EXHIBIT 10.1
SELECT ASSET PURCHASE AGREEMENT
DATED AS OF
MAY 29, 2002
AMONG
vFINANCE INVESTMENTS, INC.,
SOMERSET FINANCIAL PARTNERS, INC.,
SOMERSET FINANCIAL GROUP, INC.,
▇▇▇▇▇▇▇ ▇▇▇▇
AND
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Table of Contents
[S/T/C]
--------------------------------------------------------------------------------
Section
--------------------------------------------------------------------------------
SELECT ASSET PURCHASE AGREEMENT
--------------------------------------------------------------------------------
Recitals
--------------------------------------------------------------------------------
Recital 1
--------------------------------------------------------------------------------
Recital 2
--------------------------------------------------------------------------------
Main Text
--------------------------------------------------------------------------------
ARTICLE 1
--------------------------------------------------------------------------------
SECTION 1.01. Definitions.
--------------------------------------------------------------------------------
ARTICLE 2
--------------------------------------------------------------------------------
Section 2.01. Purchase and Sale.
--------------------------------------------------------------------------------
Section 2.02. Excluded Assets.
--------------------------------------------------------------------------------
Section 2.03. Assumed Liabilities.
--------------------------------------------------------------------------------
Section 2.04. Excluded Liabilities.
--------------------------------------------------------------------------------
Section 2.05. Assignment of Contracts and Rights.
--------------------------------------------------------------------------------
Section 2.06. Purchase Price; Allocation of Purchase Price.
--------------------------------------------------------------------------------
Section 2.07. Payment of Purchase Price.
--------------------------------------------------------------------------------
Section 2.08. Closing.
--------------------------------------------------------------------------------
ARTICLE 3
--------------------------------------------------------------------------------
Section 3.01. Corporate Existence and Power.
--------------------------------------------------------------------------------
Section 3.02. Corporate Authorization.
--------------------------------------------------------------------------------
Section 3.03. Governmental Authorization.
--------------------------------------------------------------------------------
Section 3.04. Non-contravention.
--------------------------------------------------------------------------------
Section 3.05. Required and Other Consents.
--------------------------------------------------------------------------------
Section 3.06. Absence of Certain Changes.
--------------------------------------------------------------------------------
Section 3.07. No Undisclosed Material Liabilities.
--------------------------------------------------------------------------------
Section 3.08. Material Contracts.
--------------------------------------------------------------------------------
Section 3.9. RESERVED]
--------------------------------------------------------------------------------
Section 3.10. RESERVED]
--------------------------------------------------------------------------------
Section 3.11. Properties.
--------------------------------------------------------------------------------
Section 3.12. Sufficiency of and Title to the Purchased Assets.
--------------------------------------------------------------------------------
Section 3.13. Intellectual Property.
--------------------------------------------------------------------------------
Section 3.14. Insurance Coverage.
--------------------------------------------------------------------------------
Section 3.15 Compliance.
--------------------------------------------------------------------------------
Section 3.16. Agreements with Regulators.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Section 3.17. Absence of Certain Changes or Events.
--------------------------------------------------------------------------------
Section 3.18. Absence of Litigation.
--------------------------------------------------------------------------------
Section 3.19. Selling Documents.
--------------------------------------------------------------------------------
Section 3.20. Finders" Fees.
--------------------------------------------------------------------------------
Section 3.21. Employees.
--------------------------------------------------------------------------------
Section 3.22. Representations.
--------------------------------------------------------------------------------
ARTICLE 4
--------------------------------------------------------------------------------
Section 4.01. Corporate Existence and Power.
--------------------------------------------------------------------------------
Section 4.02. Corporate Authorization.
--------------------------------------------------------------------------------
Section 4.03. Governmental Authorization.
--------------------------------------------------------------------------------
Section 4.04. Non-contravention.
--------------------------------------------------------------------------------
Section 4.05. Absence of Certain Changes.
--------------------------------------------------------------------------------
Section 4.06. Litigation.
--------------------------------------------------------------------------------
Section 4.07 SEC Documents.
--------------------------------------------------------------------------------
Section 4.08. Agreements with Regulators.
--------------------------------------------------------------------------------
Section 4.09 . Finders" Fees.
--------------------------------------------------------------------------------
Section 4.10. Representations.
--------------------------------------------------------------------------------
ARTICLE 5
--------------------------------------------------------------------------------
Section 5.01. Conduct of the Business.
--------------------------------------------------------------------------------
Section 5.02. Access to Information; Confidentiality.
--------------------------------------------------------------------------------
Section 5.03 Notice of Certain Events.
--------------------------------------------------------------------------------
Section 5.04. Non-Competition.
--------------------------------------------------------------------------------
Section 5.05. Obtaining of Consents.
--------------------------------------------------------------------------------
Section 5.06. Clearing Agreement and Third Parties.
--------------------------------------------------------------------------------
Section 5.07. Employee Matters.
--------------------------------------------------------------------------------
Section 5.08. List of Customer Accounts.
--------------------------------------------------------------------------------
Section 5.09. No Shop.
--------------------------------------------------------------------------------
ARTICLE 6
--------------------------------------------------------------------------------
Section 6.01. Confidentiality.
--------------------------------------------------------------------------------
Section 6.02. Access.
--------------------------------------------------------------------------------
Section 6.03. Piggy-Back Registration Rights.
--------------------------------------------------------------------------------
Section 6.04. Preservation of Business.
--------------------------------------------------------------------------------
ARTICLE 7
--------------------------------------------------------------------------------
Section 7.01. Best Efforts, Further Assurances.
--------------------------------------------------------------------------------
Section 7.02. Certain Filings.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Section 7.03. Public Announcements.
--------------------------------------------------------------------------------
Section 7.04. Trademarks; Tradenames.
--------------------------------------------------------------------------------
Section 7.05. Warn Act.
--------------------------------------------------------------------------------
ARTICLE 8
--------------------------------------------------------------------------------
Section 8.01. Tax Definitions.
--------------------------------------------------------------------------------
Section 8.02. Tax Matters.
--------------------------------------------------------------------------------
Section 8.03. Tax Cooperation; Allocation of Taxes.
--------------------------------------------------------------------------------
ARTICLE 9
--------------------------------------------------------------------------------
Section 9.01. Employee Benefits Definitions.
--------------------------------------------------------------------------------
Section 9.02. ERISA Representations.
--------------------------------------------------------------------------------
Section 9.03. Seller's Employee Benefit Plans.
--------------------------------------------------------------------------------
Section 9.04. Buyer Benefit Plans.
--------------------------------------------------------------------------------
Section 9.05. Continuation of Certain Administrative Services
and Insurance Coverage.
--------------------------------------------------------------------------------
Section 9.06. No Third-Party Beneficiaries.
--------------------------------------------------------------------------------
ARTICLE 10
--------------------------------------------------------------------------------
Section 10.01. Conditions to Obligations of Buyer and Seller.
--------------------------------------------------------------------------------
Section 10.02. Conditions to Obligation of Buyer.
--------------------------------------------------------------------------------
Section 10.03. Conditions to Obligation of Seller.
--------------------------------------------------------------------------------
ARTICLE 11
--------------------------------------------------------------------------------
Section 11.01. Survival.
--------------------------------------------------------------------------------
Section 11.02. Indemnification.
--------------------------------------------------------------------------------
Section 11.03. Damages.
--------------------------------------------------------------------------------
Section 11.04. Procedures.
--------------------------------------------------------------------------------
ARTICLE 12
--------------------------------------------------------------------------------
Section 12.01. Grounds for Termination.
--------------------------------------------------------------------------------
Section 12.02. Effect of Termination.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ARTICLE 13
--------------------------------------------------------------------------------
Section 13.01. Notices.
--------------------------------------------------------------------------------
SECTION 13.02. Amendments and Waivers.
--------------------------------------------------------------------------------
SECTION 13.03. Expenses.
--------------------------------------------------------------------------------
SECTION 13.04. Successors and Assigns.
--------------------------------------------------------------------------------
SECTION 13.05. Governing Law.
--------------------------------------------------------------------------------
SECTION 13.06 Arbitration.
--------------------------------------------------------------------------------
SECTION 13.07. Prior Agreements.
--------------------------------------------------------------------------------
SECTION 13.08. Jurisdiction.
--------------------------------------------------------------------------------
SECTION 13.09. Waiver of Trial Jury.
--------------------------------------------------------------------------------
SECTION 13.10. Counterparts; Third-Party Beneficiaries.
--------------------------------------------------------------------------------
SECTION 13.11. Entire Agreement.
--------------------------------------------------------------------------------
SECTION 13.12. Captions.
--------------------------------------------------------------------------------
SELECT ASSET PURCHASE AGREEMENT
AGREEMENT dated as of May _29, 2002 among vFINANCE INVESTMENTS, INC., a
Florida corporation ("Buyer"), SOMERSET FINANCIAL PARTNERS, INC., a
Delaware corporation ("SFP"), SOMERSET FINANCIAL GROUP, INC., a
Delaware Corporation ("SFG") (SFP and SFG, jointly, the "Seller"), and
▇▇▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇") and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") (▇▇▇▇ and
▇▇▇▇▇▇▇▇, jointly, the "Stockholders").
W I T N E S S E T H :
WHEREAS, Seller conducts business as a licensed broker-dealer for
securities and insurance, and is engaged, directly and through
Affiliates, in certain ancillary businesses (collectively, the
"Business");
WHEREAS, Buyer desires to purchase certain of the assets of the
Business from Seller, and Seller desires to sell such assets of the
Business to Buyer, upon the terms and subject to the conditions
hereinafter set forth;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with such other Person.
"Cause" shall include (a) a breach of any material provision of any
Employment Agreement, (b) a willful or repeated failure to comply with
the Buyer's policies, rules and procedures as from time to time in
effect, or (c) any conduct, actual or threatened, which is likely to
bring public discredit or economic injury to the Buyer.
"Closing Date" means the date of the Closing.
"CSC" shall mean Correspondent Services Corporation, a division of UBS
PaineWebber.
"Disclosure Schedule" means the Schedule annexed hereto.
"Gross Production" means all (i) cash revenues from whatever source
actually earned by the Business from the efforts of the Transferred
Employees from their activities in connection with the Business,
commencing on the first business day after the Closing including all
revenues earned by new hirees in the Princeton, NJ office (both OSJ and
non-OSJ), (ii) future gross commission stream actually received by the
Business on outstanding insurance or other similar products, and (iii)
solely with respect to investment banking fees, earned sales credits,
finders' fees, advisory fees and commissions of the Transferred
Employees in accordance with Buyer"s usual compensation matrix for
participating in the relevant transaction; but not including
commissions earned by the Seller prior to the Closing Date and paid
thereafter or otherwise as set forth on Schedule ____ to be delivered
at Closing, or otherwise specifically identified on the Disclosure
Schedule.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Independent Contractor" means a duly licensed or registered individual
who is providing services pursuant to a valid Office of Supervisory
Jurisdiction ("OSJ") Agreement, as set forth in Schedule .
"Intellectual Property Rights" means (i) inventions, whether or not
patentable, reduced to practice or made the subject of one or more
pending patent applications, (ii) national and multinational statutory
invention registrations, patents, and patent applications (including
all reissues, divisions, continuations, continuations-in-part,
extensions, and reexaminations thereof) registered or applied for in
the United States and all other nations throughout the world, all
improvements to the inventions disclosed in each such registration,
patent or patent application, (iii) trademarks, service marks, trade
dress, logos, domain names, trade names, and corporate names (whether
or not registered) in the United States and all other nations
throughout the world, including all variations, derivations,
combinations, registrations, and applications for registration of the
foregoing and all goodwill associated therewith, (iv) copyrights
(whether or not registered) and registrations and applications for
registration thereof in the United States and all other nations
throughout the world, including all derivative works, moral rights,
renewals, extensions, reversions, or restorations associated with such
copyrights, now or hereafter provided by law, regardless of the medium
of fixation or means of expression, (v) computer software, (including
source code, object code, firmware, operating systems, and
specifications), (vi) trade secrets and, whether or not confidential,
business information (including pricing and cost information, business
and marketing plans, and customer and supplier lists) and know-how
(including manufacturing and production processes and techniques and
research and development information), (vii) industrial designs
(whether or not registered), (viii) databases and data collections,
(ix) copies and tangible embodiments of any of the foregoing, in
whatever form or medium, (x) all rights to obtain and rights to apply
for patents, and to register trademarks and copyrights, (xi) all rights
in all of the foregoing provided by treaties, conventions and common
law, and (xii) all rights to ▇▇▇ or recover and retain damages and
costs and attorneys" fees for past, present, and future infringement or
misappropriation of any of the foregoing.
"Key Transferred Employee" means the Transferred Employees listed on
Schedule 5.09(a).
"Licensed Intellectual Property Rights" means all Intellectual Property
Rights owned by a third party and licensed or sublicensed to Seller or
an Affiliate of Seller and held for use or used in the conduct of the
Business.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance, or other adverse
claim of any kind in respect of such property or asset. For the
purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any property or asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale
agreement, capital lease, or other title retention agreement relating
to such property or asset.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), prospects, business, assets,
results of operations, or prospects of the Business (other than the
Excluded Assets).
"NASD " shall mean the National Association of Securities Dealers, Inc.
"Owned Intellectual Property Rights" means all Intellectual Property
Rights owned by Seller or an Affiliate of Seller and held for use or
used in the conduct of the Business.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"SEC Documents" shall mean, as of a particular date, all reports and
other documents file by the Company pursuant to Section 13(a) or 15(d)
of the Exchange Act since the beginning of the Company's then most
recently completed fiscal year as of the time in question (provided
that if the date in question is within ninety [90] days of the
beginning of the Company's fiscal year, the term shall include all
documents filed since the beginning of the second preceding fiscal
year).
"Transferred Employee" means a duly licensed and registered employee or
Independent Contractor as listed on the Disclosure Schedule, who shall
have all necessary registrations and licenses transferred to or for the
benefit of the Buyer.
(b) Other Definitions:
Term Section
(c) Unless the context indicates otherwise, words importing the
singular number include the plural number, and vice versa. The terms
"hereof", "herein," "hereto," "hereunder," "hereinafter", and similar
terms refer to this Agreement . Words of any gender include the
correlative words of the other genders, unless the sense indicates
otherwise.
ARTICLE 2
PURCHASE AND SALE
Section 2.01. Purchase and Sale. Except as otherwise provided below,
upon the terms and subject to the conditions of this Agreement, Buyer
agrees to purchase from Seller and Seller agrees to sell, convey,
transfer, assign, and deliver, or cause to be sold, conveyed,
transferred, assigned, and delivered, to Buyer at the Closing, free and
clear of all Liens, other than Permitted Liens, all of Seller's right,
title, and interest in, to and under the assets, properties, and
business, of every kind and description, wherever located, real,
personal, or mixed, tangible or intangible, owned, held, or used in the
conduct of the Business by Seller or the subsidiaries at its Toms
River, NJ, Westport, CT, and Melville, Long Island offices (the
"Locations") as the same shall exist on the Closing Date, including all
assets and not disposed of in the ordinary course of business as
permitted by this Agreement, and all assets of the Business thereafter
acquired by Seller (the "Purchased Assets"), and including, without
limitation, all right, title, and interest of Seller in, to and under:
(a) all customer and client accounts (but only to the extent it has a
credit balance), and such other accounts as Buyer may, in its
discretion, select;
(b) advances/draws and loans to registered representatives that
transition over to Buyer, whether forgivable or non-forgivable;
(c) future gross commission stream due after closing on insurance,
mutual funds, or other similar products, unless otherwise
specifically identified on the Disclosure Schedule, but not
including commissions due for stock and bond transactions effected
prior to Closing;
(d) furniture, equipment, supplies, signs and other fixtures
identified in the Disclosure Schedule;
(e) property, rights, privileges, powers and franchises of Seller
identified in the Disclosure Schedule;
(f) all files, operating data and records relating to Seller,
including, without limitation, customer lists and customer account
information held at CSC, any other clearing firm, or any third
party non-CSC wholesalers and insurance companies;
(g) all of the capital stock (or other equity interests of Seller) of
Somerset Lending Services, Inc., a Delaware corporation, Somerset
Gold I, LLC, a Delaware corporation, America's Credit Resource
Group, LLC, a Delaware corporation, and Somerset Platinum I, LLC,
a Delaware corporation (the "Subsidiaries");
(h) all Licensed Intellectual Property Rights and Owned Intellectual
Property Rights name and any derivative thereof and including
without limitation the items listed on Schedule 3.15;
(i) all transferable licenses, permits, or other governmental
authorization affecting, or relating in anyway to, the Business,
including without limitation the items listed on Schedule 3.17;
(j) all books, records, files, and papers, whether in hard copy or
computer format, used in the Business, including, without
limitation, software, sales, and promotional literature, manuals,
and data, sales and purchase correspondence, lists of present and
former suppliers, lists of present and former customers, personnel
and employment records, and any information relating to any Tax
imposed on the Purchased Assets; and
(k) all telephone numbers, websites, URLs, and similar rights of the
Business;
(l) all goodwill associated with the Business or the Purchased Assets,
together with the right to represent to third parties that Buyer
is the successor to the Business.
Section 2.02. Excluded Assets. Buyer expressly understands and agrees
that the following assets and properties of Seller (the "Excluded
Assets") shall be excluded from the Purchased Assets:
(a) all of Seller's cash and cash equivalents on hand, in banks, and
receivables from or due from brokers excluding the forgivable and
non-forgivable loans;
(b) commissions due from stock and bond transactions earned prior to
Closing;
(c) insurance policies;
(d) all securities, including the equity interest in any Affiliates
other than the Subsidiaries;
(e) all notes receivable and accounts receivable owing to the Seller
as set forth on the Disclosure Schedule;
(f) all the rights that accrue or will accrue to Seller under this
Agreement;
(g) all the rights to any of Seller's claims for any federal, state,
local or foreign tax refunds;
(h) all customer and client accounts except as set forth in Section
2.01(a);
(i) all of Seller's right, title and interest to assets or goodwill
not related to or necessary for the Business;
(j) any Purchased Assets sold or otherwise disposed of in the ordinary
course of business and not in violation of any provisions of this
Agreement during the period from the date hereof until the Closing
Date.
Section 2.03. Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the time of
the Closing, to assume the following liabilities (the "Assumed
Liabilities"):
(a) real estate leases, equipment, furniture and fixtures and other
leases related to the Toms River, NJ, Westport, CT and the
Melville, Long Island facilities, identified in the Disclosure
Schedule, excluding lease obligations related thereto past due as
of the Closing; and
(b) benefits for select salaried personnel and Transferred Employees
who are retained as determined in the sole and absolute discretion
of Buyer, pursuant to medical and other benefits as given to other
Buyer's employees,
Section 2.04. Excluded Liabilities. Notwithstanding any provision in
this Agreement or any other writing to the contrary, Buyer is assuming
only the Assumed Liabilities and is not assuming any other liability or
obligation of Seller (or any predecessor of Seller or any prior owner
of all or part of its businesses and assets) of whatever nature,
whether presently in existence or arising hereafter. All such other
liabilities and obligations shall be retained by and remain obligations
and liabilities of Seller (all such liabilities and obligations not
being assumed being herein referred to as the "Excluded Liabilities").
Notwithstanding anything to the contrary in this Section 2.04, the
Buyer shall not assume, and shall not be liable for, any liabilities or
obligations of the Seller of any nature whatsoever, express or implied,
fixed or contingent, including, but not limited to any liability owing
to the Stockholders or any claim or causes of action , regardless of
when made or asserted, which arises out of or is based upon any express
or implied representation, warranty, agreement or guarantee made by the
Seller or the Stockholders, any employee or agent of the Seller or the
Stockholders, or alleged to have been made by the Seller or the
Stockholders or any employee or agent of the Seller or the
Stockholders, or arising out of relating to the conduct and operations
of Seller or the Business, or acts or omissions of Seller, its agents
or employees prior to the Closing, or which is imposed or asserted to
be imposed by operation of law, of or for any service or activity
performed by or on behalf of the Seller, including without limitation
any claim seeking recovery for property damage, consequential damage,
lost revenue or income or personal injury. In addition to the
foregoing, in no event shall the Buyer assume any liability or incur
any liability or obligation in respect of:
(a) any federal, state or local income or other tax liability of
Seller payable with respect to the Business, Assets, properties or
operations of the Seller for any period through the Closing Date
or incident to or arising as a consequence of the negotiation or
consummation by the Seller of this Agreement and the transactions
contemplated by this Agreement, provided that Transfer Taxes
incurred in connection with the transactions contemplated by this
Agreement and Apportioned Obligations shall be paid in the manner
set forth herein;
(b) any liability or obligation relating to employee benefits or
compensation arrangements existing on or prior to the Closing
Date, including, without limitation, any liability or obligation
under any of Seller's employee benefit agreements, plans or other
arrangements listed on the Disclosure Schedule;
(c) any liability or obligation relating to an Excluded Asset;
(d) related in any form or manner to any loan or investment by a
shareholder and/or investor in the Seller.
Section 2.05. Assignment of Contracts and Rights. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Purchased Asset or any claim or
right or any benefit arising thereunder or resulting therefrom if such
assignment, without the consent of a third party thereto, would
constitute a breach or other contravention of such Purchased Asset or
in any way adversely affect the rights of Buyer or Seller thereunder.
Seller and Buyer will use their best efforts (but without any payment
of money by Seller or Buyer) to obtain the consent of the other parties
to any such Purchased Asset or any claim or right or any benefit
arising thereunder for the assignment thereof to Buyer as Buyer may
request. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights of
Seller thereunder so that Buyer would not in fact receive all such
rights, Seller and Buyer will cooperate in a mutually agreeable
arrangement under which Buyer would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including
sub-contracting, sub-licensing, or sub-leasing to Buyer, or under which
Seller would enforce for the benefit of Buyer, with Buyer assuming
Seller's obligations, any and all rights of Seller against a third
party thereto. Seller will promptly pay to Buyer when received all
monies received by Seller under any Purchased Asset or any claim or
right or any benefit arising thereunder, except to the extent the same
represents an Excluded Asset. In such event, Seller and Buyer shall, to
the extent the benefits therefrom and obligations thereunder have not
been provided by alternate arrangements satisfactory to Buyer and
Seller, negotiate in good faith an adjustment in the consideration paid
by Buyer for the Purchased Assets.
Section 2.06. Purchase Price; Allocation of Purchase Price.
(a) The Purchase Price shall be paid as provided in Section 2.07.
(b) As soon as practicable after the Closing, the Buyer shall deliver
to the Seller a statement (the "Allocation Statement"), allocating the
Purchase Price (plus Assumed Liabilities, to the extent properly taken
into account under Section 1060 of the Code)
among the Purchased Assets in accordance with Section 1060 of the Code.
If within ten (10) days after the delivery of the Allocation Statement
the Seller notifies the Buyer in writing that the Seller objects to the
allocation set forth in the Allocation Statement, the Buyer and the
Seller shall use commercially reasonable efforts to resolve such
dispute within twenty (20) days. In the event that the Buyer and the
Seller are unable to resolve such dispute within twenty (20) days, the
Buyer and the Seller shall jointly retain a nationally recognized
accounting firm (the "Accounting Referee") to resolve the disputed
items. Upon resolution of the disputed items, the allocation reflected
on the Allocation Statement shall be adjusted to reflect such
resolution. The costs, fees and expenses of the Accounting Referee
shall be borne equally by Buyer and Seller.
(c) Seller and Buyer agree to (i) be bound by the Allocation Statement,
(ii) act in accordance with the Allocation in the preparation, filing
and audit of any Tax return (including, without limitation, filing Form
8594 with its federal income Tax return for the taxable year that
includes the date of the Closing).
(d) Not later than 30 days prior to the filing of their respective
Forms 8594 relating to this transaction, each party shall deliver to
the other party a copy of its Form 8594.
Section 2.07. Payment of Purchase Price. The Purchase Price for the
purchased assets (the "Purchase Price") shall be paid as follows:
(a) The issuance at Closing of 3,000,000 legended restricted common
shares of Buyer's parent, vFinance, Inc. ("vFinance") with (i) subject
to the other terms of this Section 2.07(a) and the terms of Section
2.07(b), 1,000,000 Shares to be delivered at Closing (or thereafter as
may be applicable) to Seller or such Affiliate of Seller (which shall
qualify as an Accredited Investor under Regulation D under the ▇▇▇▇
▇▇▇) as Seller shall designate in a schedule delivered to Buyer not
less than three days prior to closing, and (ii) 2,000,000 common shares
to be held in escrow by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, as escrow agent pursuant
to an Escrow Agreement, and to be delivered to Seller or such Affiliate
as Buyer shall designate, in not more than twelve equal installments of
125,000 Shares commencing the first monthly anniversary date subsequent
to Closing, provided that (x) 80% of the Key Transferred Employees set
forth in the Disclosure Schedule, shall have all registration and
licenses transferred to Buyer, and such registration and licenses shall
remain with Buyer for a period of not less than thirty (30) days after
Closing; and (y) the Gross Production of such Transferred Employee
received by Buyer (net of any monies held by any clearing agents with
respect to Gross Production by the Transferred Employees) on a monthly
basis during such months, equals or exceeds $350,000.
Gross Production under this Section 2.07 shall be cumulative, and
excesses or shortfalls shall be carried forward to the next month or
months, provided, however, that (i) subject to Section 2.07(b) :
(A) on such date prior to the date (the "First Anniversary Date") which
is the first anniversary of closing that the Gross Production equals or
exceeds $4,200,000, any balance up to a maximum of 1,500,000 escrowed
shares will be released,
(B) on such date prior to the First Anniversary Date that the Gross
Production equals or exceeds $6,000,000, and additional 250,00 escrowed
shares will be released, and
(C)on such date prior to the First Anniversary Date that the Gross
Production equals or exceeds $8,000,000,a final 250,000 escrowed shares
will be released :and
(ii) if on the First Anniversary Date the Gross Production shall not
equal or exceed $4,200,000, no further shares shall be released by the
Escrow Agent and all remaining escrowed shares shall be immediately
returned to the Buyer.
(b) (i) Neither the Buyer nor the Escrow Agent shall be obligated to
release any shares at Closing or thereafter, unless the Seller
shall have provided proof of payment to Buyer, with a copy to the
Escrow Agent of all Excluded Liabilities of Seller including
amounts due to investors in Seller's equity or debt, or delivered
covenants addressed to Buyer not to ▇▇▇ (in the form annexed as
Exhibit_______) from the holders of 85% in principal amount of the
Seller's liabilities and all outstanding litigation listed in
Schedule . If on or prior to the Closing Date, SFG shall be
engaged, or under applicable regulatory guidelines shall be
required to engage, in a liquidating transaction, the initial
tranche of 1,000,000 Shares to be issued at Closing shall be added
to the amounts distributable under the Escrow Agreement and the
monthly and cumulative amounts distributable under Section 2.07
(a) shall be 208,333 and 2,500,000 Shares respectively and Buyer
shall not be obligated to issue any of the warrants or options
specified in Section 2.07(c).
(ii) The Escrow Agent shall not be obligated to release any
shares unless the Seller (i) shall have paid all approved and
unpaid commissions, payroll, bonuses and other forms of
compensation to any Transferred Employee or employees of the
Seller incurred prior to the Closing Date as set forth in a
schedule to be delivered at Closing, on or prior to any escrow
release date.
(iii)The parties shall equitably adjust the number of Shares
hereunder at Closing, in respect of any unpaid or otherwise
outstanding obligations of Seller under any leases of real
property, equipment leases, and other agreements or contracts
which Buyer will be assuming, or will be required to assume at
Closing.
(c) The issuance at Closing to Seller or Affiliates of Seller (which
shall qualify as an Accredited Investor under Regulation D under the
▇▇▇▇ ▇▇▇) of (i) non-transferrable options to purchase 1,400,000 shares
of vFinance in the form annexed as Exhibit G, which option shall be
issued solely to the Key Transferred Employee listed on Schedule
2.07(c)(i) and in the amounts set forth in said Schedule (which options
are not cancelable but which will vest in four equal annual
installments commencing on the first anniversary of Closing), and (ii)
warrants to purchase 500,000 shares of vFinance in the form annexed
hereto as Exhibit G. Such warrants and options shall bear an exercise
price equal to 110% of the closing price of vFinance. Common Stock on
the day prior to closing but in no event less than $.35 per share, and
shall carry piggy-back registration rights as set forth in Section
6.03. To the extent any such options are issued to Stockholders or Key
Transferred Employees, all vested rights thereunder shall terminate 90
days after the termination of any employer-employee relationship or OSJ
relationship with Buyer unless same shall have been terminated for
Cause in which event such rights will terminate immediately, and all
non-vested rights shall expire upon such termination. Neither the
warrants nor the options shall have cashless exercise rights.
Section 2.08. Closing. The closing (the "Closing") of the purchase and
sale of the Purchased Assets and the assumption of the Assumed
Liabilities hereunder shall take place at the offices of ▇▇▇▇▇▇▇ &
Prager, LLP as soon as possible, but in no event later than 10 business
days, after satisfaction of the conditions set forth in Article 10, or
at such other time or place as Buyer and Seller may agree. At the
Closing:
(a) Buyer shall deliver to Seller, Stockholders, or their respective
designees, or Escrow Agent the Shares, Options and Warrants set forth
in Section 2.07, as may be applicable;
(b) Seller and Buyer shall enter into an Assignment and Assumption
Agreement, and Seller shall deliver to Buyer such special warranty
deeds, bills of sale, endorsements, consents, assignments, and other
good and sufficient instruments of conveyance and assignment as the
parties and their respective counsel shall deem reasonably necessary or
appropriate to vest in Buyer all right, title and interest in, to and
under the Purchased Assets; and
(c) the opinion, certificates and documents required pursuant to
Article 10.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof and as of
the Closing Date that:
Section 3.01. Corporate Existence and Power. Seller is a corporation
duly incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all corporate powers and
all material governmental licenses, authorizations, permits, consents,
and approvals required to carry on its business as now conducted.
Seller is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect. Seller has heretofore delivered to Buyer true and
complete copies of the certificate of incorporation and bylaws of
Seller as currently in effect.
Section 3.02. Corporate Authorization. The execution, delivery, and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby are within Seller's and its Affiliates
corporate powers and , except for any required approval by Seller's
stockholders, have been duly authorized by all necessary corporate
action on the part of Seller. This Agreement constitutes a valid and
binding agreement of Seller and its Affiliates., enforceable in
accordance with their terms.
Section 3.03. Governmental Authorization. Subject to NASD approval, the
execution, delivery, and performance by Seller of this Agreement and
the
consummation of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, or
official other than (i) compliance with any applicable requirements of
the HSR Act; (ii) compliance with the 1933 Act and 1934 Act ; and (iii)
compliance with the rules and regulations of the National Association
of Securities Dealers.
Section 3.04. Non-contravention. The execution, delivery, and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) violate the
certificates of incorporation or bylaws of Seller or its Affiliates,
(ii) assuming compliance with the matters referred to in Section 3.03,
violate any applicable law, rule, regulation, judgment, injunction,
order, or decree, (iii) assuming the obtaining of all Required and
Other Consents as those terms are defined below, constitute a default
under or give rise to any right of termination, cancellation, or
acceleration of any right or obligation of Buyer or to a loss of any
benefit relating to the Business to which Seller is entitled under any
provision of any agreement or other instrument binding upon Seller or
by which any of the Purchased Assets is or may be bound, or (iv) result
in the creation or imposition of any Lien on any Purchased Asset other
than Permitted Liens.
Section 3.05. Required and Other Consents.
(a) Section 3.05(a) of the Disclosure Schedule sets forth each
agreement, contract, or other instrument binding upon Seller or any
permit, license, membership right (including, without limitation, any
environmental permit or membership in a self-regulatory or quasi
governmental entity) requiring a consent or other action by any Person
as a result of the execution, delivery, and performance of this
Agreement, except such consents or actions as would not, individually
or in the aggregate, have a Material Adverse Effect if not received or
taken by the Closing Date (the "Required Consents").
(b) Schedule 3.05(b) of the Disclosure Schedule sets forth each other
consent or action by any Person (the "Other Consents") under such
agreements, contracts, or other instruments or such Permits that is
necessary with respect to the execution, delivery, and performance of
this Agreement.
Section 3.06. Absence of Certain Changes. Except as set forth in the
Disclosure Schedule, the Business has been conducted in the ordinary
course consistent with past practices and there has not been:
(a) any event, occurrence, development, or state of circumstances or
facts which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect;
(b) any incurrence, assumption, or guarantee by Seller of any
indebtedness for borrowed money with respect to the Business other than
in the ordinary course of business and in amounts and on terms
consistent with past practices, but not in any event exceeding $10,000,
except as disclosed in Schedule 3.06(b);
(c) any creation or other incurrence of any Lien on any Purchased
Asset;
(d) any damage, destruction, or other casualty loss (whether or not
covered by insurance) affecting the Business or any Purchased Asset
which, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect;
(e) any transaction or commitment made, or any contract or agreement
entered into, by Seller relating to the Business or any Purchased Asset
(including the acquisition or disposition of any assets) or any
relinquishment by Seller of any contract or other right, in either
case, material to the Business, other than transactions and commitments
in the ordinary course of business consistent with past practices and
those contemplated by this Agreement;
(f) any change in any method of accounting or accounting practice by
Seller with respect to the Business except for any such change after
the date hereof required by reason of a concurrent change in generally
accepted accounting principles;
(g) any (i) employment, deferred compensation, severance, retirement,
or other similar agreement entered into with any officer or employee of
the Business (or any amendment to any such existing agreement), (ii)
grant of any severance or termination pay to any officer or employee of
the Business, or (iii) change in compensation or other benefits payable
to any officer or employee of the Business pursuant to any severance or
retirement plans or policies thereof;
(h) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to
organize any employees of the Business, which employees were not
subject to a collective bargaining agreement at the Balance Sheet Date,
or any lockouts, strikes, slowdowns, work stoppages, or threats thereof
by or with respect to employees of the Business; or
(i) any capital expenditure, or commitment for a capital expenditure,
for additions or improvements to property, plant, and equipment.
Section 3.07. No Undisclosed Material Liabilities. There are no
liabilities of the Business of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable, or otherwise, and there
is no existing condition, situation, or set of circumstances which
could reasonably be expected to result in such a liability, other than:
(a) liabilities disclosed in Section 3.07 of the Disclosure Schedule;
(b) other undisclosed liabilities which, individually or in the
aggregate, are not material to the Business.
Section 3.08. Material Contracts.
(a) Except for the Contracts disclosed in Section 3.08 of the
Disclosure Schedule, with respect to the Business, Seller is not a
party to or bound by:
(i) any lease (whether of real or personal property) providing for
annual rentals of $2,500 or more;
(ii) any agreement for the purchase of materials, supplies, goods,
services, equipment, or other assets providing for either (A)
annual payments by Seller of $2,500 or more or (B) aggregate
payments by Seller of $2,500 or more;
(iii) any sales, distribution, or other similar agreement
providing for the sale by Seller of materials, supplies, goods,
services, equipment, or other assets that provides for either (A)
annual payments to Seller of $5,000 or more or (B) aggregate
payments to Seller of $5,000 or more;
(iv) any partnership, joint venture, or other similar agreement or
arrangement;
(v) any agreement relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets, or
otherwise);
(vi) any agreement relating to indebtedness for borrowed money or
the deferred purchase price of property (in either case, whether
incurred, assumed, guaranteed, or secured by any asset), except
any such agreement (A) with an aggregate outstanding principal
amount not exceeding $5,000 and which may be prepaid on not more
than thirty (30) days" notice without the payment of any penalty
and (B) entered into subsequent to the date of this Agreement as
permitted by Section 3.06(b);
(vii) any option, license, franchise, or similar agreement;
(viii) any agency, dealer, sales representative, marketing, or
other similar agreement;
(ix) any agreement that limits the freedom of Seller or its
Subsidiaries to compete in any line of business or with any Person
or in any area or to own, operate, sell, transfer, pledge, or
otherwise dispose of or encumber any Purchased Asset or which
would so limit the freedom of Buyer after the Closing Date;
(x) any agreement with or for the benefit of any Stockholder or
other Affiliate of Seller; or
(xi) any other agreement, commitment, arrangement, or plan not
made in the ordinary course of business that is material to the
Business.
(b) Each Contract disclosed in any Schedule to this Agreement or
required to be disclosed pursuant to this Section is a valid and
binding agreement of Seller and is in full force and effect, and none
of Seller or, to the knowledge of Seller, any other party thereto is in
default or breach in any material respect under the terms of any such
Contract, and, to the knowledge of Seller, no event or circumstance has
occurred that, with notice or lapse of time or both, would constitute
any event of default thereunder. True and complete copies of each such
Contract have been delivered to Buyer.
Section 3.9. [RESERVED]
Section 3.10. [RESERVED]
Section 3.11. Properties.
(a) Section 3.11(a) of the Disclosure Schedule correctly describes all
real property used or held for use [primarily] in the Business included
in the Purchased Assets (the "Real Property "), which Seller leases,
operates, or subleases, any title insurance policies and surveys with
respect thereto, and any Liens thereon, specifying in the case of
leases or subleases, the name of the lessor or sublessor, the lease
term, and basic annual rent.
(b) Section 3.11(b) of the Disclosure Schedule correctly describes all
personal property used or held for use [primarily] in the Business
included in the Purchased Assets, including, without limitation,
machinery, equipment, furniture, vehicles, software, terminals, and
other trade fixtures and fixed assets, which Seller owns, leases, or
subleases, and any Liens thereon, specifying in the case of leases or
subleases, the name of the lessor or sublessor, the lease term and
basic annual rent.
(c) Seller has good and marketable, indefeasible, fee simple title to,
or in the case of leased Real Property or personal property has valid
leasehold interests in, all Purchased Assets (whether real, personal,
tangible, or intangible) reflected on the Disclosure Schedule or
acquired after the Disclosure Schedule, except for properties and
assets sold since the Disclosure Schedule in the ordinary course of
business consistent with past practices. No Purchased Asset is subject
to any Lien, except:
(i) Liens disclosed on the Disclosure Schedule;
(ii) Liens for taxes not yet due or being contested in good faith
(and for which adequate accruals or reserves have been established
on the Disclosure Schedule); or
(iii) Liens which do not materially detract from the value of such
Purchased Asset, or materially interfere with any present or
intended use of such Purchased Asset (clauses (i)-(iii) of this
Section 3.11(c) are, collectively, the "Permitted Liens").
(d) There are no developments affecting any of the Purchased Assets
pending or, to the knowledge of Seller threatened, which might
materially detract from the value, materially interfere with any
present or intended use, or materially adversely affect the
marketability of such Purchased Assets.
(e) All leases of real property or personal property are in good
standing and are valid, binding, and enforceable in accordance with
their respective terms and there does not exist under any such lease
any default or any event which with notice or lapse of time or both
would constitute a default.
(f) The structures, and equipment included in the Purchased Assets have
no material defects, are in good operating condition and repair and
have been
reasonably maintained consistent with standards generally followed in
the industry (giving due account to the age and length of use of same,
ordinary wear and tear excepted), are adequate and suitable for their
present and intended uses and, in the case of plants, buildings, and
other structures (including, without limitation, the roofs thereof),
are structurally sound.
Section 3.12. Sufficiency of and Title to the Purchased Assets.
(a) The Purchased Assets constitute all of the property and assets used
or held for use primarily in the Business and are adequate to conduct
the Business as currently conducted and as planned to be conducted by
Buyer.
(b) Upon consummation of the transactions contemplated hereby, Buyer
will have acquired good and marketable title in and to, or a valid
leasehold interest in, each of the Purchased Assets, free and clear of
all Liens, except for Permitted Liens.
(c) Except as set forth in the Disclosure Schedule, there are no
options, warrants, pre-emptive rights or rights to subscribe to
securities, rights or obligations convertible into or exchangeable for
or giving any right to subscribe for any shares of capital stock or
other equity interests of the Subsidiaries.
Section 3.13. Intellectual Property.
(a) Section 3.13 of the Disclosure Schedule contains a true and
complete list of each of the registrations, applications and other
Intellectual Property Rights included in the Owned Intellectual
Property Rights and the Licensed Intellectual Property Rights
(excluding software that may be purchased over-the-counter for less
than $200), specifying as to each such Intellectual Property Right, as
applicable, (i) the nature of such Intellectual Property Right, (ii)
the owner of such Intellectual Property Right, (iii) the jurisdictions
by or in which such Intellectual Property Right (A) is recognized
(without regard to registration) or (B) has been issued or registered
or in which an application for such issuance or registration has been
filed, (iv) the registration or application numbers thereof, (v) the
termination or expiration dates thereof and, (vi) all agreements
related to such Intellectual Property Right, including (A) the date of
any license or agreement, (B) the identity of all parties thereto, (C)
a description of the nature and subject matter thereof, (D) any
applicable royalty, and (E) the term thereof.
(b) The Licensed Intellectual Property Rights and the Owned
Intellectual Property Rights together constitute all the Intellectual
Property Rights used or held for use primarily in the Business and are
adequate to conduct the Business as currently conducted and as proposed
to be conducted by Buyer. There exist no restrictions on the
disclosure, use, or transfer of the Owned Intellectual Property Rights.
The consummation of the transactions contemplated by this Agreement
will not alter, impair, or extinguish any Owned Intellectual Property
Rights or Licensed Intellectual Property Rights.
(c) None of Seller and any Affiliate of Seller has given an indemnity
in connection with any Owned Intellectual Property Right or any
Licensed Intellectual Property Right to any Person.
(d) None of Seller and any Affiliate of Seller has infringed,
misappropriated, or otherwise violated any Intellectual Property Right
of any third person. There is no claim, action, suit, investigation, or
proceeding pending against, or, to the knowledge of Seller, threatened
against or affecting, the Business or any present or former officer,
director, or employee of the Business (i) based upon, or challenging or
seeking to deny or restrict, the rights of Seller or any Affiliate of
Seller in any of the Owned Intellectual Property Rights and the
Licensed Intellectual Property Rights, (ii) alleging that the use of
the Owned Intellectual Property Rights or the Licensed Intellectual
Property Rights or any services provided, processes used, or products
manufactured, used, imported, or sold with respect to the Business do
or may conflict with, misappropriate, infringe, or otherwise violate
any Intellectual Property Right of any third party, or (iii) alleging
that Seller or any Affiliate of Seller infringed, misappropriated, or
otherwise violated any Intellectual Property Right of any third party.
(e) None of the Owned Intellectual Property Rights and Licensed
Intellectual Property Rights material to the operation of the Business
has been adjudged invalid or unenforceable in whole or part, and, to
the knowledge of Seller, all such Owned Intellectual Property Rights
and Licensed Intellectual Property Rights are valid and enforceable.
(f) Seller or an Affiliate of Seller holds all right, title and
interest in and to all Owned Intellectual Property Rights and all of
the licenses under the Licensed Intellectual Property Rights, free and
clear of any Lien. In each case where a patent or patent application,
trademark registration or trademark application, service ▇▇▇▇
registration or service ▇▇▇▇ application, or copyright registration or
copyright application included in the Owned Intellectual Property is
held by assignment, the assignment has been duly recorded with the
governmental authority from which the patent or registration issued or
before which the application or application for registration is
pending. Seller or an Affiliate of Seller has taken all actions
necessary to maintain and protect the Owned Intellectual Property
Rights and their rights in the Licensed Intellectual Property Rights,
including payment of applicable maintenance fees and filing of
applicable statements of use.
(g) To the knowledge of Seller, no Person has infringed,
misappropriated, or otherwise violated any Owned Intellectual Property
Right or Licensed Intellectual Property Right. Seller or an Affiliate
of Seller has taken reasonable steps in accordance with normal industry
practice to maintain the confidentiality of all confidential
Intellectual Property Rights. None of the Intellectual Property Rights
that are material to the Business and the value of which to the
Business is contingent upon maintaining the confidentiality thereof,
has been disclosed other than to employees, representatives, and agents
of Seller or an Affiliate of Seller all of whom are bound by written
confidentiality agreements substantially in the form previously
disclosed to Buyer.
Section 3.14. Insurance Coverage. Seller has furnished to Buyer a list
of, and true and complete copies of, all insurance policies and
fidelity bonds relating to the Purchased Assets, the business and
operations of the Business and its officers and employees. There is no
claim by Seller pending under any of such policies or bonds as to which
coverage has been questioned, denied, or disputed by the underwriters
of such policies or bonds or in respect of which such underwriters have
reserved their rights. All premiums payable under all such policies
and bonds have been timely paid and Seller has otherwise complied fully
with the terms and conditions of all such policies and bonds. Such
policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) have been in effect since
January 1, 1998, and remain in full force and effect. Such policies and
bonds are of the type and in amounts customarily carried by Persons
conducting businesses similar to the Business. Seller does not know of
any threatened termination of, premium increase with respect to, or
material alteration of coverage under, any of such policies or bonds.
Except as disclosed in Section 3.14 of the Disclosure Schedule, after
the Closing Seller shall continue to have coverage under such policies
and bonds with respect to events occurring prior to the Closing.
Section 3.15 Compliance.
(a) Seller and its Subsidiaries hold, and have been and are in
compliance with all permits, licenses, exemptions, orders and approvals
of all Governmental Entities or SROs necessary for the operation of the
businesses of Seller and each such subsidiary, except to the extent the
failure to so hold or comply would, individually or in the aggregate,
be immaterial to the consummation of the transactions contemplated by
this Agreement or the operations of the Business after the Closing, and
there are no proceedings pending, threatened or, to the best knowledge
of Seller and Stockholder, contemplated by any Governmental Entity or
SRO seeking to terminate, revoke or limit any such permit, license,
exemption, order or approval, nor, to the best knowledge of Seller and
Stockholder, do adequate grounds exist for any such action by any
Governmental Entity or SRO. Neither Seller nor any of its subsidiaries
nor the conduct of any of their businesses is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment
or decree of any Governmental Entity or SRO applicable to Seller or any
of its subsidiaries or by which its or any of their respective
properties are bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Seller or any of its
subsidiaries is a party or by which Seller or any of its subsidiaries
or any of the Assets are bound or affected, except, in the case of
clauses (i) and (ii) above, for any such conflicts, defaults or
violations which would, individual or in the aggregate, be immaterial
to the consummation of the transactions contemplated by this Agreement
or the operations of the Business after the Closing. Stockholder has
not taken any action, or failed to comply with any law, regulation,
order, judgment or decree, which has or reasonably could be expected to
result in Seller or any of its subsidiaries violating or being deemed
to have violated any law, regulation, order or decree of any
Governmental Entity or SRO applicable to Seller or any of its
subsidiaries or by which its or any of the Assets are bound or
affected, except for any such violations which would, individually or
in the aggregate, be immaterial to the consummation of the transactions
contemplated by this Agreement or the operations of the Business after
the Closing. Except as disclosed in Section 3.15 of the Disclosure
Schedule, no investigation or inquiry by any Governmental Entity with
respect to Seller or any of its subsidiaries is pending or, to the best
knowledge of Seller and the Stockholder, threatened, other than, in
each case, those the outcome of which, individually or in the
aggregate, would be immaterial to the consummation of the transactions
contemplated by this Agreement or the operations of the Business after
the Closing.
(b) Except as disclosed on those SEC Forms ADV and BD which have been
filed by the Seller or its subsidiaries with the SEC and copies of
which have been delivered to Buyer by Seller prior to the date of this
Agreement, neither Seller nor any of its
subsidiaries, nor any of their respective officers, directors,
employees or affiliates, has been the subject of any disciplinary
proceedings or orders of any Governmental Entity or SRO arising under
applicable securities laws which would be required to be disclosed on
SEC Forms ADV or BD, and no such disciplinary proceeding or order is
pending or, to the best knowledge of Seller and Stockholders,
threatened, nor, to the best knowledge of Seller and Stockholders, do
adequate grounds exist for any such action by any Governmental Entity
or SRO; and except as disclosed on such SEC Forms ADV or BD, neither
Seller nor any of its subsidiaries, nor any of the respective officers,
directors, employees or affiliates of any of the foregoing, has been
permanently enjoined by the order, judgment or decree of any court or
other Governmental Entity from engaging in or continuing any conduct or
practice in connection with any activity or in connection with the
purchase or sale of any security. Except as disclosed on such SEC Forms
ADV or BD, neither Seller nor any of its Affiliates or Subsidiaries,
nor any of their respective officers, directors or employees, is or has
been: (i) ineligible to serve as, or subject to any disqualification
which would be the basis for any denial, suspension or revocation of
the registration of or for any limitation on the activities of Seller
or any of its subsidiaries as, an investment adviser under the
provisions of the Investment Advisers Act of 1940, as amended (the
"Advisers Act") or as a broker-dealer under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); or (ii) ineligible to serve
in, or subject to any disqualification which would be the basis for any
limitation on serving in, any of the capacities specified in Section
9(a) or 9(b) of the Investment Company Act.
(c) Section 3.15(c) of the Disclosure Schedule sets forth a list of all
of the permits, licenses, consents, approvals, authorizations of, and
all registrations, qualifications, designations, declarations and
filings with and under all federal, state, local or foreign laws and
all Government Entities and SRO's necessary for Seller and its
subsidiaries to conduct their business as presently carried on
(collectively, "Permits"). All Permits are in full force and effect and
no suspension or cancellation of any of them is, to the best knowledge
of Seller or Stockholder, threatened. All officers, directors employees
and affiliates of Seller and its subsidiaries required to be registered
or licenses with a Governmental Entity or SRO are currently registered
or licensed in the appropriate capacity with such Governmental Entity
or SRO. All such registrations and licenses are in full force and
effect and no suspension or cancellation of any of them is, to the best
knowledge of Seller or Stockholder, threatened. Seller has delivered to
Buyer a true and complete copy of Seller's and each such Affiliate's or
Subsidiary's currently effective Form BD as filed with the SEC, all
state and federal securities registration forms, all prior Form BD
filings, all reports and all correspondence filed by Seller or any of
its subsidiaries with the SEC or any SRO under the Exchange Act and the
rules promulgated thereunder or otherwise and under similar state and
federal statutes within the last three years, and Seller will deliver
to Buyer such forms and reports as are filed from and after the date
hereof and prior to the Closing Date. The information contained in such
forms and reports was (or will be, as the case may be) true and
complete in all material respects as of the time of filing.
(d) Section 3.15(d) of the Disclosure Schedule sets forth a complete
and accurate list of each of Seller's and its subsidiaries memberships
in commodities exchanges, boards of trade, clearing organizations and
trade associations, and a description of the type of membership and the
type of registered holder thereof. All such
memberships and similar privileges of each of Seller and such
subsidiaries are in good standing.
(e) For purposes of this Section 3.15, and Sections 3.16, 3.17 and 3.18
below, references to Seller or to any of its Affiliates or subsidiaries
shall be deemed to include any businesses conducted by any other
persons pursuant to agreements with Seller or its Affiliates or
subsidiaries of the type specified in Section 3.15(a).
Section 3.16. Agreements with Regulators. Except as disclosed on its Forms
ADV and BD as filed with the SEC prior to the date of this Agreement, neither
Seller nor Stockholder nor any of Seller's subsidiaries nor any officer or
director thereof is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or subject to any enforcement order or directive by, or a recipient of any
supervisory letter form, or has adopted any board resolutions at the request of,
any Governmental Entity or any SRO which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its operational
practices or policies or its management, nor has Seller or any of its
subsidiaries been advised by any Governmental Entity or any SRO, or has reason
to believe that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such enforcement order, decree,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission, or any such board resolutions.
Section 3.17. Absence of Certain Changes or Events. Except as disclosed in
Section 3.17 of the Disclosure Schedule, since January 1, 2000, Seller and its
Affiliates have conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since such date, there has not been
(i) any change, event or development in or affecting Stockholder or Seller or
any of its subsidiaries that constitutes or could have either individually or in
the aggregate a Material Adverse Effect on Seller, or any material loss or
interference with the business of Seller and its Affiliates from civil
disturbance, fire, explosion, earthquake, flood or other natural disaster,
whether or not covered by insurance, (ii) any change by Seller in its accounting
methods, principles or practices, except as required by changes in U.S.
generally accepted accounting principles or as recommended by Seller's
independent accountants and consented to in writing by Buyer prior to such
change, (iii) any declaration, setting aside or payment of any dividends or
distributions in respect of any series of capital stock of Seller other than
dividends and distributions payable solely in cash, (iv) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefits plan or agreement or arrangement (including without limitation
the granting of stock options, stock appreciation rights, performance awards or
restricted stock awards under any such plan, arrangement or agreement), or any
other increase in the compensation payable or to become payable to any present
or former directors, officers or employees of Seller or any of its subsidiaries,
except for increases in base compensation and annual cash bonuses to
non-executive officers of Seller and its subsidiaries, in each case in the
ordinary course of business and consistent with past practice, or (v) any other
action which, if it had been taken after the date hereof, would have required
the consent of Buyer under Article III hereof.
When used with respect to Seller or any of its subsidiaries, the term
"Material Adverse Effect" means any material change in or effect on (i) the
business, results of operations or condition (financial or other) of Seller and
its Affiliates and subsidiaries taken as a whole, or (ii) the ability of Seller,
and the Stockholders to perform their respective obligations under, or to
consummate any of the transactions contemplated by, this Agreement on a timely
basis.
Section 3.18. Absence of Litigation. Except as disclosed in Section 3.18 of
the Disclosure Schedule, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Seller and Stockholders,
threatened against Seller or any of its Affiliates or Subsidiaries, or any
properties or rights of Seller or any of its subsidiaries, by or before any
court, arbitrator or other Governmental Entity. Except as disclosed in Section
3.18 of the Disclosure Schedule, neither Seller nor any of its Affiliates or
Subsidiaries nor any of their respective properties is or are subject to any
order, writ, judgment, injunction, decree, determination or award.
Section 3.19. Selling Documents. None of the documents or information
delivered to Buyer in connection with the transactions contemplated by this
Agreement, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading. The financial projections relating to the Business delivered or made
to Buyer are made in good faith and are based upon reasonable assumptions, and
Seller is not aware of any fact or set of circumstances that would lead it to
believe that such projections are incorrect or misleading in any material
respect.
Section 3.20. Finders' Fees. There is no investment banker, broker, finder,
or other intermediary which has been retained by or is authorized to act on
behalf of Seller who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
Section 3.21. Employees. Schedule 3.21 sets forth a true and complete list
of (a) the names, titles, annual salaries, and other compensation of all
employees (including Transferred Employees) of the Business (by classification).
None of such employees and no other key employee of the Business has indicated
to Seller that he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within one (1) year
after the Closing Date.
Section 3.22. Representations. The representations and warranties of Seller
contained in this Agreement, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, are true
and correct with only such exceptions as would not in the aggregate reasonably
be expected to have a Material Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of the
Closing Date that:
Section 4.01. Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of Florida
and has all corporate powers and all material governmental licenses,
authorizations, permits, consents, and approvals required to carry on its
business as now conducted.
Section 4.02. Corporate Authorization. The execution, delivery, and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby are within the corporate powers of Buyer have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes a valid and binding agreement of Buyer., enforceable in
accordance with their terms.
Section 4.03. Governmental Authorization. The execution, delivery, and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby require no material action by or in respect of, or material
filing with, any governmental body, agency, or official other than (in
compliance with any applicable requirements of the HSR Act; (ii) compliance with
any applicable requirements of the 1933 Act and 1934 Act, and (iii) compliance
with the requirements of the National Association of Securities Dealers.
Section 4.04. Non-contravention. The execution, delivery, and performance
by Buyer of this Agreement and the consummation of the transactions contemplated
hereby do not and will not (i) violate the certificate of incorporation or
bylaws of Buyer or (ii) assuming compliance with the matters referred to in
Section 4.03, violate any applicable material law, rule, regulation, judgment,
injunction, order, or decree, or (iii) assuming the obtaining of all Required
and Other Consents, constitute a default under or give rise to any right of
termination, cancellation, or acceleration of any right or obligation of Buyer
or to a loss of any benefit to which Buyer is entitled under any provision of
any agreement or other instrument binding upon Buyer.
Section 4.05. Absence of Certain Changes. Except as set forth in the
Disclosure Schedule, Buyer has conducted its activities in the ordinary course
consistent with past practices and there has not been:
(a) any event, occurrence, development, or state of circumstances or
facts which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect;
(b) any damage, destruction, or other casualty loss (whether or not
covered by insurance) individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect;
(c) any transaction or commitment made, or any contract or agreement
entered into, by Buyer (including the acquisition or disposition of any
assets) or any relinquishment by Buyer of any contract or other right,
in either case, other than transactions and commitments in the ordinary
course of business consistent with past practices and those
contemplated by this Agreement;
(d) any change in any method of accounting or accounting practice by
Buyer except for any such change after the date hereof required by
reason of a concurrent change in generally accepted accounting
principles.
Section 4.06. Litigation. Except as set forth in the Disclosure Schedule,
there is no action, suit, investigation, or proceeding pending against, or to
the knowledge of Buyer threatened against or affecting, Buyer before any court
or arbitrator or any governmental body, agency, or official.
Section 4.07. SEC Documents. The Buyer has delivered or made available to
Seller and Stockholders true and complete copies of the SEC Documents
(including, without limitation, proxy information and solicitation materials).
To the best of Buyer's knowledge, the Buyer has not provided to Seller any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Buyer, but which has not
been so disclosed. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be,
and other federal, state and local laws, rules and regulations applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Buyer included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (a) as may be otherwise
indicated in such financial statements or the notes thereto or (b) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Buyer as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
Section 4.08. Agreements with Regulators. Except as disclosed on its Forms
ADV and BD as filed with the SEC prior to the date of this Agreement, neither
Buyer nor any of Buyer's subsidiaries nor any officer or director thereof is a
party to any written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or subject to any
enforcement order or directive by, or a recipient of any supervisory letter
form, or has adopted any board resolutions at the request of, any Governmental
Entity or any SRO, or has reason to believe, which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy, its
operational practices or policies or its management, nor has Buyer or any of its
subsidiaries been advised by any Governmental Entity or any SRO that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such enforcement order, decree, agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter or similar
submission, or any such board resolutions.
Section 4.09. Finders' Fees. There is no investment banker, broker, finder,
or other intermediary which has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
Section 4.10. Representations. The representations and warranties of Buyer
contained in this Agreement, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, are true
and correct with only such exceptions as would not in the aggregate reasonably
be expected to have a Material Adverse Effect.
ARTICLE 5
COVENANTS OF SELLER
Seller agrees that:
Section 5.01. Conduct of the Business. From the date hereof until the
Closing Date, Seller shall conduct the Business in the ordinary course
consistent with past practice and shall use its best efforts to preserve intact
the business organizations and relationships with third parties and to keep
available the services of the present employees of the Business. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, Seller will not:
(a) with respect to the Business acquire a material amount of assets
from any other Person;
(b) sell, lease, license, or otherwise dispose of any Purchased Assets
except (i) pursuant to existing contracts or commitments and (ii) in
the ordinary course consistent with past practice;
(c) settle or compromise any litigation in which Seller or any of its
subsidiaries is a defendant (whether or not commence prior to the date
of this Agreement) which would result in the imposition of any order,
writ, judgment, decree or determination having a material adverse
effect on the Business following the Closing;
(d) enter into any new line of business or open any new offices except
in accordance with Seller's current business plan as disclosed to Buyer
in writing prior to the date of this Agreement, or change in any
material respect any of its existing policies or procedures with
respect to the marketing of its business, the servicing of customer
accounts or the supervision of its personnel;
(e) terminate, cancel or modify any insurance coverage maintained by
Seller or any of its subsidiaries with respect to any of their material
assets or their business operations which is not replaced by an
adequate amount of comparable insurance coverage;
(f) into any employment or consulting agreements other than in the
normal course of business;
(g) agree or commit to do any of the foregoing; or
(h) (i) take or agree or commit to take any action that would make any
representation or warranty of Seller hereunder inaccurate in any
respect at, or as of any time prior to, the Closing Date or (ii) omit
or agree or commit to omit to take any action necessary to prevent any
such representation or warranty from being inaccurate in any respect at
any such time.
Section 5.02. Access to Information; Confidentiality.
(a) From the date hereof until the Closing Date, Seller will (i) give
Buyer, its counsel, financial advisors, auditors, and other authorized
representatives full access to the offices, properties, books, and
records of Seller relating to the Business, (ii) furnish to Buyer, its
counsel, financial advisors, auditors, and other authorized
representatives such financial and operating data and other information
relating to the Business as such Persons may reasonably request, and
(iii) instruct the employees, counsel, and financial advisors of Seller
to cooperate with Buyer in its investigation of the Business. Any
investigation pursuant to this Section shall be conducted in such
manner as not to interfere unreasonably with the conduct of the
business of Seller. Notwithstanding the foregoing, Buyer shall not have
access to personnel records of Seller relating to individual
performance or evaluation records, medical histories, or other
information which in Seller's good faith opinion is sensitive or the
disclosure of which could subject
Seller to risk of liability. No investigation by Buyer or other
information received by Buyer shall operate as a waiver or otherwise
affect any representation, warranty, or agreement given or made by
Seller hereunder.
(b) After the Closing, Seller and its Affiliates will hold, and will
use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors, and agents to
hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Business, except
to the extent that such information can be shown to have been (i)
previously known on a non-confidential basis by Seller, (ii) in the
public domain through no fault of Seller or its Affiliates, or (iii)
later lawfully acquired by Seller from sources other than those related
to its prior ownership of the Business. The obligation of Seller and
its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such
information as they would take to preserve the confidentiality of their
own similar information.
(c) On and after the Closing Date, Seller will afford promptly to Buyer
and its agents reasonable access to its books of account, financial,
and other records (including, without limitation, accountant's work
papers), information, employees, and auditors to the extent necessary
or useful for Buyer in connection with any audit, investigation,
dispute, or litigation or any other reasonable business purpose
relating to the Business; provided that any such access by Buyer shall
not unreasonably interfere with the conduct of the business of Seller.
Buyer shall bear all of the out-of-pocket costs and expenses
(including, without limitation, attorneys" fees, but excluding
reimbursement for general overhead, salaries and employee benefits)
reasonably incurred in connection with the foregoing.
Section 5.03. Notices of Certain Events. Seller shall promptly notify
Buyer of:
Any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(a) Any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by
this Agreement;
(b) Any actions, suits, claims, investigations, or proceedings commenced
or, to its knowledge threatened against, relating to or involving or
otherwise affecting Seller or the Business that, if pending on the date
of this Agreement, would have been required to have been disclosed
pursuant to Article 3 or that relate to the consummation of the
transactions contemplated by this Agreement; and
(c) The damage or destruction by fire or other casualty of any Purchased
Asset or part thereof or in the event that any Purchased Asset or part
thereof becomes the subject of any proceeding or, to the knowledge of
Seller, threatened proceeding for the taking thereof or any part
thereof or of any right relating thereto by condemnation, eminent
domain, or other similar governmental action.
Section 5.04. Non-competition.
(a) ▇▇▇▇▇▇▇▇ agrees,
(i) unless his employment or OSJ agreement is terminated without Cause
by the Buyer, for a period of eighteen (18) months from the Closing
Date, neither he nor any of his Affiliates, shall engage, either
directly or indirectly, as a principal or for his own account or solely
or jointly with others, or as stockholders in any corporation, limited
liability company or other entity, or joint stock association, in any
business that competes with the Business or Subsidiary as it exists on
the Closing Date within the States of Connecticut, New Jersey and New
York; provided that nothing herein shall prohibit the acquisition of a
diversified company having not more than 5% of its sales (based on its
latest published annual audited financial statements) attributable to
any business that competes with the Business; or
(ii) for a period of four (4) years from the Closing Date, neither he
nor any of his Affiliates shall employ or solicit, or receive or accept
the performance of services by, any Transferred Employee; and
(iii) at any time after the Closing Date, neither he nor any of his
Affiliates shall utilize the name "Somerset" or any derivative thereof.
(b) ▇▇▇▇ agrees,
(i) except for merchant banking, investment banking and syndicate
activities, for a period of eighteen (18) months from the Closing Date,
neither he nor any of his Affiliates, shall engage, either directly or
indirectly, as a principal or solely or jointly with others, or as
stockholders in any corporation, limited liability company or other
entity, or joint stock association, in any business that competes with
the Business or Subsidiary as it exists on the Closing Date within the
States of Connecticut, New Jersey and New York; provided that nothing
herein shall prohibit the acquisition of a diversified company having
not more than 5% of its sales (based on its latest published annual
audited financial statements) attributable to any business that
competes with the Business; or
(ii) for a period of four (4) years from the Closing Date, neither he
nor any of his Affiliates shall employ or solicit, or receive or accept
the performance of services by, any Transferred Employee; and
(iii) except for merchant banking, investment banking and syndicate
activities, neither he nor any of his Affiliates shall utilize the name
"Somerset" or any derivative thereof, and to promptly after the Closing
Date amend the name of any other entity utilizing the name of Somerset.
(c) If any provision contained in this Section shall for any reason be
held invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Section, but this Section shall be construed as if
such invalid, illegal, or unenforceable provision had never been
contained herein. It is the intention of the parties that if any of the
restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too
broad or to any extent invalid, such provision shall not be construed
to be null, void, and of no effect, but to the extent such provision
would be valid or enforceable under applicable law, a court of
competent jurisdiction shall construe and interpret or reform this
Section to provide for a covenant having the maximum enforceable
geographic area, time period, and other provisions (not greater than
those contained herein) as shall be valid and enforceable under such
applicable law. Seller acknowledges that Buyer would be irreparably
harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate Buyer for any such
breach. Seller agrees that Buyer shall be entitled to injunctive relief
requiring specific performance by Seller of this Section, and Seller
consents to the entry thereof.
Section 5.05. Obtaining of Consents.
(a) Seller and Stockholder shall use all best efforts to obtain all
necessary consents and approvals from third parties necessary to
transfer, assign and convey the Assets to Buyer and to vest in Buyer
good and marketable title thereto.
(b) Without limiting the foregoing, Seller agrees as follows with
respect to all brokerage accounts that are to be transferred to Buyer
pursuant to Section 1.1:
(i) Seller shall waive all cancellation, termination, transfer and exit
fees and charges arising from the transfer of any customer account
pursuant to this Agreement, to the extent permitted by law, including
any ▇▇▇, ▇▇▇▇▇, SEP or other retirement account, and to the extent that
any such fees or charges are assessed by third parties, Buyer shall pay
such fees and charges; and
(ii) Seller shall, to the extent necessary and permitted under
applicable law and the relevant agreements, appoint Buyer (or any
entity designated by Buyer) as successor trustee or custodian with
respect to any ▇▇▇, ▇▇▇▇▇, SEP or other retirement accounts transferred
to Buyer pursuant to this Agreement.
Section 5.06. Clearing Agreement and Third Parties. Seller and Stockholder
shall cooperate with Buyer and take all actions reasonably requested by Buyer,
to (i) facilitate the transfer of all customer accounts maintained by Seller and
its Affiliates and Subsidiaries by CSC or any other third party wholesaler or
insurance company (provided that such transfer shall not occur or be effective
prior to the Closing), (ii) use all reasonable best efforts to obtain any
consents or approvals of applicable SRO's necessary for such actions, and (iii)
execute a new clearing agreement with CSC if required.
Section 5.07. Employee Matters. As of the Closing, Buyer shall offer
employment to each Transferred Employee described in Schedule 5.09 on the
Closing Date, and shall provide to such employees who accept Buyer's offer of
employment such health and welfare benefits as in the aggregate are no less
favorable than those provided by Buyers to its employees on the date of this
Agreement; provided that nothing in this Agreement shall be deemed to create any
obligation on the part of Buyer or any of its affiliates to continue the
employment of any such employee following the Closing or to refrain from
modifying, amending or terminating any such health and welfare benefits in
accordance with the terms of the applicable plans and applicable law.
As of the Closing Seller or its Affiliates shall file a Form U-5
termination for each Transferred Employee by the Closing (except with respect to
the Stockholders who will remain dual registered with Seller or its Affiliates
and with Buyer). Concurrent therewith Seller shall assist Buyer in the filing of
a Form U-4 by Buyer for all of Seller's or its Affiliates Transferred Employee.
Section 5.08. List of Customer Accounts. As soon as practicable after the
date of this Agreement, Seller shall obtain and furnish to Buyer a list of all
active customer accounts as of the most recent date such data is available, as
reported to it in writing or by data base accessibility by CSC, showing account
numbers, customer equity and margin debits (but excluding customer names and
addresses).
Section 5.09. No Shop. Neither the Stockholders, the Seller, nor any agent,
employee, officer, director, trustee or any representative of any of the
foregoing will, during the period commencing on the date of this Agreement and
ending with the earlier to occur of the Closing Date or the termination of this
Agreement in accordance with its terms, directly or indirectly, solicit or
initiate the submission of proposals or offers from any person or entity for,
participate in any discussions pertaining to, or furnish any information to any
person or entity other than the Buyer or the Buyer's authorized agent, relating
to any acquisition or purchase of all or a material amount of the assets of, or
any equity interest in, the Seller or any merger, consolidation or business
combination of or involving the Seller.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
Section 6.01. Confidentiality. Prior to the Closing Date and after any
termination of this Agreement, Buyer and its Affiliates will hold, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors, and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Business or Seller furnished to Buyer or its Affiliates in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a non-confidential
basis by Buyer, (ii) in the public domain through no fault of Buyer, or (iii)
later lawfully acquired by Buyer from sources other than Seller; provided that
Buyer may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors, and agents in connection with the
transactions contemplated by this Agreement and to its lenders or other Persons
in connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by Buyer of the confidential
nature of such information and are directed by Buyer to treat such information
confidentially. The obligation of Buyer and its Affiliates to hold any such
information in confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the confidentiality
of their own similar information. If this Agreement is terminated, Buyer and its
Affiliates will, and will use their best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors, and
agents to, destroy or deliver to Seller, upon request, all documents and other
materials, and all copies thereof, obtained by Buyer or its Affiliates or on
their behalf from Seller in connection with this Agreement that are subject to
such confidence.
Section 6.02. Access. On and after the Closing Date, Buyer will afford
promptly to Seller and its agents reasonable access to its properties, books,
records, employees, and auditors to the extent necessary to permit Seller to
determine any matter relating to its rights and obligations hereunder or to any
period ending on or before the Closing Date; provided that any such access by
Seller shall not unreasonably interfere with the conduct of the business of
Buyer. Seller will hold, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors, and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning Buyer or the Business provided to it pursuant to this
Section.
Section 6.03 Piggy-Back Registration Rights. Buyer covenants that the
Seller (or its designees) shall have piggy-back registration rights with respect
to the Shares, and the Shares underlying the Warrants and Options issued
pursuant to Section 2.07 hereof then held by the Seller subject to the
conditions set forth below. If the Company participates (whether voluntarily or
by reason of an obligation to a third party) in the registration of any shares
of the Company's stock (other than a registration on Form ▇-▇, ▇-▇ or successor
form), the Company shall give written notice thereof to the Seller and the
Seller shall have the right, exercisable within ten (10) business days after
receipt of such notice, to demand inclusion of all or a portion of the Seller's
Shares in such registration statement subject, in the event of an underwritten
offering, to customary cutbacks and lock-ups requested by the managing
underwriter of all selling stockholders thereunder, on a pro-rata basis with
such other selling stockholders. In the event of an underwritten offering, the
right of any Seller to registration pursuant to the piggyback registration
rights granted to the Seller pursuant to this Section shall be conditioned upon
such Seller's participation in such underwriting and the inclusion of such
Seller's Shares in the underwriting. All Holders proposing to distribute their
Shares through such underwriting shall (together with the Company and the other
holders of securities of the Company with registration rights to participate
therein distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company. If the Seller exercises
such election, the Shares so designated shall be included in the registration
statement at no cost or expense to the Seller (other than any standard or
contractual commissions, which would be borne by the Seller in connection with
the sale of Seller's shares). The Seller's rights under this Section shall
expire at such time as the Seller can sell all of the Shares under Rule 144 (k)
without volume or other restrictions or limit.
Section 6.04. Preservation of Business. Buyer will use its reasonable
efforts to preserve Seller's present relationships with employees, suppliers,
customers and others having business relationships with it.
ARTICLE 7
COVENANTS OF BUYER AND SELLER
Buyer and Seller agree that:
Section 7.01. Best Efforts; Further Assurances.
(a) Subject to the terms and conditions of this Agreement, Buyer and Seller
will use their best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated
by this Agreement. Seller and Buyer agree to execute and deliver such other
documents, certificates, agreements, and other writings and to take such
other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement and
to vest in Buyer good and marketable title to the Purchased Assets.
(b) Seller hereby constitutes and appoints, effective as of the Closing
Date, Buyer and its successors and assigns as the true and lawful attorney
of Seller with full power of substitution in the name of Buyer, or in the
name of Seller but for the benefit of Buyer, (i) to collect for the account
of Buyer any items of Purchased Assets and (ii) to institute and prosecute
all proceedings which Buyer may in its sole discretion deem proper in order
to assert or enforce any right, title, or interest in, to or under the
Purchased Assets, and to defend or compromise any and all actions, suits,
or proceedings in respect of the Purchased Assets. Buyer shall be entitled
to retain for its own account any amounts collected pursuant to the
foregoing powers, including any amounts payable as interest in respect
thereof.
Section 7.02. Certain Filings. Seller and Buyer shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official, or authority is required, or any
actions, consents, approvals, or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making any such filings, furnishing information required in connection
therewith, and seeking timely to obtain any such actions, consents, approvals,
or waivers.
Section 7.03. Public Announcements. The parties agree to consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except
for any press releases and public statements the making of which may be required
by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
Section 7.04. Trademarks; Tradenames. Except as set forth in the other
subsections of this Section 7.04, after the Closing, Buyer and its Affiliates
shall not use any of the marks or names, domain names, or URL's set forth on
Schedule 7.04 (collectively or individually as the context requires, the "Seller
Trademarks and Tradenames").
Section 7.05. Warn Act. The parties agree to cooperate in good faith to
determine whether any notification may be required under the Worker Adjustment
and Retraining Notification Act (the "WARN Act") as a result of the transactions
contemplated by this Agreement. Buyer will be responsible for providing any
notification that may be required under the WARN Act with respect to any
Transferred Employees. Seller will be responsible for providing any notification
that may be required under the WARN Act with respect to any employees of the
Business that are not Transferred Employees, provided that Buyer has given
sufficient notice to enable Seller to provide such timely notification. If Buyer
fails to provide sufficient notice, Buyer shall be liable for any additional
expenditure resulting from the failure to provide notification required under
the WARN Act with respect to any employees of the Business.
ARTICLE 8
TAX MATTERS
Section 8.01. Tax Definitions. The following terms, as used herein, have
the following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Preclosing Tax Period" means (i) any Tax Period ending on or before the
Closing Date and (ii) with respect to a Tax Period that commences before but
ends after the Closing Date, the portion of such period up to and including the
Closing Date.
"Tax" means (i) any tax, governmental fee, or other like assessment or
charge of any kind whatsoever (including, but not limited to, [any payment
required to be made to any state abandoned property administrator or other
public official pursuant to an abandoned property, escheat, or similar law (an
"Escheat Payment") and any withholding on amounts paid to or by any Person),
together with any interest, penalty, addition to tax, or additional amount
imposed by any governmental authority (a "Taxing Authority") responsible for the
imposition of any such tax (domestic or foreign), or (ii) liability for the
payment of any amounts of the type described in (i) as a result of being party
to any agreement or any express or implied obligation to indemnify any other
Person.
Section 8.02. Tax Matters. Seller hereby represents and warrants to Buyer
that:
(a) Seller has timely paid all Taxes which will have been required to be
paid on or prior to the date hereof, the non-payment of which would result
in a Lien on any Purchased Asset, would otherwise adversely affect the
Business or would result in Buyer becoming liable or responsible therefor.
(b) Seller has established, in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
periods, adequate reserves for the payment of, and will timely pay, all
Taxes which arise from or with respect to the Purchased Assets or the
operation of the Business and are incurred in or attributable to the
Preclosing Tax Period, the non-payment of which would result in a Lien on
any Purchased Asset, would otherwise adversely affect the Business or would
result in Buyer becoming liable therefor.
Section 8.03. Tax Cooperation; Allocation of Taxes.
(a) Buyer and Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Business and the Purchased Assets (including,
without limitation, access to books and records) as is reasonably necessary
for the filing of all Tax returns, the making of any election relating to
Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any
Tax. Buyer and Seller shall retain all books and records with respect to
Taxes pertaining to the Assets for a period of at least six years following
the Closing Date. At the end of such period, each party shall provide the
other with at least ten days prior written notice before destroying any
such books and records, during which period the party receiving such notice
can elect to take possession, at its own expense, of such books and
records. Seller and Buyer shall cooperate with each other in the conduct of
any audit or other proceeding relating to Taxes involving the Assets or the
Business.
(b) All real property taxes, personal property taxes, and similar ad
valorem obligations levied with respect to the Purchased Assets for a
taxable period which includes (but does not end on) the Closing Date
(collectively, the "Apportioned Obligations") shall be apportioned between
Seller and Buyer based on the number of days of such taxable period
included in the Preclosing Tax Period and the number of days of such
taxable period after the Closing Date (with respect to any such taxable
period, the "Postclosing Tax Period"). Seller shall be liable for the
proportionate amount of such taxes that is attributable to the Preclosing
Tax Period, and Buyer shall be liable for the proportionate amount of such
taxes that is attributable to the Postclosing Tax Period.
(c) All excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, franchise, property, transfer, gains, and
similar Taxes, levies, charges, and fees (collectively, "Transfer Taxes")
incurred in connection with the transactions contemplated by this Agreement
shall be borne by Seller. Seller represents and warrants to Buyer that,
with respect to the transactions contemplated by this Agreement, Seller is
entitled to an exemption from Transfer Taxes for isolated, casual or
occasional sales in each jurisdiction that would otherwise impose a
Transfer Tax on the transactions. Buyer and Seller shall cooperate in
providing each other with any appropriate resale exemption certifications
and other similar documentation.
(d) Apportioned Obligations and Taxes described in Section 8.03(c) shall be
timely paid, and all applicable filings, reports, and returns shall be
filed, as provided by applicable law. The paying party shall be entitled to
reimbursement from the non-paying party in accordance with Section 8.03(b)
or (c), as the case may be. Upon payment of any such Apportioned Obligation
or Tax, the paying party shall present a statement to the non-paying party
setting forth the amount of reimbursement to which the paying party is
entitled under Section 8.03(b) or (c), as the case may be together with
such supporting evidence as is reasonably necessary to calculate the amount
to be reimbursed. The non-paying party shall make such reimbursement
promptly but in no event later than ten (10) days after the presentation of
such statement. Any payment not made within such time shall bear interest
at a rate equal to eighteen (18%) per annum for each day until paid.
ARTICLE 9
EMPLOYEE BENEFITS
Section 9.01. Employee Benefits Definitions. The following terms, as used
herein, having the following meanings:
"Employee Plans" means the plans referred to in the first sentence of
Section 9.02.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"International Plan" means an employment, severance, or similar contract,
arrangement, or policy (exclusive of any such contract which is terminable
within 30 days without liability of Seller or any of its ERISA Affiliates), or a
plan or arrangement providing for severance, insurance coverage (including any
self-insured arrangements), workers" compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, pension or retirement
benefits, or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, or other forms of incentive compensation or
postretirement insurance, compensation, or benefits that (a) is not an Employee
Plan or a Benefit Arrangement, (b) is maintained or contributed to by Seller or
any ERISA Affiliate, and (c) covers any employee or former employee of the
Company or any of its subsidiaries.
"Multiemployer Plan" means each Employee Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.
Section 9.02. ERISA Representations. Seller hereby represents and warrants
to Buyer that:
(a) Schedule 9.02(a) lists each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is maintained, administered, or contributed to by Seller or any
of its Affiliates (as defined below), and (iii) covers any employee of the
Business (hereinafter referred to collectively as the "Employee Plans").
With respect to each Employee Plan, Seller has provided a true and complete
copy of such plan document, the most recently filed Form 5500 and an
accurate summary description of such plan. Seller has provided Buyer with,
or has caused to be provided to Buyer, complete actuarial data (including
age, salary, service, and related data) as of the most recent practicable
date for employees of the Business.
(b) No Employee Plan is a Multiemployer Plan and no Employee Plan is
subject to Title IV of ERISA. Neither Seller nor any of Seller's Affiliates
has incurred any liability under Title IV of ERISA arising in connection
with the termination of any plan covered or previously covered by Title IV
of ERISA that could become, after the Closing Date, an obligation of Buyer
or any of its Affiliates.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Seller has
furnished to Buyer copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. Each Employee Plan
has been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules, and regulations,
including but not limited to ERISA and the Code, which are applicable to
such Plan.
(d) Schedule 9.02(d) includes a list of each employment, severance, or
other similar contract, arrangement, or policy (written or oral) and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers" compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, or for deferred compensation, profit-sharing, bonuses,
stock options, stock appreciation, or other forms of incentive compensation
or postretirement insurance, compensation, or benefits which (i) is not an
Employee Plan, (ii) is entered into, maintained or contributed to, as the
case may be, by Seller or any of its Affiliates, and (iii) covers any
U.S. employee of the Business. Such contracts, plans, and arrangements as
are described above, copies or descriptions of all of which have been made
available or furnished previously to Buyer are hereinafter referred to
collectively as the "Benefit Arrangements." Each Benefit Arrangement has
been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules, and
regulations which are applicable to such Benefit Arrangement.
(e) With respect to the employees of the Business, there are no employee
postretirement medical or health plans in effect, except as required by
Section 601 of ERISA.
(f) Except as disclosed in writing to Buyer prior to the date hereof, there
has been no amendment to, written interpretation of, or announcement
(whether written or not written) by Seller or any of its Affiliates
relating to, or change in employee participation or coverage under, any
Employee Plan or Benefit Arrangement which would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement above the
level of the expense incurred in respect thereof for the most recent fiscal
year.
(g) The Purchased Assets are not now nor will they after the passage of
time be subject to any Lien imposed under Code Section 412(n) by reason of
the failure of Seller or its Affiliates to make timely installments or
other payments required by Code Section 412.
(h) No Transferred Employee will become entitled to any retirement,
severance, or similar benefit or enhanced benefit solely as a result of the
transactions contemplated hereby.
Section 9.03. Seller's Employee Benefit Plans.
(a) Seller shall retain all obligations and liabilities under the Employee
Plans and Benefit Arrangements in respect of each employee or former
employee (including any beneficiary thereof) who is not a Transferred
Employee. Except as expressly set forth herein, Seller or its designated
Affiliate shall retain all liabilities and obligations in respect of
benefits accrued as of the Closing Date by Transferred Employees under the
Employee Plans and Benefit Arrangements, and neither Buyer nor any of its
Affiliates shall have any liability with respect thereto. Except as
expressly set forth herein, no assets of any Employee Plan or Benefit
Arrangement shall be transferred to Buyer or any of its Affiliates or to
any plan of Buyer or any of its Affiliates. With respect to Seller's 401(k)
Plan, Seller shall amend the 401(k) Plan to provide that Transferred
Employees shall be entitled to a pro rata portion, based on the number of
days of the current Plan year that occur before and including the Closing
Date, of any contribution to the 401(k) Plan by Seller in respect of the
current Plan year of the 401(k) Plan. Accrued benefits or account balances
of Transferred Employees under the Employee Plans and Benefit Arrangements
shall be fully vested as of the Closing Date.
(b) With respect to the Transferred Employees (including any beneficiary or
dependent thereof), Seller shall retain (i) all liabilities and obligations
arising under any group life, accident, medical, dental, or disability plan
or similar arrangement (whether or not insured) to the extent that such
liability or obligation relates to contributions or premiums accrued
(whether or not payable), or to claims incurred (whether or not reported),
on or prior to the Closing Date, (ii) all liabilities and obligations
arising under any worker's compensation arrangement to the extent such
liability or obligation relates to the period prior to the Closing Date,
including liability for any retroactive worker's compensation premiums
attributable to such period, and (iii) all other liabilities and
obligations arising under the Employee Plans and the Benefit Arrangements
to the extent any such liability or obligation relates to the period prior
to the Closing Date, including proportional accruals from January 1, 2002
through the Closing Date and including, without limitation, liabilities and
obligations in respect of accruals through the Closing Date under any bonus
plan or arrangement, any vacation plans, arrangements, and policies.
(c) With respect to any Transferred Employee (including any beneficiary or
dependent thereof) who enters a hospital or is on short-term disability
under any Benefit Arrangement on or prior to the Closing Date and continues
in a hospital or on short-term disability after the Closing Date, Seller
shall be responsible for claims and expenses incurred both before and after
the Closing Date in connection with such Person, to the extent that such
claims and expenses are covered by a Benefit Arrangement, until such time,
(if any) that, in the case of a Transferred Employee, such Person resumes
full-time employment with Buyer or one of its Affiliates and, in the case
of any beneficiary or dependent of a Transferred Employee, such Person's
hospitalization has terminated. With respect to any Benefit Arrangements
covering medical expenses and other costs relating to pregnancies and
maternity leave, Seller shall be responsible for all claims (whether or not
reported) and expenses incurred during the period prior to and ending on
the Closing Date, and Buyer or one of its Affiliates shall be responsible
for such benefit arrangements covering such pregnancies and maternity leave
for the period subsequent to the Closing Date.
Section 9.04. Buyer Benefit Plans.
(a) Buyer or one of its Affiliates will recognize all service of the
Transferred Employees with Seller or any of its Affiliates, only for
purposes of eligibility to participate in those employee benefit plans,
within the meaning of Section 3(3) of ERISA, in which the Transferred
Employees are enrolled by Buyer or one of its Affiliates immediately after
the Closing Date.
(b) As soon as practicable after the close of the current plan year of the
401(k) Plan, account balances as of the Closing Date of the Transferred
Employees, including earnings thereon through the date of transfer, shall
be transferred to a defined contribution plan of Buyer or one of its
Affiliates. Such transfer shall be effected in accordance with applicable
law and regulations and Buyer shall make or cause to be made, and Seller
should shall make or cause to be made, any required filings in connection
therewith. Buyer or one of its Affiliates may require, as a condition to
the acceptance of any such transfer, evidence satisfactory to Buyer of the
qualified status of the 401(k) Plan, including without limitation, a copy
of a favorable determination letter from the Internal Revenue Service and
an opinion of
counsel that the 401(k) Plan has in operation remained qualified at all
relevant times. In consideration of such transfer, Buyer or one of its
Affiliates shall assume all liabilities to Transferred Employees under the
401(k) Plan. Each of the parties hereto shall pay its own expenses in
connection with such transfer. Neither Buyer nor any of its Affiliates
shall assume any other obligations or liabilities arising under or
attributable to the 401(k) Plan, the same to be retained or assumed by
Seller.
Section 9.05. Continuation of Certain Administrative Services and Insurance
Coverage. To the extent requested by Buyer in writing prior to the Closing Date,
Seller agrees to continue (i) to provide certain administrative services in
respect of the Transferred Employees as reasonably necessary for Buyer to
conduct the Business, including but not limited to payroll services, record
keeping services, and claims processing services and (ii) to cover Transferred
Employees under the Employee Plans and Benefit Arrangements which provide for
insurance coverage and to provide claims processing services in respect of the
Transferred Employees in both cases for the period ending six months after the
Closing Date or, in either case, until such earlier time as Buyer or its
designated Affiliate can assume responsibility for such insurance and
administrative services in an orderly manner. Buyer agrees to reimburse Seller
for Seller's costs reasonably incurred in continuing to provide such insurance
and administrative services. Such continuation of insurance and administrative
services shall not affect the allocation of liabilities and obligations as set
forth in this Article 9. Buyer shall use all reasonable efforts to arrange for
such administrative services and insurance coverage as promptly as possible in
order to avoid using Seller's services under this Section.
Section 9.06. No Third-Party Beneficiaries. No provision of this Article
shall create any third-party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of Seller or of
any of its subsidiaries in respect of continued employment (or resumed
employment) with either Buyer or the Businesses or any of their Affiliates and
no provision of this Article 9 shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Employee Plan or Benefit Arrangement or any plan or arrangement which may be
established by Buyer or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify, or terminate after the
Closing Date any such plans or arrangements of Buyer or any of its Affiliates.
ARTICLE 10
CONDITIONS TO CLOSING
Section 10.01. Conditions to Obligations of Buyer and Seller. The
obligations of Buyer and Seller to consummate the Closing are subject to the
satisfaction of the following conditions:
(a) No provision of any applicable law or regulation and no judgment,
injunction, order, or decree shall prohibit the consummation of the
Closing.
(b) All actions and consents by or in respect of or filings with any
governmental body, agency, official, or authority required to permit the
consummation of the Closing shall have been taken, made, or obtained,
including the requirements of the Securities and Exchange Commission, the
National Association of Securities Dealers and CSC.
(c) Buyer and Stockholders shall have entered into Independent Contractor
Agreements with respect to the Princeton, New Jersey office at a 85% payout
to the Independent Contractor.
(d) Buyer shall have entered into Independent Contractor Agreements with
the Independent Contractors in its existing Minnesota and Connecticut
offices acceptable to Buyer.
(e) Buyer and each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Xirnax and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall have entered into Employment Agreements acceptable to Buyer.
Section 10.02. Conditions to Obligation of Buyer. The obligation of Buyer
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Seller shall have performed in all material respects all of its
obligations and covenants hereunder required to be performed by it on or
prior to the Closing Date, (ii) the representations and warranties of
Seller contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto (A) that are qualified by materiality
or Material Adverse Effect shall be true at and as of the Closing Date as
if made at and as of such date, and (B) that are not qualified by
materiality or Material Adverse Effect shall be true in all material
respects at and as of the Closing Date as if made at and as of such time,
and (iii) Buyer shall have received a certificate signed by the Chief
Executive Officer of Seller to the foregoing effect.
(b) There shall not be threatened, instituted, or pending any action or
proceeding by any Person before any court or governmental authority or
agency, domestic or foreign, (i) seeking to restrain, prohibit, or
otherwise interfere with the ownership or operation by Buyer or any of its
Affiliates of all or any material portion of the Purchased Assets or the
business or assets of Buyer or any of its Affiliates or to compel Buyer or
any of its Affiliates to dispose of all or any material portion of the
Purchased Assets or of Buyer or any of its Affiliates or (ii) seeking to
require divestiture by Buyer or any of its Affiliates of any Purchased
Assets.
(c) There shall not be any action taken, or any statute, rule, regulation,
injunction, order, or decree proposed, enacted, enforced, promulgated,
issued, or deemed applicable to the purchase of the Purchased Assets, by
any court, government, or governmental authority or agency, domestic or
foreign, that, in the reasonable judgment of Buyer could, directly or
indirectly, result in any of the consequences referred to in clauses
10.02(b)(i) and 10.02(b)(ii) above.
(d) Buyer shall have received an opinion of __Kaplan, Gotbetter &
Levinson___, counsel to Seller, dated the Closing Date in the form annexed
hereto. In rendering such opinion, such counsel may rely upon certificates
of public officers, as to matters governed by the laws of jurisdictions
other than [specify] or the federal laws of the United States of America,
upon opinions of counsel reasonably satisfactory to Buyer, and, as to
matters of fact, upon certificates of officers of Seller, copies of which
opinions and certificates shall be contemporaneously delivered to Buyer.
(e) Execution and delivery of other relevant agreements, including
non-compete, employment agreements, trademark or software licenses, leases,
clearing, service or administrative agreements, or other transition
agreements.
(f) Seller shall have received all Required Consents, Other Consents,
Permits, and all consents, authorizations or approvals from the
governmental agencies referred to in Section 3.05, in each case in form and
substance reasonably satisfactory to Buyer, and no such consent,
authorization, or approval shall have been revoked.
(g) Seller shall have delivered duly executed covenants not to ▇▇▇ from the
holders of not less than 85% in principal amount of the Seller's
liabilities in respect of all outstanding litigation.
(g) Buyer shall have received, in respect Required Approvals for each
facility or real property leased, or operated by Seller with respect to the
Purchased Assets and any required state or municipal transfer form from the
Seller. Such forms shall be satisfactory to Buyer in its sole discretion
and shall not impose upon Buyer any obligations or liabilities to which
Buyer shall not have consented in writing prior to the Closing.
(h) Buyer shall have received all documents it may reasonably request
relating to the existence of Seller and the authority of Seller for this
Agreement, all in form and substance reasonably satisfactory to Buyer.
Section 10.03. Conditions to Obligation of Seller. The obligation of Seller
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations and covenants hereunder required to be performed by it on or
prior to the Closing Date, (ii) the representations and warranties of Buyer
contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto (A) that are qualified by materiality or
Material Adverse Effect shall be true at and as of the Closing Date as if
made at and as of such date, and (B) that are not qualified by materiality
or Material Adverse Effect shall be true in all material respects at and as
of the Closing Date as if made at and as of such time, and (iii) Seller
shall have received a certificate signed by the Chief Executive Officer of
Buyer to the foregoing effect.
(b) There shall not be any action taken, or any statute, rule, regulation,
injunction, order, or decree proposed, enacted, enforced, promulgated,
issued, or deemed applicable to the purchase of the Purchased Assets, by
any court, government, or governmental authority or agency, domestic or
foreign, that, in the reasonable judgment of Buyer could, directly or
indirectly, result in any of the consequences referred to in clauses
10.03(a)(i) and 10.03(a)(ii) above.
(c) Seller shall have received an opinion of ▇▇▇▇▇▇▇ & Prager, LLP, counsel
to Buyer, dated the Closing Date in the form set forth in Section _______.
In rendering such opinion, such counsel may rely upon certificates of
public officers, as to matters governed by the laws of jurisdictions other
than New York or the federal laws of the United States of America, upon
opinions of counsel reasonably satisfactory to Seller, and, as to matters
of fact, upon certificates of officers of Buyer, copies of which opinions
and certificates shall be contemporaneously delivered to Seller.
(d) Execution and delivery of other relevant agreements, including
non-compete, employment agreements, trademark or software licenses, leases,
supply, service or administrative agreements, or other transition
agreements.
(e) Buyer shall have received all consents, authorizations or approvals
from governmental agencies referred to in Section 4.03, in each case in
form and substance reasonably satisfactory to Seller, and no such consent,
authorization, or approval shall have been revoked.
(f) Seller shall have received all documents it may reasonably request
relating to the existence of Buyer and the authority of Buyer for this
Agreement, all in form and substance reasonably satisfactory to Seller.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
Section 11.01. Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
until the third anniversary of the Closing Date; provided that the
representations and warranties contained in Articles 8 or 9 shall survive until
expiration of the statute of limitations applicable to the matters covered
thereby (giving effect to any waiver, mitigation, or extension thereof), if
later. Notwithstanding the preceding sentence, any representation or warranty in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence,
if notice of the inaccuracy thereof giving rise to such right of indemnity shall
have been given to the party against whom such indemnity may be sought prior to
such time.
Section 11.02. Indemnification.
(a) Seller and Stockholders hereby indemnifies Buyer and its Affiliates
against and agree, jointly and severally, to hold each of them harmless
from any and all damage, loss, liability, and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys"
fees and expenses in connection with any action, suit, or proceeding)
("Damages") incurred or suffered by Buyer or any of its Affiliates arising
out of:
(i) any misrepresentation or breach of warranty (each such
misrepresentation and breach of warranty a "Warranty Breach") or
breach of covenant or agreement made or to be performed by Seller
pursuant to this Agreement;
(ii) the Excluded Liabilities;
(iii) any litigation or other proceedings pending on the Closing Date;
or
(iv) any other action, activities or undertaking of the Seller prior
to the Closing Date (whether of misfeasance or nonfeaseance),
regardless of whether such Damages arise as a result of the negligence, strict
liability, or any other liability under any theory of law or equity of, or
violation of any law by, Buyer or any of its Affiliates; provided that with
respect to indemnification by Seller for any Warranty Breach pursuant to Section
11.02(a)[(i), (i) Seller or Stockholder shall not be liable unless the aggregate
amount of Damages with respect to any Warranty Breach (determined without regard
to any materiality qualification contained in any representation, warranty or
covenant giving rise to the claim for indemnity hereunder) exceeds $10,000 and
then only to the extent of such excess and (ii) Seller's maximum liability shall
not exceed the market value of the Purchase Price on the Closing based upon the
average of the last bid and ask price on the day first preceding the Closing.
(b) Buyer hereby indemnifies Seller and the Stockholders against and agrees
to hold each of them harmless from any and all Damages incurred or suffered
by Seller or any of its Affiliates arising out of any Warranty Breach or
breach of covenant or agreement made or to be performed by Buyer pursuant
to this Agreement; provided that with respect to indemnification by Buyer
for any Warranty Breach pursuant to this Section, (i) Buyer shall not be
liable unless the aggregate amount of Damages with respect to such Warranty
Breaches (determined without regard to any materiality qualification
contained in any representation, warranty, or covenant giving rise to the
claim for indemnity hereunder) exceeds $10,000, and then only to the extent
of such excess and (ii) Buyer's maximum liability shall not exceed market
value of the Purchase Price on the Closing based upon the average of the
last bid and ask price on the day first preceding the Closing, less the
fair value of the total benefits received by Seller and Stockholders,
whether in the form of waiver
of liabilities, proceeds from the sale of Shares or the value of Shares,
options or warrants still held and not exercised.
Section 11.03. Damages. The term "Damages" as used in this Article 11is not
limited to matters asserted by third parties against any person entitled to be
indemnified under this Article 11, but includes Damages incurred or sustained by
any such person in the absence of third party claims, includes amounts paid as
indemnity or otherwise by Buyer to their affiliates and each of their respective
officers, directors, employees, agents and other representatives, and includes
amounts paid as indemnity or otherwise by Seller or Stockholders to their
affiliates and each of their respective officers, directors, employees, agents
and other representatives.
Section 11.04. Procedures. Promptly after receipt by an Indemnified Person
under this Article 11 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Article 11
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person, as
the case may be; provided, however, that an Indemnified Person shall have the
right to retain its own counsel with the reasonable fees and expenses to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by such counsel in such proceeding. In such event, the Company
shall pay for only one separate legal counsel for the Seller selected by the
Seller. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person under this Article
11, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
ARTICLE 12
TERMINATION
Section 12.01. Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not have been
consummated on or before July 15, 2002;
(c) by either Seller or Buyer if there shall be any law or regulation that
makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the transactions contemplated
hereby would violate any non-appealable final order, decree, or judgment of
any court or governmental body having competent jurisdiction; or
(d) the occurrence of any event giving rise to or resulting in a Material
Adverse Effect.
The party desiring to terminate this Agreement pursuant to clauses 12.01(b),
12.01(c) or 12.01(d) shall give ten (10) days written notice of such termination
to the other party.
Section 12.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 12.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent,
consultant, or representative of such party) to the other party to this
Agreement; provided that if such termination shall result from the (i) willful
failure of either party to fulfill a condition to the performance of the
obligations of the other party, (ii) failure to perform a covenant of this
Agreement, or (iii) breach by either party hereto of any representation or
warranty or agreement contained herein, such party shall be fully liable for any
and all Damages incurred or suffered by the other party as a result of such
failure or breach. The provisions of Sections 5.02, 6.01, 13.03, 13.05, 13.06
,13.07, 13.08 and 13.09 shall survive any termination hereof pursuant to Section
12.01.
ARTICLE 13
MISCELLANEOUS
Section 13.01. Notices. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon personal delivery or seven business days after deposit in
the United States Postal Service, by (a) advance copy by fax, and (b) mailing by
express courier or registered or certified mail with postage and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto. Notice solely by
e-mail shall not be deemed sufficent notice hereunder.
if to Buyer, to:
vFinance Investments, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
eMail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
with a copy to: (which shall not constitute notice)
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
eMail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
if to Seller, to:
Somerset Financial Partners, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
eMail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to: (which shall not constitute notice)
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ESQ
.. Gusrae, ▇▇▇▇▇▇ & Bruno, PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
If to the Stockholders:
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇- ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇- ▇▇▇-▇▇▇▇
with a copy to: (which shall not constitute notice)
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ESQ
Gusrae, ▇▇▇▇▇▇ & Bruno, PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
SECTION 13.02. Amendments and Waivers.
(a) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 13.03. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
SECTION 13.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate,
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto.
SECTION 13.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
SECTION 13.06 Arbitration.
(a) Subject to the provisions of paragraph (d) below, any controversy or
claim arising out of or relating to this Agreement, or the breach, termination
or validity thereof, shall be determined by arbitration in New York, New York in
accordance with the provisions of this Section and the Rules of the National
Association of Securities Dealers, Inc.) in effect on the date of this
Agreement. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
(b) Each party will, upon the written request of the other party, provide
the other with copies of documents relevant to the issues raised by any claim or
counterclaim. Other discovery may be ordered by the arbitrator to the extent the
arbitrator deems additional discovery appropriate, and any dispute regarding
discovery, including disputes as to the need therefor or the relevance or scope
thereof, shall be determined by the arbitrator, which determination shall be
conclusive.
(c) All expenses and fees of the arbitrator and expenses of the arbitration
shall be borne equally by both parties unless they agree otherwise or unless the
arbitrator in the award assesses such expenses against one of the parties or
allocates such expenses other than equally between the parties. Each party shall
bear its own counsel fees and the expenses of its witnesses except to the extent
otherwise provided in the contract or under applicable law.
(d) Notwithstanding the foregoing paragraphs of this Section, the parties
agree that the parties may have recourse to the federal or state courts, to seek
equitable relief with respect to this Agreement (including, without limitation,
injunctive relief) or otherwise in aid of the jurisdiction of the arbitrator
hereunder, without waiving or otherwise prejudicing the parties' right to
arbitration of the dispute
SECTION 13.07. Prior Agreements. The parties hereto acknowledge that prior
public announcements and other discussions may lead to certain Somerset related
employee departures, whether to vFinance or other brokerage operations. In light
of such, at no time may Somerset, or any Somerset related party, hold vFinance
liable for or responsible for such departure, including, but not limited to, any
raiding or other related claims and issues. It is understood that this provision
shall survive the termination of this Agreement, provided, however, that any
employee who transfers to vFinance prior to Closing shall be deemed a
Transferred Employee for purposes of this Agreement.
SECTION 13.08. Jurisdiction. Except as otherwise expressly provided in this
Agreement, including without limitation Section 13.06, the parties hereto agree
that any suit, action, or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in the United States District
Court for the Southern District of New York or any New York State court sitting
in New York County, so long as one of such courts shall have subject matter
jurisdiction over such suit, action, or proceeding, and that any cause of action
arising out of this Agreement shall be deemed to have arisen from a transaction
of business in the State of New York, and each of the parties hereby irrevocably
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action, or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action, or
proceeding in any such court or that any such suit, action, or proceeding which
is brought in any such court has been brought in an inconvenient forum. Process
in any such suit, action, or proceeding may be served on any party anywhere in
the world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 13.01 shall be deemed effective service of process on
such party.
SECTION 13.09. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this agreement or the transactions contemplated
hereby.
SECTION 13.10. Counterparts; Third-Party Beneficiaries. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof (or a facsimilie transmission of a copy)
signed by the other party hereto. No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
SECTION 13.11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 13.12. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
vFINANCE INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
SOMERSET FINANCIAL PARTNERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
SOMERSET FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of ▇▇▇▇ of Sale
Exhibit B Form of Assumption Agreement
Exhibit C Form of Trademark Assignment
Exhibit D Form of Clearing Agreement and Related CSC Documents
Exhibit E Form of Opinion of Buyer's Counsel
Exhibit F Form of Opinion of Seller's and Stockholder's Counsel
Exhibit G Form of Warrant and Option
Exhibit H Form of OSJ Agreement
Exhibit I Allocation Statement
Exhibit J Employment Agreement
DISCLOSURE SCHEDULES
Schedule 2.01(a) Transferred Accounts
Schedule 2.01(g) Seller Subsidiaries
Schedule 2.02 Excluded Assets
Schedule 2.07 Recipients of Warrants, Options and Restricted Stock
Schedule 3.04 No Conflict
Schedule 3.05(a) and (b) Consents and Approvals
Schedule 3.06 & 3.17 Absence of Certain Changes or Events
Schedule 3.07 Undisclosed Liabilities
Schedule 3.08 Other Transferred Leases, Contracts and Agreements
Schedule 3.11 Transferred Office Leases
Schedule 3.11(b) Transferred Equipment Leases and Service Contracts
Schedule 3.12 Title to Assets
Schedule 3.13 Intellectual Property
Schedule 3.14 Insurance
Schedule 3.15 Investigations by Governmental Entities
Schedule 3.15(c) Permits, Licenses, Registrations, etc.
Schedule 3.15(d) Certain Memberships
Schedule 3.18 Absence of Litigation
Section 3.19 Seller Docs
Schedule 3.21 List of Employees
Schedule 5.06 Non-Compete Agreements
Schedule 5.09 Transferred Employees
Schedule 5.10 Customer Accounts
Schedule 7.04 Retained Trademarks and Tradenames
Schedule8.02 Tax Matters
Schedule 9.02(a)(1) Employee Benefit Plans
Schedule 9.02(a)(2) Amendment of Employee Benefit Plans
Schedule 9.02(a)(3) Unfunded Employee Benefit Plans
Schedule 9.02(d) Certain Rights under Employee Benefit Plans
Schedule [###] Transactions with Affiliates
Schedule 9.02(d) Benefit Arrangements
SECTION 3.07
LIABILITIES
See Capitalization Table and Financing Profile dated February 28, 2002
SECTION 3.19
SELLING DOCUMENTS
o Trial Balance and Pro Forma Consolidated Financials for year end December
31, 2001
o Condensed unaudited Consolidated Financial Statements of Somerset Financial
Partners, Inc. for year end December 31, 2001
o Form X-17AS-5 for Somerset Financial Group, Inc. for year end December 31,
2001