for the Shares
is limited, and the Sellers understand that the Shares are an illiquid
investment.
(d) The Sellers must bear the economic risk of their
investment in the Shares for an indefinite period of time, because the
Shares have not been registered under the Securities Act and may not be
resold except (i) pursuant to an effective registration statement
covering such securities pursuant to the Securities Act, (ii) in a bona
fide private placement to a purchaser who shall be subject to the same
restrictions on any resale, (iii) subject to the restrictions contained
in Rule 144 under the Securities Act, if applicable, or (iv) pursuant
to any other available exemption from registration under the Securities
Act.
18. Additional Representations by Purchaser.
Purchaser hereby makes the following additional
representations:
(a) Purchaser is acquiring the Seller's Membership Units
(the "Units") in First Atlanta Securities, L.L.C.
("FAS") for its own account, for investment and not
with a view to any distribution within the meaning of
the Securities Act of 1933, as amended (the
"Securities Act").
(b) Purchaser has received all information relating to
the business and affairs of FAS which it has
requested. Purchaser has had the opportunity to ask
questions of and receive answers from FAS and the
Sellers regarding FAS's business, operations and
financial condition. In evaluating the suitability of
an investment in FAS, Purchaser has only relied upon
the representations of Sellers and attachments to the
Purchase Agreement. Purchaser is familiar with the
business, operations and financial condition of FAS.
(c) Purchaser understands that the Units are a
speculative investment which involve a high degree of
risk, and Purchser could lose its entire investment
in the Units. The market for the Units is limited,
and Purchaser understands that the Units are an
illiquid investment.
(d) Purchaser must bear the economic risk of its investment in the Units
for an indefinite period of time, because the Units have not been registered
under the Securities Act and may not be resold except (i) pursuant to an
effective registration statement covering such securities pursuant to the
Securities Act, (ii) in a bona fide private placement to a purchaser who shall
be subject to the same restrictions on any resale, (iii) subject to the
restrictions contained in Rule 144 under the Securities Act, if applicable, or
(iv) pursuant to any other available exemption from registration under the
Securities Act.
19. Purchase Agreement Effective as Amended. As hereby amended and as
amended by the First ---------------------------------------- Amendment, the
Purchase Agreement remains in full force and effect.
[signatures continue on next page]
IN WITNESS WHEREOF, the undersigned parties have hereunder set their
hands as of the date set forth above.
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
First Atlanta Financial Group LLC
By: --------
XCEL Capital, L.L.C.
By:-------------------
FIRST ATLANTA SECURITIES, LLC
By:
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INSTITUTIONAL EQUITY HOLDINGS, INC.
By:
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